Michigan repealed its prevailing wage law back in 2018. Previous to that, the prevailing wage law required businesses (primarily construction) doing work for the state, counties, or local municipalities to pay their workers at wage and fringe benefits rates determined by certain entities such as counties, the National Prevailing Wage Center, or other legitimate source.
These entities used labor contracts and select wage studies to determine the prevailing wage to be used for bidding on the public work. This requirement forced businesses to quote at higher costs for the work. This was because they had to pay wage rates sometimes above the local wage market. Michigan decided that this potential extra cost to the state and other public employers resulted in too much extra money being spent and passed a law repealing use of prevailing wage and fringe benefits to establish pay on those public projects.
This has become a point of contention with Michigan’s Governor Whitmer and she recently re-instated prevailing wage for State work. The Associated Builders and Contractors (ABC), a construction industry trade association in Michigan, has been fighting attempts to re-implement a prevailing wage requirement on businesses. In March of this year Governor Whitmer unilaterally announced by press release that the State would require any business wishing to get a state contract of $50,000 or more would have to pay the prevailing wage to their workers in order to get the contract. ABC has been fighting that development since it was announced in October 2021.The Michigan Court of Claims dismissed that case. That decision is being appealed.
The case that ABC won last week (Associated Builders and Contractors v. Meridian Township COA Docket 359027) was from an attempt in March 2021 by Meridian Township to install “guidelines” requiring any business that bid on Township projects of more than $50,000 to commit to paying prevailing wages on its projects. The Michigan Court of Appeals held that putting this prevailing wage requirement in even so much as a Township “guideline” was a violation of the Local Government Labor Regulatory Act (LGLRLA). Last week the Michigan Court of Appeals upheld a lower court ruling stating the same.
What is kind of confusing is the Appeals Court stated that a public entity can’t have a formal rule requiring prevailing wage and benefits. But it is acceptable for local governments to in turn contract with businesses that pay prevailing wages and fringe benefits. They just cannot require it as a dictated formal policy, rule, or ordinance.
We will no doubt be hearing a lot more about prevailing wage in the coming months. With both the Michigan Governor’s office and the Legislature under Democratic control, betting money is one of the first new bills (perhaps before repealing Right to Work) to restore prevailing wage in Michigan. Prevailing wage is a Big Labor must have. Since the repeal of prevailing wage back in 2018 construction businesses that are union free were much more competitive in their project bidding because they did not have to pay wage rates dictated by expensive labor agreements.
If prevailing wage returns, the cost of doing business and what Michigan taxpayers will have to pay for “fixing the damn roads” and other projects will go up.
Sources: GONGWER COA Finds No Error in Meridian Prevailing Wage, Fringe Benefit Ruling (12/9/2022) ; Mackinaw Center Legal Foundation. ABC Fights Prevailing Wage; Associated Builders and Contractors Greater Michigan Chapter v. Township of Meridian No. 359027 (12/8/2022)