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Prevailing Wage and Davis-Bacon Compliance in Michigan

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Michigan's Public Works Regulations

Michigan has a unique situation regarding public works regulations:

State Law: Michigan has a state-specific prevailing wage requirement for state-funded public works projects, reinstated by an executive directive in 2021. This means that contractors on state-funded projects must comply with wage requirements based on local union rates.
Federal Law: The Davis-Bacon Act (DBA) applies to Michigan's federally funded or assisted construction projects.

Key point: In 2018, Michigan's prevailing wage law, which had been in place since 1965, was repealed. In 2021, however, Michigan reinstated prevailing wage requirements for state-funded projects through an executive directive from the governor. This action re-established wage protections for workers on state projects, requiring that wages be set according to local union rates, effectively restoring the prevailing wage standard at the state level without new legislation.

Definition of "Public Works" in Michigan

In Michigan, public works refer to construction, maintenance, repair, or improvement projects funded by state or federal government money. Examples of public works projects include:

Roads, highways, and bridges
Public schools, state facilities, and other government buildings
Water and sewage systems

Important note: The Davis-Bacon Act applies to federally funded projects, ensuring that workers are paid according to prevailing wage rates set for the project's location.

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Prevailing Wage Determinations: Federal (Davis-Bacon) Requirements

Federal Davis-Bacon Act: The Davis-Bacon Act applies to federally funded or federally assisted public works projects in Michigan. Under this act, contractors must pay workers the prevailing wages determined by the U.S. Department of Labor, based on local wage surveys that include both a basic hourly wage and fringe benefits.
State-Specific Requirements: For state-funded public projects, Michigan's prevailing wage rates are determined by collective bargaining agreements within the locality, reflecting union wage standards even for non-union projects.

Components of Wage Determinations

Federal wage determinations for Michigan include:

Basic Hourly Rate: The minimum wage rate paid directly to workers in a specific job classification.
Fringe Benefits: Non-cash benefits include health insurance, retirement plans, and paid leave.
Total Hourly Rate: The sum of the basic hourly rate and fringe benefits.

For example, if the basic hourly wage is $25 and fringe benefits are valued at $5, the total hourly rate would be $30. The contractor must pay the full $30 in wages if no fringe benefits are provided.

Compliance for Contractors and Subcontractors

For federally funded public works projects in Michigan, contractors and subcontractors must comply with the Davis-Bacon Act by adhering to the following guidelines:

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Determine Applicable Wage Rates

Contractors must access the prevailing wage rates for each job classification based on the project's location.

These wage rates are available through the Wage Determinations Online (WDOL) portal on SAM.gov.

Submit Certified Payroll Records

Submit weekly certified payroll records (Form WH-347) showing compliance with prevailing wage laws.

Handle Fringe Benefits

Contractors must ensure that all workers are paid at least the prevailing wage for their specific job classification, including the basic hourly rate and any applicable fringe benefits.

Maintain Accurate Records

Contractors must maintain detailed payroll records, including hours worked, wages paid, and fringe benefits provided to workers. The U.S. Department of Labor or the contracting agency should make these records available for inspection.

Contractors must post prevailing wage determinations in a prominent location at the job site where workers can access the information.

Post Wage Rates On-Site

Contractors must post prevailing wage determinations in a prominent location at the job site where workers can access the information.

Penalties for Non-Compliance

Failure to comply with the Davis-Bacon Act can result in severe consequences, including:

Fines
Back pay for underpaid workers
Disqualification from bidding on future federally funded projects

Unique Aspects of Michigan's Public Works System

Reinstated Prevailing Wage Standards Through Executive Action: Michigan reinstated prevailing wage requirements in 2021 via an executive directive after repealing the law in 2018. This reinstatement demonstrates a unique approach by reviving wage standards without formal legislative action.
Prevailing Wage Applies Only to State-Funded Projects: In Michigan, prevailing wage requirements apply solely to state-funded public works projects, while local or municipal projects are exempt. This limits prevailing wage mandates to projects directly financed by state funds.
Emphasis on Local Union Wage Rates: Michigan's public works system sets prevailing wages based on union agreements specific to the locality for state-funded projects. This ensures that even non-union contractors pay wages comparable to union standards, aligning with local economic conditions and labor agreements.

Relevant Resources

U.S. Department of Labor Wage Determinations Online (WDOL): SAM.gov - Wage Determinations
U.S. Department of Labor Davis-Bacon and Related Acts Compliance: DOL Davis-Bacon Compliance
Michigan Department of Labor and Economic Opportunity: Michigan Prevailing Wage Guidelines

Does Michigan have a state-specific prevailing wage law?

Yes, Michigan has a state-specific prevailing wage requirement for state-funded projects, reinstated by executive directive in 2021. This applies only to projects funded directly by the state, while federally funded projects adhere to the Davis-Bacon Act.

How are prevailing wage rates determined in Michigan?

For state projects, rates are based on collective bargaining agreements in each locality, ensuring union-aligned wages. For federally funded projects, prevailing wage rates are determined by the U.S. Department of Labor based on local wage surveys.

What are the penalties for non-compliance with prevailing wage laws in Michigan?

Penalties for non-compliance include several serious consequences. Contractors may be required to compensate workers with back pay for any wage underpayment. Additionally, contractors may face fines for failing to meet wage or reporting standards. For repeated violations, contractors risk debarment, which disqualifies them from bidding on future public works projects.

How are fringe benefits handled under the prevailing wage requirements in Michigan?

Fringe benefits are part of the total wage contractors must pay. Contractors can provide fringe benefits (e.g., health insurance) or pay their equivalent in cash. If no benefits are provided, contractors must pay the full rate (basic + fringe) in wages.