On July 23, Senate Bill 571 (“SB 571” or the “Amendment”) was signed into law, adding registration requirements and the inclusion of both public and private energy facility projects. The Amendment is effective 90 days from the end of this year’s Legislative session, tentatively scheduled for Dec. 19, though last year’s ended on Nov. 14. This Amendment showcases the Michigan Legislature’s continued push to utilize prevailing wage law to regulate public and renewable energy projects. These changes do not change compliance with the Davis-Bacon Act, applying to federally funded or assisted projects exceeding $2,000.

SB 571 amends the Prevailing Wage Act, passed on March 24, 2023, 2023 PA 10 (MCL 408.1101 et seq.) (“the Act”), which restored prevailing wage requirements that had been repealed by 2018 PA 171. As set out in our previous article, the Act became effective on Feb. 13, applying to certain state-funded projects with a bid acceptance date, on or after that date.

SB 571 – Amending the Michigan Prevailing Wage Act

Once the Amendment is effective, a “state project” can be either:

1. New construction, alteration, repair, installation, painting, decorating, completion, demolition, conditioning, reconditioning, or improvement of public buildings, schools, works, bridges, highways, or roads that are both:
   1. Authorized by a public contracting agent, and
   2. Sponsored or financed in whole or in part by this state.
2. Or an energy facility project.

A “public contracting agent” is an officer, school board, a state board or commission, or state institution supported in whole or in part by funds from this state, authorized to enter a contract for a state project or to perform a state project by the direct employment of labor. Contracting agents that are outside state government can satisfy the requirements of “sponsored” or “financed” in a number of ways, including having the state act as surety for payment of bonds issued to finance the project. Meanwhile, an “energy facility project” is the new construction, completion, demolition, major alteration, or repowering of a public or private energy facility.

The Addition of Energy Facility Projects to “State Projects” Under the Act

Under the Amendment, “energy facilities” include energy storage facilities, solar energy facilities, and wind energy facilities, but exclude fossil fuel storage and power-to-gas storage that directly uses fossil fuel inputs. Additionally, an energy facility may be located on more than one parcel of property, including fragmented parcels that share a single point of interconnection to the power grid.

 State Project Registration Required for State Projects

To obtain a state project registration or renew an existing registration, a contractor must submit an application to the Department of Labor and Economic Opportunity (“MDLEO”) along with a fee, valid for one year. In its application, the contractor must include its: name, address (including of the in-state records custodian, if applicable), phone number, type of legal entity, members with a financial interest in the company, tax identification number, unemployment insurance identification number, and a statement with documentary support that the contractor is compliant with all applicable laws, including, but not limited to, holding every license, registration, certificate, or other similar authorization required by law.

Without a state project registration, a contractor may not submit or be listed on a bid, enter an agreement, or perform work on a state project. If in violation of the Act, the contractor and subcontractor will be held jointly and severally liable.

Certified Payroll

Within 10 days of the end of the pay period, the contractor must transmit its certified payroll records for the preceding pay period to the contracting agent, or after a year from the enactment of the Amendment to the Act, to the database created by the MDLEO. A contractor is not required to submit certified payroll under the Amendment if already required to submit payroll to the Department of Transportation, or if performing solely routine maintenance or repair to an energy facility project.

The database to be created by MDLEO within a year of the passage of the Amendment will include job classifications, the construction mechanics’ skill level, gross wages paid, number of hours, time periods worked, hourly wage rate, hourly overtime wage rate, and the hourly fringe benefit rate.

Penalties

MDLEO may suspend or revoke a contractor’s state project registration if the contractor significantly or repeatedly violated the Act or another law. To enforce the Amendment against the contractor, MDLEO must also have promulgated an effective rule establishing procedures for suspending or revoking a state project registration. A person who violates the Act is also subject to a civil fine of not more than $5,000.

Proper guidance from a knowledgeable professional can help contractors reduce risks and potential penalties when dealing with Prevailing Wage Act issues.