Prevailing wage laws require contractors on public construction projects to pay their labor no less than the prevailing wage and fringe benefits in the area. The “prevailing wage” is typically determined by reference to collective bargaining agreements for each construction labor classification. On June 30, 2015, Governor Snyder approved the Local Government Labor Regulatory Limitation Act (the “Act”). The Act took immediate effect. By its terms, the Act precludes the adoption of any new (after December 31, 2014), local (city, village, township, county, education institution, etc.), prevailing wage law. The Act did not address whether local prevailing wage ordinances adopted prior to January 1, 2015, were valid exercises of municipal authority.
That issue, however, was recently decided by the Michigan Supreme Court in Associated Builders & Contractors v City of Lansing. Below, the Michigan Court of Appeals concluded that the enactment of a prevailing wage ordinance was a valid exercise of a city’s police power. On appeal, the Michigan Supreme Court agreed on the merits, finding that wages paid to employees of contractors working on municipal contracts is a municipal concern. Thus, because the Michigan Constitution grants cities and villages the right to adopt resolutions and ordinances relating to its municipal concerns subject to the Constitution and the law, the Michigan Supreme Court held that absent law to the contrary, cities and villages have the constitutional authority to enact ordinances and charter provisions regulating wages paid to third-party employees working on municipal construction contracts. As a result, local prevailing wage laws adopted before December 31, 2014 remain enforceable.
Recent efforts to repeal the Michigan Prevailing Wage Act in 1965 have stalled as well. Michigan Senate Bill 3, a one sentence repeal of the prevailing wage law, was passed by the Senate last year. Governor Snyder suggested that he would not approve the repeal because he believes it would hamper his efforts to increase the number of skilled tradesmen in Michigan. Senate Bill 3 stalled in the Committee on Commerce and Trade in the House, while the group titled “Protecting Michigan Taxpayers” led a citizen-initiated petition drive. That petition drive failed last fall when state Board of Canvassers rejected the petitions due to an estimated 41 percent of invalid signatures.
Following the failed petition drive, Protecting Michigan Taxpayers regrouped. It filed a federal lawsuit against the company hired to collect the signatures for what Protecting Michigan Taxpayers characterizes as “the worst petition drive in the history of the State of Michigan,” and began a second citizen-initiated petition drive. The state deadline for submitting signatures on the second petition drive is June 1. If sufficient valid signatures were obtained by the deadline and a Board of Canvassers approves the petition, the Michigan Legislature will have 40 session days to pass an act, which would avoid the petition going on the ballot. Governor Snyder would not have the opportunity to veto it. Otherwise, an approved petition would go on the ballot. While prevailing wages have prevailed for now, the victory may be temporary.