AB 1198 lets a prevailing wage change land mid-job, but only on public contracts of $35 million or more

For most electrical shops, AB 1198 changes nothing directly. It matters when you subcontract electrical work on a large public works job and the prime contract has an awarded value of $35 million or more.

AB 1198 was approved by the Governor and filed September 27, 2026, as Chapter 513, Statutes of 2026. It amends and repeals Labor Code Section 1773.6 and adds Section 1773.65.

The new rule starts July 1, 2027. If you bid public work after that date, the first question is not only what the electrical scope includes. You also need to know whether the prime contract crosses the $35 million threshold and whether a prevailing wage rate change could reach your labor cost during the job.

Most small electrical shops are outside AB 1198

A typical small electrical contractor is not automatically covered just because the work is public, institutional, or subject to prevailing wage. The new rule applies to a public works contract that is awarded, or for which notice to bidders is published, after July 1, 2027, when the awarded value of the prime contract is $35 million or greater.

That threshold is read against the prime contract’s awarded value. It is not the value of your electrical subcontract by itself.

So an electrical subcontract can be much smaller than $35 million and still matter under the new rule if it sits under a covered prime contract. The reverse is also true. A large electrical subcontract does not, by itself, establish that the new rule applies if the prime contract does not meet the threshold.

The jobs most likely to raise the question are large public builds such as hospitals, transit work, major campus construction, and civic construction. The point is not the project label. The point is whether the job is public works and whether the prime contract reaches the statutory threshold.

Before you price the labor, get those facts.

When a prime contractor or facilities manager calls your shop about a public or institutional job, the caller usually starts with the schedule and the scope. Wage determinations rarely lead the conversation. That leaves you to ask the questions that decide whether the rule matters: Is this a public works job? Who is the owner or awarding body? What is the awarded value of the prime contract? When was, or will be, the notice to bidders published?

Those questions belong in your intake process, not in a last minute review after you have sent a number.

The old rule froze the rate at bid advertisement

Under current law, a worker on a public works job must be paid the prevailing rate in effect when the project was advertised for bid.

That is the lock.

If the Director of Industrial Relations later determines that a higher prevailing wage rate applies during the contract, the new rate does not apply under the current rule unless a collective bargaining agreement assumed the increase. The rate in effect at bid advertisement controls.

The Assembly Third Reading analysis of AB 1198, as amended January 22, 2026, described that existing rule. It is the reason a later determination ordinarily does not change the labor rate already attached to the job.

That rule affects more than payroll. It affects how you estimate labor, how you set your subcontract price, and what you agree to in the scope and payment terms. Our guide on estimating an electrical job that survives a change order covers the broader pricing problem. AB 1198 adds a specific prevailing wage issue to that problem for covered public contracts.

July 1, 2027 changes the lock on covered contracts

Starting July 1, 2027, a prevailing wage rate change can apply during a covered public works contract.

The trigger is a determination by the Director of the Department of Industrial Relations that, within a semiannual period, there has been a change in a prevailing wage rate in a locality. That determination applies to a public works contract that is awarded, or for which notice to bidders is published, after July 1, 2027, if the awarded value of the contract is $35 million or greater.

For those contracts, a mid contract rate change is no longer frozen at the rate in effect when the job was advertised. The new rate applies on its effective date.

That creates a direct estimating question for you. If your electrical bid assumes one labor rate for the entire job, what happens if the applicable rate changes while your crew is still working? The answer cannot be left to an assumption that the original bid rate remains fixed.

Put the issue next to your labor assumptions. If your bid format already separates labor, material, equipment, and change order exposure, keep this rate issue visible rather than burying it in a general contingency. See how to price electrical jobs without underbidding for the pricing discipline this requires.

The $35 million threshold belongs to the prime contract

The final chaptered version carries the $35 million threshold. An earlier January draft had no dollar threshold. That difference matters.

You should not decide coverage by looking only at your subcontract amount. Ask the prime for the awarded value of the prime contract. Ask for the notice to bidders date too.

For a public bid after July 1, 2027, request both items before you finalize your labor number:

• The prime contract’s awarded value.
• The date the notice to bidders was published, or the date the contract was awarded if that is the relevant event.

The statute applies based on the contract being awarded, or the notice to bidders being published, after July 1, 2027. The threshold is based on the awarded value of the prime contract.

You should also ask who the awarding body is. That identifies the public entity connected to the contract and gives you a clear place to direct questions about the job documents. Do not assume the caller’s description of the project gives you enough information.

The earlier AB 1104 discussion of prevailing wage and the PWC-100 for solar and battery jobs is useful background for the separate questions that come with public work. AB 1198 does not turn every public job into a covered $35 million contract.

The petition clock starts when the new determination is published

AB 1198 gives a contractor, an awarding body, or a representative of any craft, classification, or type of work affected by a rate change on a particular contract a way to challenge the determination.

The deadline is 20 days after publication of the new determination.

The challenge must be a verified petition filed with the Director. The ground is that the rate was not determined in accordance with state law. A copy must go to the awarding body within two days after filing.

The Director investigates or holds a hearing. Within 20 days after the petition, the Director makes a final determination, unless the Director, the awarding body, and interested parties agree to a longer period.

The final determination takes effect 10 days after issuance. It stays in effect until it is modified, rescinded, or superseded.

That is a short business deadline. If a rate determination affects your contract, do not treat it as a payroll question that can wait until the next billing cycle. Identify who is reviewing it, what date starts the 20 day period, and whether a petition is being considered.

This is separate from ordinary payment or change order procedures. Keep your contract notices and deadlines organized. Our article on change order claim deadlines for private works addresses a different law and a different setting, but the operating lesson is the same: a deadline that is not recorded can be missed.

Affordable housing contracts use a different rule

Affordable housing developments that meet the bill’s affordability criteria are handled under new Section 1773.65 instead.

For those contracts, prevailing wage determinations are not effective for contracts that have already been noticed to bidders or already awarded.

Do not apply the general covered contract rule to an affordable housing development without checking the chaptered text and the facts of that project. The exemption is not a reason to guess. It is a reason to identify the project category before you price the work.

Use the chaptered Section 1773.65 for the affordability percentages and income definitions.

Put rate change protection in the electrical subcontract bid

On any public bid after July 1, 2027, ask the prime for the prime contract’s awarded value and the notice to bidders date. Ask who the awarding body is. Ask how the prime intends to handle a prevailing wage change that becomes effective during the work.

Carry a rate change line or escalation clause in your subcontract bid. Ask for contract language that explains how a mid job rate change will be passed through to your electrical scope. Do not assume the prime’s contract with the public agency automatically gives you a payment right that is absent from your subcontract.

Your payroll process also needs a response plan. If a new rate applies on its effective date, your payroll must be able to switch the applicable rate for the affected work. Keep the determination, the effective date, the affected classification, and the instruction used for payroll in the job record.

Wirewoman can help with the intake part of this process. Wirewoman answers your shop line 24/7, asks the intake questions you set, sends the job summary by SMS within 30 seconds of the call, and logs every call to a dashboard. Add, “Is this a public or government job, and who is the owner or awarding body?” to the intake. The answer then sits in the text summary and the dashboard record next to the job type. Wirewoman does not determine wage rates or give legal advice.

Assembly Appropriations estimated that the Department of Industrial Relations would incur costs of about $3.2 million in the first year, $3 million in the second year, and $2.8 million annually after that to review petitions and make determinations. The analysis also said project costs for agencies would likely rise. The State Building and Construction Trades Council supported the bill, arguing that some nonunion contractors bid public jobs at lower pre adjustment wage rates and then refused to honor later scheduled increases. Opponents included the Rural County Representatives of California, the California State Association of Counties, the League of California Cities, and the California Special Districts Association, citing costs to local agencies.

For your shop, the action is narrower. On every public or government job call, ask the owner or awarding body, the prime contract value, and the notice to bidders date. For a covered bid after July 1, 2027, put rate change language in your number, ask how the prime will pass through a new rate, and set payroll up to change rates on the effective date.

Read the chaptered Sections 1773.6 and 1773.65 before bidding a covered job. This is general information, not legal advice.