Prevailing Wage Update

Municipal Law Alert, July 2009

Wisconsin’s prevailing wage law has existed in one fashion or another since 1933. Recently, there have been two important changes to the prevailing wage law, which are likely to increase the number of projects that are covered by the law. This article gives a summary of those changes.

Essentially, the prevailing wage law (Wis. Stat. § 66.0903) requires municipalities that enter “public works” contracts that exceed a certain dollar amount to require that the contractors and subcontractors who work on the project pay the “prevailing wage” to their employees. The “prevailing wage” is determined by the state Department of Workforce Development (DWD). The law applies to contracts “for the erection, construction, remodeling, repairing or demolition of any project of public works, including a highway, street or bridge construction project.” Previously, the law applied to projects that exceeded $234,000 for multi-trade projects and $48,000 for single-trade projects. These thresholds had been adjusted upward over the years.

The Governor’s budget had proposed several important changes to the law. The first is a new threshold of $2,000 – prevailing wage laws would apply to every public works project over $2,000. However, the Joint Finance Committee recommended a threshold of $25,000, and that $25,000 threshold was approved when the governor signed the budget bill.

A second development over the past year has concerned private developers who build infrastructure, such as streets or sewers, that eventually are turned over to a municipality. In August of 2008, the DWD issued several determinations about how the prevailing wage law applied under those facts: if the public work would have been subject to prevailing wages had the municipality contracted for it directly and if the public work will be turned over to the municipality, then the public work within a private development project is subject to the prevailing wage law.

The City of Chippewa Falls and several other municipalities appealed the DWD determination. In June, the DWD upheld its decision against Chippewa Falls.

Further, in the Governor’s budget bill, the Department’s position was codified. The Joint Finance Committee recommended that the prevailing wage law apply to any streets, bridges, sanitary sewers, and water mains constructed by private developers and turned over to a municipality for public ownership. These changes become effective on January 1, 2010.

The bottom line is that municipalities can expect the prevailing wage law to apply to many more public works contracts and private developments than in the past.

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