Public work

Prevailing Wage in Arizona

When Arizona contractors have to pay prevailing wages, after the 2026 court ruling on Phoenix and Tucson, and what federal Davis-Bacon rules still require.

General information, not legal or tax advice. Checked October 2026. Sources are listed at the end.

Short version: in Arizona, a prevailing wage requirement almost always comes from federal money, not from the state or a city. If your project, or the prime contract above you, uses federal funds covered by the Davis-Bacon Act or a related law, prevailing wages and weekly certified payroll apply. Purely state- or city-funded jobs generally don't carry them.

Arizona law bars state and local prevailing wage rules

A 1984 voter-approved law, A.R.S. § 34-321, bars state agencies and local governments from requiring prevailing wages on their public works contracts.

In 2024, Phoenix and Tucson tried anyway. Phoenix adopted a prevailing wage ordinance for city construction contracts over $4 million, and Tucson for contracts of $2 million or more, relying on the cities' power to set local minimum wages. Contractor groups sued, and a Maricopa County Superior Court judge struck both ordinances down before they took effect.

On February 27, 2026, a three-judge panel of the Arizona Court of Appeals, Division One, affirmed. In an opinion by Presiding Judge Michael S. Catlett (Associated Minority Contractors of Arizona v. City of Phoenix, No. 1 CA-CV 24-0658), the court held that the 2006 and 2016 voter-approved minimum wage laws didn't repeal the 1984 ban. A prevailing wage isn't a minimum wage in that sense, the court reasoned, because it covers only certain workers on certain public projects. The ordinances remain unenforceable. Check for later developments, such as a review by the Arizona Supreme Court, before you bid.

Where prevailing wages still apply in Arizona: federal Davis-Bacon

The federal Davis-Bacon Act applies to federal contracts over $2,000 for building, altering, or repairing public buildings or public works. Dozens of "related acts" extend the same requirements to projects paid for with federal grants, loans, or other assistance. In Arizona, that commonly includes:

  • Federal construction, such as work on military bases and federal buildings
  • Highway and transit projects that use federal funds, even when ADOT, a county, or a city runs the job
  • Housing and community development projects with HUD money, and water and wastewater projects with federal funding
  • Some clean-energy projects whose owners claim federal tax credits that come with prevailing wage requirements; ask the project owner

The requirements flow down. If the prime contract is covered, every subcontract under it is too, so a sub can owe prevailing wages and certified payroll without ever bidding public work directly. Under the Department of Labor's 2023 rule, the requirements apply by operation of law even if the clause was left out of the contract.

What a covered job requires

  • Pay at least the wage determination. Each covered contract includes a wage determination listing the required hourly rate and fringe benefit amount for each classification. Pay the fringe to bona fide plans, in cash, or a combination.
  • Classify by the work performed. A worker who does two kinds of work is paid each classification's rate for the hours in it, if your records show the split.
  • Pay overtime on the basic rate. Time and a half over 40 hours in a workweek; on contracts over $100,000 the Contract Work Hours and Safety Standards Act adds its own overtime requirement for laborers and mechanics.
  • Follow apprentice rules. Apprentices must be individually registered, and the ratio to journeyworkers is checked daily on the jobsite. Unregistered helpers are paid the journeyworker rate.
  • Submit certified payroll weekly. Usually on Form WH-347 or an online system. How to fill out the WH-347.
  • Keep records for at least three years after the prime contract's work is complete.

What it means for your payroll setup

Prevailing wage jobs are where payroll systems break. The same worker can be on a private job at their normal rate Monday and a federally funded job at the determination rate Tuesday, with fringe owed only on the covered hours, and a certified payroll due every week. Before you take covered work, make sure your payroll provider can pay multiple rates by job and classification, track fringe by project, and produce certified payroll reports in the format your contract requires. Questions to ask a provider.

Prevailing wage questions

Does Arizona have a state prevailing wage law?

No. Arizona law (A.R.S. § 34-321) bars state agencies and local governments from requiring prevailing wages on their public works contracts. In Arizona, prevailing wage requirements generally come from federal funding under the Davis-Bacon Act and related laws.

Can Phoenix or Tucson require prevailing wages on city contracts?

No, under current law. On February 27, 2026, the Arizona Court of Appeals, Division One, held that state law bars the Phoenix and Tucson prevailing wage ordinances adopted in 2024. Check for later developments before you bid.

When does Davis-Bacon apply to an Arizona project?

On federal construction contracts over $2,000, and on many projects paid for with federal grants, loans, or other assistance, including highway, transit, housing, and water projects run by state or local agencies. Your contract documents say whether it applies.

Do subcontractors have to pay prevailing wages?

Yes, if the prime contract is covered. The requirements flow down to every subcontract, including weekly certified payroll.

Bidding public work?

We'll match you with a payroll or PEO provider that handles multiple rates, fringe tracking, and weekly certified payroll. Free quote, no obligation. Use the quote form

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Sources