Several federal clean energy tax credits and deductions include prevailing wage and apprenticeship (PWA) requirements. These requirements apply to specific credits and project types under current federal law and may affect credit value.
For projects subject to PWA requirements, failure to comply may result in a reduced credit value rather than full ineligibility. Cities should confirm whether a specific tax credit includes PWA provisions before incorporating credit values into financial models.
Prevailing Wage Requirement
Where applicable, the prevailing wage requirement generally requires that laborers and mechanics employed on a qualifying project be paid wages at rates not less than those determined by the U.S. Department of Labor for the relevant geographic area.
Prevailing wage rates vary by region and job classification and include both base hourly wages and applicable fringe benefits. Project teams must consult current Department of Labor wage determinations when structuring contracts.
Apprenticeship Requirement
As part of the United States’ strategy to develop and enhance skilled labor, certain tax credits also include apprenticeship requirements tied to construction activities. These requirements typically include:
- A minimum percentage of total labor hours performed by qualified apprentices
- Compliance with applicable apprentice-to-journey worker supervision ratios
- Minimum participation requirements when workforce size exceeds a specified threshold
Specific thresholds, labor hour percentages, and applicability rules depend on project type and construction start date under current federal guidance.
Administrative and Compliance Considerations
Meeting PWA requirements may require:
- Detailed labor tracking and certified payroll documentation
- Coordination with contractors and subcontractors
- Verification of apprenticeship program participation
- Ongoing recordkeeping and reporting
Because compliance obligations can increase administrative complexity and project oversight requirements, cities should account for these costs when evaluating project economics.
Exceptions and Applicability
Certain smaller projects may be exempt from PWA requirements, depending on statutory thresholds and project size. Eligibility for exemptions should be confirmed under current IRS guidance before assuming reduced compliance obligations.
Note: Prevailing wage and apprenticeship rules are subject to statutory interpretation and evolving federal guidance. Thresholds, documentation standards, and enforcement procedures may change. Cities should consult current IRS and Department of Labor guidance, as well as project counsel, when structuring projects.
This information is provided for planning purposes and should not be considered legal advice.