Michigan Prevailing Wage: Coverage, Rates, and Contractor Penalties

Michigan’s prevailing wage law requires contractors on state-funded construction projects to pay workers no less than the locality’s prevailing wage and fringe benefit rates for their trade. The requirement was restored by Public Act 10 of 2023 and took effect on February 13, 2024.¹ Along with the wage floor, the law brings in contractor registration, certified payroll reporting, and registration-based penalties for contractors that don’t comply.

Which Projects Are Covered

The law applies to “state projects”: construction, repair, demolition, or improvement of public buildings, schools, bridges, highways, and roads, when the work is authorized by a public contracting agent and the state sponsors or finances it in whole or in part.² A project doesn’t need to be entirely state-funded. Partial state financing plus public authorization is enough to bring the wage rules in.

A 2024 amendment extended coverage to energy facility projects, defined as new construction, completion, demolition, major alteration, or repowering of an energy facility.³

One important boundary: projects already required to pay federal Davis-Bacon rates set by the U.S. Secretary of Labor are exempt from the Michigan act.⁴ The same exemption applies to contracts that already include wage schedules matching local prevailing rates set through collective bargaining. So on a highway project with federal money and federal wage determinations, the federal rate governs and the Michigan act steps aside. Where a project has no state or federal funding, neither law applies.

Who Counts as a Covered Worker

The statute uses the term “construction mechanic”: any skilled or unskilled mechanic, laborer, worker, helper, assistant, or apprentice working on a state project.⁵ It doesn’t cover executive, administrative, professional, office, or custodial employees. Physical construction work on a covered project brings the worker under the wage rules; back-office work doesn’t.

The Michigan Department of Labor and Economic Opportunity publishes trade classifications covering electricians, carpenters, plumbers, bricklayers, cement masons, laborers, and power equipment operators for highway and commercial construction, among others.⁶ Placement in a classification is based on the work actually performed, not the job title on the payroll.

Apprentices

Apprentices are covered, but the lower apprentice-specific rate only applies when the apprentice is enrolled in a registered apprenticeship program approved by the U.S. Department of Labor or a state apprenticeship agency. An unregistered apprentice may be owed the full journeyman rate for that classification regardless of experience.

Registration Before Bidding

A contractor cannot bid on or perform work on a state project without a state project registration, and cannot list an unregistered subcontractor on a bid. Subcontractors need their own registration to work or contract on a state project.⁴ Copies of the contractor’s registration and each known subcontractor’s registration go with every bid submission.

The registration is also the state’s main lever for enforcement. Suspend or revoke it and the contractor is locked out of public work.

How Rates Are Set

Before a contracting agent advertises a project for bids, the commissioner determines the prevailing wage and fringe benefit rates for every construction trade the project will use, and those rates get written into the bid specifications.⁷ Every bidder starts from the same labor cost floor.

Rates are locality-specific, so a carpenter’s rate in Wayne County will not match the rate in Marquette County. If a contract isn’t awarded within 90 days of the original rate determination, the commissioner issues updated rates before the contract can move forward.⁷

Base Wages, Fringe Benefits, and Overtime

Each trade’s rate has two parts: a base hourly wage and a fringe benefit rate. The fringe covers employer contributions toward things like health insurance, pension, paid time off, life insurance, and training.⁸ A contractor can meet the fringe obligation by making actual benefit contributions, by paying the equivalent as extra cash wages, or by combining both.

The base-versus-fringe split matters most at overtime. When a worker exceeds 40 hours in a week, the overtime premium is calculated on the base hourly rate only. Cash paid in lieu of fringes is not part of the overtime calculation.⁹ If the base is $35 and fringes add $15, overtime is figured on the $35. Getting that wrong is a common payroll mistake on these jobs.

One tax note worth flagging: fringe contributions paid directly into a qualified plan such as a health or pension fund are generally excluded from the worker’s taxable income, but fringes paid out as extra cash wages are taxable.¹⁰ Same dollar value, different tax result.

Certified Payroll and Records

Contractors and subcontractors must keep certified payroll records for at least three years and transmit them within 10 days after each pay period ends.¹¹ The statute directed the commissioner to build an online database for electronic submission.

For every construction mechanic, each record must include:¹¹

The trade classification matching the work performed
Skill level, such as apprentice or journeyman
Hours worked each day, with start and end times
Hourly base rate, overtime rate, and fringe benefit rate
Gross wages for the period

When a contractor submits payroll, an electronic attestation confirms the records are complete and accurate and that the wage and fringe rates meet or exceed the required amounts. The attestation warns that false submissions can lead to revocation or suspension of state project registration or denial of a future application. The database excludes home addresses, phone numbers, and Social Security numbers to protect worker privacy.

Contractors also have to post the applicable prevailing wage and fringe benefit rates in a conspicuous spot on the jobsite so workers can see what they should be earning.

If You Think You’ve Been Underpaid

Workers can file a complaint with the Michigan Department of Labor and Economic Opportunity through an online portal or by downloading a form and submitting it by mail.¹² An investigator reviews the claim for completeness and jurisdiction before opening a formal investigation.

Filing a complaint through the state process may limit the ability to pursue the same claim in a separate lawsuit; the portal itself warns about this. Personal records of hours worked, tasks performed, and pay received are useful, because gaps between what a worker documents and what a contractor certified are often the clearest evidence of underpayment.

Penalties for Contractors

Enforcement runs through the registration system. Contractors who submit false certified payroll records face suspension or revocation of their state project registration, which cuts off state work.¹¹ The statute also addresses contract termination and contractor liability for failing to pay the required wages and fringes.

On projects governed by Davis-Bacon rather than the Michigan act, the federal framework applies instead. Federal labor standards violations can result in debarment from federal contracts for up to three years, along with back-pay orders and liquidated damages on overtime violations.¹³

1
Michigan Legislature. Michigan Compiled Laws – Act 10 of 2023 – Prevailing Wages on State Projects
2
Michigan Legislature. Michigan Compiled Laws 408.1101 – Definitions
3
Michigan Legislature. Michigan Public Act 110 of 2024
4
Michigan Legislature. Michigan Compiled Laws 408.1102 – Contracts for State Projects
5
Michigan Legislature. Michigan Public Act 110 of 2024 – Section 408.1101
6
Michigan Department of Labor and Economic Opportunity. Prevailing Wage Job Classifications
7
Michigan Legislature. Michigan Code 408.1103 – Prevailing Wage and Fringe Benefit Rates
8
Michigan Legislature. Michigan Compiled Laws 408.1101 – Prevailing Wages on State Projects
9
U.S. Department of Labor. Fact Sheet 66E – Compliance with Fringe Benefit Requirements
10
Internal Revenue Service. Employer’s Tax Guide to Fringe Benefits
11
Michigan Legislature. Michigan Compiled Laws 408.1122 – Certified Payroll Records
12
State of Michigan. Before Filing a Wage and Benefit Complaint
13
U.S. Department of Labor. Fact Sheet – The Davis-Bacon and Related Acts