Analysis Prepared by the Department of Workforce Development
Explanation of agency authority. The prevailing wage laws require that when a state agency or local governmental unit contracts for the erection, construction, remodeling, repairing, or demolition of a public works project it must obtain a prevailing wage rate determination from the Department of Workforce Development and require that the contractors and subcontractors on the project pay their employees in accordance with those wage rates. Sections
66.0903 (5) and
103.49 (3g), Stats., set initial estimated project cost thresholds for application of the prevailing wage rate requirements and direct the Department to adjust the thresholds each year in proportion to any change in construction costs since the thresholds were last determined.
Section
779.14, Stats., sets payment and performance assurance requirements that apply to contracts for the performance of labor or furnishing of materials for a public improvement project or public work. Section
779.14 (1s), Stats., requires the Department to biennially adjust the thresholds for various requirements in proportion to any change in construction costs since the last adjustment if the adjustment to be made would not be less than 5%.
Summary of the proposed and emergency rule. Section
DWD 290.155 (1) currently provides that the prevailing wage rate requirements do not apply to any single-trade public works project for which the estimated cost of completion is below $41,000 and do not apply to any multi-trade public works project for which the estimated cost of completion is below $200,000. This proposed and emergency rule adjusts the thresholds from $41,000 to $43,000 for a single-trade project and from $200,000 to $209,000 for a multi-trade project based on a 4.639% increase in construction costs between December 2004 and December 2005.
Chapter
DWD 293 provides adjusted thresholds for various payment and performance assurance requirements that apply to contracts with state or local governments for the performance of labor or furnishing of materials for a public improvement or public work. This rule adjusts these thresholds to reflect a 12.75% increase in construction costs from December 2003 to December 2005.
Summary of analytical methodology. Sections
DWD 290.15 and
293.01 provide that the Department will adjust the thresholds on the basis of the change in the construction cost index as published in the Engineering News-Record, a national construction trade publication. Thresholds are rounded to the nearest thousand.
Comparison to federal law. The threshold for application of the federal prevailing wage law is a contract greater than $2,000. The threshold for application of the federal contractor payment and performance bond requirements is $100,000. These thresholds are in statute and are rarely adjusted.
Comparison of prevailing wage law thresholds in adjacent states. Minnesota has a statutory threshold of $2,500 for a single-trade project and $25,000 for a multi-trade project. Illinois does not have a threshold in its prevailing wage law. The law covers public works projects and defines public works projects as projects financed under various other specified laws. Michigan does not have a threshold in its prevailing wage law. The law covers projects that must be bid and relies on other agencies to determine the thresholds for what projects must be bid. Iowa does not have a prevailing wage law.
Comparison of payment and performance bond thresholds in adjacent states. Minnesota has a public contractors' performance and payment bond requirement that applies to a contract that exceeds $75,000. Illinois requires a bond if a contract for a public work exceeds $5,000. Neither state appears to have a mechanism for adjustment of the thresholds, other than statutory amendment. Michigan has a performance bond requirement without a clear statutory threshold. The Department did not find a performance bond requirement for public works contracts in Iowa.
Effect on small business. The rule affects construction companies, many of whom are small businesses. No reporting, bookkeeping, or other professional skills are required for compliance with the rule.
Analysis used to determine effect on small business. The adjustment of the thresholds for application of the prevailing wage and payment and performance bond requirements prevent these provisions from affecting more and more public works projects over time due solely to the effects of inflation.
Fiscal Impact
Under the proposed rule, a state agency or local governmental unit contracting for the construction of a single-trade public works project that costs more than $41,000 but less than $43,000 or a multi-trade project that costs more than $200,000 but less than $209,000 will not be covered by the prevailing wage requirement.
Contact Information
The proposed rules are available at the web site
http://adminrules.wisconsin.gov by typing “prevailing wage" in the search engine. This site allows you to view documents associated with this rule's promulgation, register to receive email notification whenever the Department posts new information about this rulemaking order, and submit comments and view comments by others during the public comment period. You may receive a paper copy of the rule by contacting:
Elaine Pridgen
Office of Legal Counsel
Dept. of Workforce Development
P.O. Box 7946
Madison, WI 53707-7946
(608) 267-9403
Written Comments
Written comments on the proposed rules received at the above address, email, or through the
http://adminrules.wisconsin.gov web site no later than February 16, 2006, will be given the same consideration as testimony presented at the hearing.
Small Business Regulatory Coordinator
Jennifer Jirschele
(608) 266-1023
