Prevailing Wage Partially Repealed: The Hard Cold Facts

August 6, 2015

Wisconsin’s recently passed budget act included provisions substantially scaling back prevailing wage in Wisconsin.

Prevailing Wage: What Is It?

Wisconsin’s prevailing wage law was enacted about 80 years ago, during the depression. The stated purpose of prevailing wage was to set minimum wages for trades on public projects to prevent publicly-funded projects to be diverted away from local construction workers, and have the work performed by lower-paid workers. The prevailing wage rates relate to the location of a project. For example, an electrician in Madison on a public project may receive at least $32.00 an hour, while one in a rural community may receive at least $29.00 an hour. Federally-funded projects are subject to prevailing wage under the Davis-Bacon Act of 1931. Davis-Bacon wage rates were similar, but not identical, to those previously established by the Wisconsin Department of Workforce Development (“DWD”) for Wisconsin state and local publicly-funded projects. Critics of prevailing wage argue it artificially inflates the cost of public projects.

Applicability and Non-applicability/exceptions and dollar caps

Prevailing wage now only applies to any public works project for the state or a state agency. It does not apply to a single-trade project less than $48,000 or a multiple-trade project under $100,000, public highway, street, or bridge projects, and other non-applicable sections. Prevailing wage does not apply to local public projects, unless there is a federal funding component.

Repeal of applicability to local governmental units; DWD authority repealed

The budget act repealed sections 66.0903(2) through (12) of the Wisconsin Statutes. These sections applied the prevailing wage laws to a variety of local governmental unit projects and gave the DWD authority to determine prevailing wage rates.

Prevailing Wage Rate determined by federal statute; DWD authority repealed

The act defines “prevailing wage rate” as the rate determined by the U.S. Department of Labor (Davis-Bacon). The act repealed certain statutes which originally gave the DWD authority to determine and enforce prevailing wage rates. Significant changes include the repeal of section 103.50(3)-(5) of the Wisconsin Statutes, which authorized the DWD to certify prevailing wage rates.

Language regarding statewide concern to reflect market conditions

The act adds language that it: “shall be construed as an enactment of statewide concern for the purposes of facilitating broader participation with respect to bidding on projects of public works, ensuring that wages accurately reflect market conditions, providing local governments with the flexibility to reduce costs on capital projects, and reducing spending at all levels of government in this state.” The act deleted the mention of a statewide concern for providing uniform prevailing wage rates.

Effective Dates of Partial Repeal

The changes take effect on January 1, 2017. The act also authorizes the Department of Administration to promulgate rules necessary to ensure compliance.

The Future

Because the law does not take effect until 2017, that may provide the opportunity for a total repeal, before the consequences of the partial appeal are known. Regardless of the outcome of prevailing wage, and the impact it may have on union contractors and union workers, construction companies and workers historically have weathered the storm of regulatory changes and survived. Concerned contractors should contact Axley’s Construction Law Team to discuss potential business options.