Construction trade association sues state over Whitmer's 'unilateral' prevailing wage policy

Beth LeBlanc
The Detroit News

A trade association is suing the state of Michigan over Gov. Gretchen Whitmer requiring union-rate wages be paid to the employees of contractors working for the state on projects costing more than $50,000.

Associated Builders and Contractors of Michigan, which includes union and non-union members, argued in its Thursday complaint in the Court of Claims that Whitmer cannot require the wage rate of its contractors because the state in 2018 repealed the so-called prevailing wage law. 

"The governor has seemingly revived this repealed procedure, but has not done so by either enforcing legislation or through the procedures of the Administrative Procedure Act," wrote ABC of Michigan, represented by the Mackinac Center Legal Foundation.

"The policy has been implemented by unilateral edict from the governor's office. This is not a proper method of governance and is not binding on plaintiff."

Whitmer announced the new policy during a Lansing press conference in October as a "pro-worker" effort that would have economic benefits in Michigan. 

ABC of Michigan, which represents about 900 construction and construction-related firms, vowed in October to take the policy to court and argued it was a way for Whitmer to make amends with unions she'd ruffled over her opposition to Enbridge's Line 5 pipeline

ABC of Michigan President Jimmy Greene said Thursday that his members will have to "change their entire cost structure" to accommodate the change in state policy.

“The state is under no obligation to use the lowest price, but they should at least know what the real cost of construction is," Greene said. "Instead, it has decided to pick winners and losers based on politics.”

The Mackinac Center called Whitmer's order requiring prevailing wage "her latest act of unilateral governance."

“These actions directly violate the separation of powers and circumvent the will of the people as expressed only four years ago," said Steve Delie, director of labor policy for the Midland-based conservative think tank. 

Union wages tend to be higher, driving up compensation levels for contractor employees as well as state construction costs. However, state contractors already are required to pay the prevailing wage on some projects that include federal funding with a prevailing wage requirement, such as road construction work. 

The prevailing wage repeal was passed by the Legislature in 2018 after a three-year fight over the law. Former Republican Gov. Rick Snyder opposed a repeal of the prevailing wage law so organizers instead collected signatures through the petition initiative process to repeal it. The GOP-led Legislature adopted the initiative instead of letting it go on the ballot, which allowed them to avoid Snyder's veto.

Whitmer's October reinstatement of prevailing wage was not completed through any official order or directive, but solely through a press release directing the state to begin implementing prevailing wage, the complaint said.

The Department of Technology Management and Budget later posted on its website that starting March 1, 2022, prevailing wage would be required of contractors and state contractors working on state construction projects. 

The Mackinac Center submitted Freedom of Information Act requests to the department in October and March asking for any directives from Whitmer regarding prevailing wage, according to the complaint.

The center recovered no formal directive from Whitmer to the department but found the department was instructed by a lawyer for the governor's office to communicate with the attorney general's office regarding the implementation of the policy.

ABC of Michigan argued in its Thursday complaint that the implementation of the policy violated the separation of powers, in as much as it usurped the authority of the Legislature, and the Administrative Procedures Act when it wasn't implemented using the typical rule-making process.

"The DTMB cannot simply do by developing contract forms what had previously required legislative enactment," the complaint said. 

"The DTMB is enforcing requirements which are not expressly or impliedly mandated or authorized by constitution, statute, valid rule or other law."

Craig Mauger contributed to this report.