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Prevailing Wage Act Amendments
Governor Whitmer recently signed into law Public Act 110 of 2024, which amends the Michigan Prevailing Wages on State Projects Act (Prevailing Wage Act) to: (1) extend prevailing wage requirements to energy facility projects; (2) impose a registration requirement for state project contractors and subcontractors; and (3) require the submission of certified payroll records for state projects to the Michigan Department of Labor and Economic Opportunity (LEO).
PA 110 will become effective 91 days after final adjournment of the Michigan Legislature for the 2024 regular session. The Legislature typically adjourns at the end of December, meaning PA 110 is expected to become effective in March 2025.
Energy Facility Projects
Prevailing Wage Act requirements typically apply when a contract: (1) is executed pursuant to an advertisement and invitation to bid for a state project (a term which includes many public school improvements); (2) involves the employing construction mechanics; and (3) is sponsored or financed, in whole or in part, by the State of Michigan.
PA 110 expands the definition of state project to include public school energy facility projects, which must comply with the Prevailing Wage Act requirements regardless of whether those projects are sponsored or financed by the state. A contract for an energy facility project must still be executed pursuant to an advertisement and invitation to bid and involve the employment of construction mechanics subject to Prevailing Wage Act requirements.
An energy facility project includes new construction, completion, demolition, major alteration, or repowering of an energy storage facility, solar energy facility, or wind energy facility with a nameplate capacity of two or more megawatts. Nameplate capacity is the facility’s designed full-load sustained generating output.
Subject to limited exceptions, an energy storage facility is a system that absorbs, stores, and discharges electricity. A solar energy facility is a system that captures and converts solar energy into electricity, including photovoltaic solar panels. A wind energy facility is a system that captures and converts wind energy into electricity, including wind towers and wind turbines.
State Registration Requirement
PA 110 prohibits a contractor from submitting a bid for a state project or performing work on a state project unless the contractor holds a state project registration. PA 110 also prohibits a contractor from listing a subcontractor on a state project bid proposal or entering into an agreement with a subcontractor for a state project if the subcontractor does not hold a state project registration. Finally, PA 110 prohibits a subcontractor from performing work on or entering into an agreement with a contractor for a state project if the subcontractor does not hold such a registration.
Contractors and subcontractors may apply to LEO for a state project registration. Each state project registration is valid for one year (unless earlier suspended or revoked by LEO) and may be renewed. A contractor must include in a state project bid a copy of the state project registration for the contractor and each subcontractor selected at the time that the contractor submits its bid.
Prevailing Wage Data Submission
PA 110 requires LEO to create a database within one year of the Prevailing Wage Act’s effective date that allows contractors, subcontractors, and contracting agents (including schools) to upload certified payroll records into the database. Subject to limited exceptions, within 10 days after a pay period, a contractor or subcontractor must submit to the database certified payroll records for that pay period.
Until the database is created, a contractor or subcontractor must submit those certified payroll records to the contracting agent. A contracting agent then must, within 10 days after receiving the certified payroll records, submit the certified payroll records to LEO on a form and in a manner determined by LEO. The form has not yet been published on LEO’s website.
If Prevailing Wage Act requirements apply to a school project and the school fails to include the applicable prevailing wage language (including the rates schedules) in its contract documents, bidding forms, or specifications, the school may be liable for any loss of wages and fringe benefits suffered by construction mechanics, including actual damages, interest assessed up to 10% per year, costs, and attorney fees. Each Prevailing Wage Act violation is also subject to a civil fine of up to $5,000 and an additional 10% penalty as determined by LEO.
We will update our retainer clients when LEO releases a form for schools to submit state project certified payroll records to LEO.