On March 24, 2023, Governor Whitmer signed into law a bill reinstituting Michigan’s Prevailing Wage Act (the “Act”) that will take effect in March of 2024. Previously, a prevailing wage law was in effect in Michigan from 1965 until 2018 when the law was repealed.

In 2021, Governor Whitmer reinstated some of the prevailing wage requirements for state funded projects by Executive Order. The Act passed this March reinstates a more aggressive form of the prior prevailing wage law.

What does the New Act Require?

The new Act will require every contractor and subcontractor in Michigan to pay the prevailing wage and benefit rates to employees working on most state funded construction projects. Specifically, the new Act will apply to public school projects, except those funded by millages which were put in place before the effective date of the Act. The Act also requires contractors to post the prevailing wage rates at each construction site and to maintain accurate records of actual wages and benefits paid to workers. Contractors must maintain certified payroll records for a minimum of 3 years on all projects covered by the Act.

The new Act will also require that specific language be included in future construction contracts providing that wages and fringe benefit rates are not less than the established prevailing wage and fringe benefit rate. Contractors must also include an express term that employees working on covered projects are the intended beneficiaries of the prevailing wages and benefits. Contractors must also include nondiscrimination and nonretaliation provisions in contracts, and a statement that any employee aggrieved by a contractor or subcontractor’s failure to provide prevailing wages and benefits may bring an action against the contractor or subcontractor for damages or injunctive relief. Contractors are liable for the loss of wages and fringe benefits that result from any failure to include in the contract documents or bidding forms the requirement to pay prevailing wages or the schedule of prevailing wages.

The new Act bestows the Michigan Department of Labor and Economic Opportunity (DLEO) with the authority to administer and enforce the Act. This includes the ability to initiate investigations of alleged prevailing wage violations.

The Act provides that before any new state funded construction projects are bid, the commissioner of the DLEO will determine the prevailing rates of wages and fringe benefits for all classes of employees called for in the project. All contractors will be required to include a schedule of those rates as a part of the specifications for work and the rates must be printed on the bidding forms.

Filing a Complaint

Under the new Act, workers and third parties will be able to file complaints for violations of the Act which occur after its effective date in March 2024. Employees filing a complaint may keep their identity confidential from release to the employer. Upon filing a complaint, the DLEO will initiate an investigation of the alleged violation. If the investigation results in a finding that a contractor failed to comply with requirements of the new Act, it could result in the assessment of fines of up to $5,000 (plus an additional 10% as determined by the DLEO). Contracts may also be terminated from projects for their failure to comply with the Act and contractors can be held liable for damages resulting from their termination from a project.

The Act also includes anti-retaliation provisions. Specifically, an employee who believes he has been retaliated against for filing a complaint, participating in an investigation, or raising concerns over wages, may file a complaint within 90 days after the alleged retaliatory act. The DLEO may order rehiring, reinstatement, or other equitable remedy, including full back pay or lost earnings. An aggrieved employee covered by the Act may bring a lawsuit against a contractor for the violation of the law and may recover actual damages and interest.

Administrative Enforcement

The new Act allows for regulations to be issued to aid in the interpretation of the Act. At this point, there are no concrete plans to issue regulations interpreting the Act, however, the DLEO is currently drafting an internal guidance manual on how the law will be enforced. Once the manual is finalized, DLEO investigators will be trained on enforcement procedures. At this point there are no specifics on enforcement procedures, but it is expected this will become clear in the weeks leading up to the effective date of the Act in March of 2024.