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January 19, 2010Client Alert

Budget Bill Brings Major Prevailing Wage Law Changes

When Wisconsin’s 2009-2011 Budget Bill was signed into law by Governor Doyle on June 29, 2009, it brought with it major changes to the state’s prevailing wage law through the enactment of 2009 Wisconsin Act 28. Those changes went into effect January 1, 2010 and apply to the following ongoing and future projects:

"Public Works" Projects – Prevailing wage now applies to any public works project (i.e., construction projects performed for local government units, state agencies or other public owners) with an estimated cost in excess of $25,000.

Publicly Funded Private Projects – In the past, Wisconsin’s prevailing wage laws only applied to public works projects. Now, prevailing wage law also applies to private projects in which the developer, investor or owner receives $1,000,000 or more in direct financial assistance from a local governmental unit. “Direct financial assistance” includes, for example, TIF financing. There are some exemptions to this rule, such as public funding for certain affordable housing projects.

Infrastructure Associated with Private Development – To clarify past confusion regarding the applicability of prevailing wage, the prevailing wage laws now expressly apply to road, street, bridge, sanitary sewer, and water main projects in which the completed road, street, bridge, sanitary sewer or water main is acquired by, or dedicated to, a local governmental unit for ownership or maintenance by the local governmental unit.

Turnkey Facilities – Similarly, the prevailing wage laws also now apply to turnkey construction projects, where a facility is constructed for a private owner, developer or investor, but the completed facility is acquired, leased or dedicated to a local governmental unit or state agency.

There is no grandfathering provision, so if any of the foregoing applies to your ongoing project, you are required to comply with the new regulations.

There also are new reporting requirements for contractors and subcontractors on any of the foregoing projects. In the past, contractors and subcontractors performing work on a prevailing wage project were required to keep payroll records and to allow inspection of such records. Now, contractors working on a prevailing wage project are required to electronically submit to the Department of Workforce Development (“DWD”) a certified record on the forms provided by DWD. This information is required to be submitted every month during the project by both contractors and subcontractors. If the applicable contractor’s employees are working under a collectively bargained agreement (“CBA”), and the CBA rates are at least as high as the prevailing wage rates applicable to the project, the contractor is not required to submit monthly payroll reports for those employees, but is required to submit certain information regarding the CBA and the covered employees working on the project.

The penalties for failing to comply with Wisconsin prevailing wage law include, but are not limited to, payment of unpaid wages and liquidated damages to applicable employees, a fine of not more than $200 a day or imprisonment for not more than six months or both (each day that a violation continues is a separate offense), and debarment from performing public projects.

For more information regarding Wisconsin’s new prevailing wage laws, and how those laws affect your business, please contact one of the authors of this alert or your Michael Best attorney.

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