On March 1, 2022, the State of Michigan began to require state contractors and subcontractors to pay prevailing wage on construction-based contracts issued by the Department of Technology, Management & Budget (“DTMB”).
The directive established the following guidelines for when the payment of a prevailing wage is required:
“With the exception of lease build-outs, if a project greater than $50,000 involves employing construction mechanics (e.g., asbestos, hazardous material handling, boilermaker, carpenter, cement mason, electrician, office reconstruction and installation, laborer including cleaning debris, scraping floors, or sweeping floors in construction areas, etc.) and is sponsored or financed in whole or in part by State funds, state contractors must pay prevailing wage.”
According to the State of Michigan, prevailing wage rates are established for each County in Michigan through a process of submission and review of established wages, benefits, and training investments from bona fide employee and employer organizations.
In July, 2021, the Associated Builders and Contractors of Michigan (“ABC”) filed a lawsuit against the State of Michigan with a motion for preliminary injunction asking the Court to enjoin DTMB from requiring prevailing wages for state contracts.
ABC argued that Michigan cannot require the wage rate of its contractors because of the repeal of Michigan’s prevailing wage law in 2018.
In October, the Michigan Court of Claims sided with the state and ruled that DTMB did not violate the law when it implemented its prevailing wage policy. The court granted DTMB’s motion for summary disposition, resulting in the dismissal of the case.
ABC has appealed the ruling. For the time being, pending the outcome of the appeal, DTMB’s prevailing wage policy remains in effect for construction projects financed in whole or in part by State of Michigan funds. We will continue to keep you informed about new developments in this case.
This alert serves as a general summary and does not constitute legal guidance. Please contact us with any specific questions.
Aaron L. Davis is Vice President and Treasurer, and Chair of Fraser Trebilcock’s labor law practice. He has litigation experience in a diverse range of employment matters, including Title VII, the Age Discrimination Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the Fair Labor Standards Act. You can reach him at firstname.lastname@example.org or (517) 377-0822.
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