News Story

County Project Imposes Illegal Union Wage Mandate On Bidders

Contractors: ‘See you in court’ - and it could get expensive

A group of nonunion construction firms has mounted a challenge to Muskegon County’s policy of requiring union-level wages on major building projects it financially supports. The group is threatening to file a lawsuit if the policy is applied to bids for work on an upcoming $17 million convention center in the city of Muskegon.

The West Michigan chapter of the Associated Builders and Contractors trade group contends that the policy violates state restrictions on prevailing wage requirements.

Norm Brady, president of the ABC chapter, said, “The law is clear. Local governments can’t get in between the employer/employee relationship. They cannot require (prevailing wage) any longer.”

Brady said his organization is in talks with county officials to remove the requirement from its requests for proposals on the convention center, which are expected to be issued shortly.

A March 26 letter from ABC’s attorney to County Administrator Mark Eisenbarth and the county board issued a warning. Sending out the bid requests without removing the prevailing wage provision, ABC said, “will result in the filing of a complaint seeking all appropriate and available legal relief and damages. This may lead to significant financial liability for the County.”

ABC affiliates in Michigan were behind last year’s successful effort to repeal Michigan’s prevailing wage law for state-funded projects, collecting more than 380,000 petition signatures on an initiative that was subsequently adopted by the Legislature. Prevailing wage laws prohibit government entities from awarding construction contracts to companies that don’t pay their employees wages and benefits at rates that unions represent as “prevailing” for various job classifications within a geographic area area.

But Brady said he believes the county is relying on a prevailing wage policy from 2013, and subsequent alterations to the policy, which tied local wages to federal guidelines after the state ceased calculating prevailing wage rates. Doing so is illegal, he said.

In an April 19 email, Eisenbarth responded to a series of questions about the prevailing wage policy and ABC’s challenge. “These are all issues that the County is currently reviewing and ... therefore I am unable to provide further comments at this time.”

County Commissioner Zach Lahring said he believes he is in the minority on the county board in supporting an end to the prevailing wage policy. Requiring union-level wages results in higher costs and shuts out competent, nonunion contractors, he said.

Lahring, however, said he was uncertain whether the requirement could be removed from the convention center project, which is technically a city of Muskegon proposal being financed with bonds guaranteed by the county.

The county made its financial backing of the project contingent on requests for proposals including a prevailing wage requirement, said Muskegon City Manager Frank Peterson. He said the city is aware of, “but not taking sides,” in the dispute between ABC and the county. Commissioner Lahring said the county’s policy should be revoked in any event because retaining it will “adversely affect the county and its taxpayers (on a multitude of construction projects) over the next ten years.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.