Sections 66.0903 (5), 103.49 (3g), 779.14 (1s), and 227.11, Stats.

Sections 66.0903 (5), 103.49 (3g), and 779.14, Stats.

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%.

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 $44,000 and do not apply to any multi-trade public works project for which the estimated cost of completion is below $216,000. The proposed rule will adjust the thresholds from $44,000 to $45,000 for a single-trade project and from $216,000 to $221,000 for a multi-trade project based on a 2.25% increase in construction costs between December 2006 and December 2007.

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. The proposed rule will adjust these thresholds to reflect a 5.78% increase in construction costs from December 2005 to December 2007.

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.

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.

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.

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 is not aware of a performance bond requirement for public works contracts in Iowa.

The rule affects small businesses as defined in s. 227.114 (1), Stats., but does not have a significant economic impact on a substantial number of small businesses.

The Department's Small Business Regulatory Coordinator is Elaine Pridgen, elaine.pridgen@dwd.state.wi.us, (608) 267-9403.

Many construction companies are small businesses. 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.

Under the rule, a state agency or local governmental unit contracting for the construction of a single-trade public works project that costs more than $44,000 but less than $45,000 or a multi-trade project that costs more than $216,000 but less than $221,000 is not covered by the prevailing wage requirement.

The adjustment of the threshold for performance bonds has a negligible effect on governmental bodies. If thresholds were not adjusted for inflation, public works contractors would have been required to get performance bonds on smaller projects and these costs would have been likely added to the project bid.