A Virginia law taking effect in 2027 will require small contractors to pay prevailing wage on underground utility work—a cost many haven't factored into their bids.
Most construction and trades owners in Virginia don't realize that a provision buried in HB260 is about to change how they bid and staff underground infrastructure work for public service companies. Starting July 1, 2027, the rule is simple but significant: if you perform underground utility work under contract with a public service company, you must pay workers at least the prevailing wage rate—no exceptions for small firms, no carve-outs for subcontractors.
HB260 mandates that any contractor or subcontractor performing underground infrastructure work for a public service company must pay workers the prevailing wage rate established by Virginia's Department of Labor and Industry (DOLI) Commissioner. That rate is based on federal highway and road construction wage data from SAM.gov—the federal procurement database.
This isn't optional. The prevailing wage floor applies to every covered contract entered into on or after July 1, 2027. It also requires contractors to maintain records of wages paid and post notices at job sites showing the applicable prevailing wage rate.
The rule applies broadly. If you're a general contractor, subcontractor, or specialty trades firm working on underground utility infrastructure—water, sewer, gas, electric, or telecommunications lines—for a public service company, you're covered. Size doesn't matter. A five-person crew and a 200-person firm face the same requirement.
"Public service company" includes municipal utilities, investor-owned utilities, and other entities providing utility services to the public. If you're unsure whether a client qualifies, ask directly or review their charter or regulatory status.
Prevailing wage rates are typically significantly higher than market rates. In Virginia, prevailing wage for construction trades often ranges from $45 to $65+ per hour in total compensation (wages plus fringe benefits), depending on the trade and locality. For a small contractor accustomed to bidding at market rates, this is a material cost increase.
You'll need to:
This affects your cash flow, crew scheduling, and profit margins. Bids that worked before the effective date won't work after. Contractors who don't adjust their estimating process will underbid and lose money.
The law takes effect July 1, 2027, but applies only to contracts entered into on or after that date. Contracts signed before July 1, 2027, are not covered. This gives you time to prepare, but not much. If you bid public utility underground work, now is the time to understand the rates in your area and adjust your processes.
For the full text and fiscal analysis, refer to HB260, Bill Summary and Fiscal Analysis, Page 1.
Virginia construction and trades associations and business advisors can provide detailed guidance on prevailing wage rates and compliance requirements for your specific trade and region.