Pennsylvania has enacted significant changes to its Prevailing Wage Act, expanding prevailing wage coverage to most custom fabrication work performed away from public construction sites.
Under Act 101 of 2026, signed into law on October 22, 2026, certain project-specific fabrication work will become subject to prevailing wage requirements, even when performed at an off-site facility. The law takes effect on December 21, 2026, giving affected businesses a limited window to review their operations, contracts, and compliance procedures.
Key takeaways:
- Expanded coverage. Certain custom fabrication work performed off-site for public construction projects will now be subject to prevailing wage requirements.
- Project-based wage rates. Covered fabrication work must be paid according to prevailing wage rates applicable to the public project’s location, rather than that of the fabrication facility.
- New exclusions. The legislation also provides exclusions for certain residential rehabilitation and school safety projects.
What custom fabrication work is now covered
The most significant change is the expansion of prevailing wage requirements beyond the site of work of the public construction job site.
Under the new law, certain fabrication, assembly, or production of nonstandard goods or materials specifically for a public works project will also be subject to prevailing wages, regardless of whether the work occurs at the project site.
Examples of potentially covered custom fabrication include:
- Plumbing and pipe-fitting systems
- Heating, ventilation, and air conditioning (HVAC) systems
- Sheet metal and duct systems
- Boiler and electrical systems
- Welding and mechanical insulation work
- Ornamental ironwork and rebar system assembly
- Certain project-specific signage
- Prefabricated modules and structures produced for specific public works projects
The law excludes certain materials and components, including structural steel members and precast concrete products.
For contractors and fabricators, the distinction between standard manufactured materials and custom-fabricated components will be important when determining whether prevailing wage requirements apply.
How are prevailing wage rates determined for off-site fabrication?
Under the new law, prevailing wage rates for covered custom fabrication work are determined by the location of the public works project, not the location of the fabrication facility.
For example, a fabrication company located in one Pennsylvania county that produces covered components for a public construction project in another county would need to apply the prevailing wage rates associated with the project location. This also raises significant questions of statutory interpretation and constitutionality, especially regarding out-of-state fabrication.
What additional compliance requirements apply?
Businesses performing covered custom fabrication work will be subject to the Prevailing Wage Act requirements to pay prevailing wages for the custom fabrication work that is specifically related to a prevailing wage project and will need to submit certified payrolls for the hours worked on such custom fabrication.
Are any projects excluded from prevailing wage requirements?
In addition to expanding coverage for custom fabrication, the legislation establishes exclusions for certain types of projects.
Qualifying rehabilitation projects involving residential properties containing fewer than eight units, and certain school safety and security improvements that meet statutory requirements will be outside of the definition of public works under the Act.
What should contractors and other businesses consider now?
With the new requirements taking effect on December 21, 2026, businesses involved in public construction projects should assess how the changes may affect their operations and upcoming work.
Steps to consider include:
- Review project scope. Identify current and upcoming public projects involving custom-fabricated materials or components that would trigger prevailing wage coverage.
- Evaluate contracts. Review fabrication agreements, subcontracts, bid specifications, and related documents to address applicable prevailing wage obligations.
- Assess payroll procedures. Determine whether existing systems can accommodate prevailing wage reporting for covered custom fabrication.
- Review bidding practices. Account for potential labor and administrative costs associated with covered fabrication work.
Businesses should also monitor additional guidance from the Pennsylvania Department of Labor & Industry concerning implementation and enforcement. In addition, legal challenges to the constitutionality of Act 101 are anticipated, as a similar amendment in New York is currently subject to challenge by industry groups.
McNees’ Construction and Labor and Employment Groups advise businesses and public entities on prevailing wage compliance, public construction contracts, and related labor matters. Our attorneys can assist with evaluating how the new law may affect existing operations, upcoming projects, and contractual obligations.
