New requirements for certain off-site fabrication work take effect December 21, 2026.
Pennsylvania employers involved in public construction projects have a new wage compliance requirement to prepare for.
On October 22, 2026, Governor Josh Shapiro signed Act 101 of 2026 (Senate Bill 908), expanding Pennsylvania's Prevailing Wage Act to include certain custom fabrication work performed away from a public construction job site.
The law takes effect December 21, 2026, potentially affecting contractors, subcontractors, manufacturers, and fabrication shops that produce specialized materials or components for covered public projects.
For employers, the change raises important questions about employee wage rates, job classifications, time tracking, and certified payroll reporting.
Here's what businesses should know.
Previously, Pennsylvania's prevailing wage requirements generally focused on covered work performed at public construction sites, with off-site work ordinarily excluded.
Act 101 expands the law to include certain employees performing custom fabrication for public works projects, even when that work takes place off-site.
Under the legislation, custom fabrication generally involves producing or assembling nonstandard goods or materials specifically for a public work project.
This means some work performed in a fabrication shop or other off-site facility may now be subject to the prevailing wage requirements applicable to the public project.
The legislation also extends relevant contractor compliance, reporting, and enforcement obligations to businesses performing covered custom fabrication.
Employers can review the official legislation and legislative history.
The law identifies several trades and systems that may involve covered custom fabrication, including:
The important distinction is that the work must meet the law's definition of custom fabrication for a covered public project.
Not all manufacturing or off-site production automatically qualifies.
The law expressly excludes certain components and materials, including structural steel members and precast concrete, from its custom fabrication definition.
Employers should evaluate their specific work, project contracts, and applicable exemptions before determining whether the new requirements apply.
Act 101 takes effect December 21, 2026.
The Pennsylvania Department of Labor & Industry has confirmed the effective date and stated that it is assessing the law's enforcement and compliance requirements.
Additional guidance may clarify how employers should apply the new provisions in practice.
Employers should monitor the Pennsylvania Department of Labor & Industry's prevailing wage resources for updates.
For employers performing covered custom fabrication, the law could introduce additional payroll administration responsibilities.
Employees performing covered custom fabrication may need to receive the prevailing wage rate for the applicable craft or trade in the locality where the public works project is located.
That distinction matters when fabrication occurs at a facility in a different county from the project itself.
Employers should confirm applicable wage determinations rather than relying solely on the location of the fabrication facility.
Employers may need to distinguish hours spent on covered public projects from other work performed at the same facility.
Reliable timekeeping and labor allocation can help employers document the work performed and support accurate payroll calculations.
The law extends relevant prevailing wage reporting obligations to covered custom fabrication businesses.
Pennsylvania's existing prevailing wage requirements include certified payroll reporting for covered public works projects.
Employers should review whether their current payroll processes can capture the employee, project, classification, wage, and hours information necessary for applicable reporting.
Prevailing wage compliance involves more than an employee's base hourly rate.
Applicable fringe benefit requirements, wage classifications, and overtime calculations may also need attention.
Employers should review their payroll practices with qualified advisors and project administrators before the new requirements take effect.
Yes. The legislation contains important limitations and exemptions.
Among other provisions, it excludes certain residential property rehabilitation work and qualifying school safety and security improvements. The custom fabrication definition also excludes specified materials, including structural steel members and precast concrete.
The law does not eliminate the need to evaluate whether a project qualifies as covered public work under Pennsylvania's prevailing wage framework.
Because applicability depends on the nature of the work and project, employers should not assume that every fabrication shop, public contract, or off-site task is covered.
Employers involved in public construction or custom fabrication should consider the following steps:
1. Review current and upcoming public projects. Identify contracts involving custom-built materials, specialized assemblies, or prefabricated components.
2. Evaluate whether the work meets the law's definition. Review the types of fabrication performed and any statutory exclusions.
3. Confirm applicable wage classifications. Determine which prevailing wage rates may apply to covered work, including the relevant project locality.
4. Review timekeeping and payroll reporting. Evaluate whether employee hours, project allocations, fringe benefits, and payroll records can be tracked accurately.
5. Monitor implementation guidance. Pennsylvania's Department of Labor & Industry is still assessing compliance and enforcement requirements. Additional guidance may affect implementation.
Beginning December 21, 2026, Pennsylvania Act 101 expands prevailing wage requirements to certain off-site custom fabrication performed for covered public works projects. Not all off-site manufacturing is included.
No. The law focuses on qualifying custom fabrication of nonstandard goods or materials produced specifically for covered public projects. Statutory exclusions and project requirements must also be considered.
The legislation provides that covered custom fabrication uses the applicable craft or trade rate for the locality where the public work project is located.
Businesses performing covered custom fabrication are subject to applicable prevailing wage compliance and reporting requirements. Employers should monitor forthcoming state guidance for implementation details.
December 21, 2026.
For construction and manufacturing employers, accurate payroll depends on more than processing paychecks.
Tracking hours by project, applying the correct wage classifications, managing fringe benefits, and maintaining reliable records can all play an important role in prevailing wage compliance.
At CTR Payroll | HR, we understand the complex payroll and workforce needs of construction businesses.
Our construction payroll and HR solutions help employers manage project-based labor, prevailing wage requirements, certified payroll reporting, and workforce administration with technology backed by dedicated support.
Have questions about simplifying construction payroll? Connect with CTR Payroll | HR to learn how our solutions can support your team.
This article is provided for general informational purposes and is not legal advice. Employers should consult qualified legal counsel regarding the applicability of Act 101 to their projects and operations. State implementation guidance may change.
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