Michigan’s prevailing wage law governs the wages paid to all construction employees working on projects paid for by state government. The statute’s language even covers projects undertaken by local governments that use state financial resources, no matter how small the state’s financial contribution. The vast majority of public school construction is governed by the prevailing wage law, even when all funds are provided by the local school district, because the state often serves as a guarantor for construction bonds issued by school districts. Michigan courts have ruled that this minimal state support for public school construction is enough to require the application of prevailing wages.
The statute requires that any contract for construction involving state funds must provide, "[T]he rates of wages and fringe benefits to be paid to each class of mechanics by the bidder and all of his subcontractors, shall be not less than the wage and fringe benefit rates prevailing in the locality in which the work is to be performed." Prevailing rates are calculated by the Wage and Hour Division of the state Department of Labor and Economic Growth. When soliciting bids for construction, the state agency or local government is required to incorporate the appropriate rate schedule in its bid specifications. Assuming that the bidding is completed in a timely manner, the rates listed in the specifications will apply throughout the length of the project. A contractor that fails to pay the wages called for by the WHD may be charged with a misdemeanor.* In addition, the state agency or local government that authorized the construction may rescind the construction contract and bring in another contractor to finish the project, with the original contractor being liable for any additional costs.
* Generally, criminal charges are reserved for employers that have failed to post prevailing rate tables. The more common penalty for violations is to hold back final payment for work done until back wages are paid off.