Changes to Prevailing Wage Laws in Wisconsin
Wisconsin has traditionally had three separate prevailing wage laws covering (1) projects bid or negotiated by a local governmental unit, (2) projects bid by a state agency, and (3) state highway and bridge projects bid by the Wisconsin Department of Transportation (WisDOT). Prevailing wage rates are basic hourly rates of pay, plus contributions toward health and welfare benefits, vacation benefits, pension benefits, and other economic benefits, paid for workers in the same class of labor in the area. Prevailing wage laws are aimed at ensuring the payment of wages representative of the wages paid to workers on similar private projects in the area to employees working on public works projects.
The 2015-17 Wisconsin State Budget (2015 Wisconsin Act 55) modified Wisconsin’s prevailing wage laws. The modifications became effective January 1, 2017.
First, the 2015-17 budget bill repealed Wisconsin’s prevailing wage law for local governmental units, such as villages, towns, cities, school districts, and sewerage districts, effective January 1. Local governmental units are also prohibited from passing any ordinance or other enactment requiring payment of prevailing wages.
Note, however, that if a local governmental unit issued a request for bids before January 1, 2017, for a public works project that is subject to bidding or entered into a contract before January 1 for a public works project that is not subject to bidding, those projects are still subject to current prevailing wage law through the life of the contract, even if the work extends into 2017 and subsequent years. Projects with prevailing wage determinations issued before 2017 also continue to be subject to current prevailing wage law through the life of the contract. Prevailing wage requirements for these types of projects will continue to be enforced by the Wisconsin Department of Workforce Development (DWD).
Second, although state prevailing wage law will still apply to state agency and state highway projects, prevailing wage requirements for new public works projects for state agencies bidding on or after January 1, 2017, will be administered and enforced by the Wisconsin Department of Administration’s (DOA) Division of Facilities Development rather than the DWD. The hours of labor will be determined by Wisconsin statute, and the prevailing wage rates applicable to state building projects will be the rates issued by the U.S. Department of Labor (DOL) under the Davis-Bacon Act (DBA). WisDot will continue to administer and enforce prevailing wage law for state highway projects.
As a result of these changes, the Prevailing Wage Rate Determinations published in the bidding documents will look different. The prevailing wage rates determined by the DOL are applicable to areas instead of a single county and are based on trade classifications for the same or the most similar trade or occupation in the area in which the project is situated. Classifications will be different from those previously published by the DWD and will cover broader areas.
The impact of the changes to the prevailing wage laws remains to be seen. In the meantime, contractors working on local governmental projects must keep in mind any obligations they may have under bids and contracts that predate January 1, 2017. Contractors doing business on state building projects will need to adapt to the transition from DWD to DOA oversight as well as to differences in the prevailing wage rate determinations incorporating the DBA rates.
This article, slightly modified to note recent updates, was featured in the February 2017 issue of the Wisconsin Employment Law Letter, which is co-edited by Axley Brynelson Attorneys Saul Glazer and Michael Modl and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.