CementA few weeks ago I got to toot our horn about the J.D. Donovan case, whereby the Minnesota Supreme Court held that transportation of supplies to non-work sites is not “work under the contract” pursuant to Minn. R. 5200.1106, and thus not subject to the Minnesota Prevailing Wage Act (MnPWA), Minn. Stat. 177.41-.44.  Unfortunately, it took the Minnesota Supreme Court to determine whether the MnPWA applied to a Minnesota Department of Transportation project – overruling the Minnesota Court of Appeals.  If those learned judges were unable to determine properly whether work was covered, what about the rest of us?!  Unfortunately, the MnPWA and related rules are not as clear as they could be, leading up to cases such as J.D. Donovan v. Minnesota Department of Transportation.

Generally, the prevailing wage is the hourly rate plus fringe benefits, required by law to be paid for each trade or occupation while performing work on qualifying federal, state, or local municipality-funded construction projects.  The federal Davis-Bacon Act (DBA) and each state (often called “Little Davis-Bacon Acts”) may (and often do) define “prevailing wage” and “covered work” differently.  Thus, even if you are not a Minnesota contractor – if you are doing work in Minnesota, you should take care to understand the MnPWA and how it differs from either the DBA or your usual state prevailing wage statue.

What is the Minnesota Prevailing Wage?

Under the MnPWA, the prevailing wage is the hourly basic rate of pay plus the employer’s contribution/cost for fringe benefits (medical or hospital care, pensions on retirement or death, life insurance, disability and sickness insurance, or accident insurance, for vacation and holiday pay, for defraying the costs of apprenticeship or other similar programs, or for other bona fide fringe benefits—but only where the contractor or subcontractor is not required by other federal, state, or local law to provide any of those benefits).  Whether something is a “fringe benefit” is another big issue – one for another post.  The prevailing wage rates for a project should be listed on the determination included with the bidding documents.  What if the bidding documents are missing the rates, or you want to verify?  The current commercial wage rates can be found here. The highway/heavy prevailing wage rates may be found here. Unlike some other state prevailing wage acts, Minnesota’s prevailing wage rates do not change throughout the project (with some extremely limited exceptions such as a correction).

When Does the MnPWA Apply to a Project?

The MnPWA applies to “laborers, workers and mechanics” that erect, construct, remodel, or repair public buildings or other public works, financed in whole or part by state funds.  Keep in mind, this group of workers is more broadly defined than DBA’s “laborers and mechanics”.  The MNPWA does not define “erecting”, “construction”, “remodeling or repairing”, “public work” or what it means to be “financed in whole or part by state funds”.  It doesn’t apply to laborers or mechanics that process or manufacture materials or products, or to the delivery of materials or products by or for commercial establishments which have a fixed place of business from which they regularly supply processed or manufactured materials or products (thank you J.D. Donovan!).

The MnPWA applies when one trade is used and the total project cost is $2,500 or greater or when multiple trades are used and the cost is $25,000 or greater.  Minnesota Rule 5200.1100, Master Job Classifications, lists the various job classifications for the MnPWA, broken out into various job classifications:

  1. Laborers (their code will start with 101 – Laborer, Common)
  2. Special Equipment (code starts with 201 – Articulated hauler)
  3. Power Equipment Operators – Highway and Heavy Projects (code starts with 302 – Helicopter Pilot)
  4. Power Equipment Operations Commercial Projects (code starts with 501 – Helicopter Pilot)
  5. Truck Drivers (code starts with 601 – Mechanic – Welder)
  6. Unit (no codes – refers to all axles)
  7. Special Crafts (code Starts with 701 – Heating and Frost Insulators) *note – this code is where you’ll find the journeymen such as Electricians (707), Ironworkers (712), Plumbers (719), Sheet metal workers (721)

Determining the proper classification is also a whole other post – one I endeavor to write soon.  For example, see above how a Helicopter Pilot can be classified as either a 302 or 501?  Depends not only on the task at hand but the application as well.  And yes, a single person may be classified in more than one classification for a single project.  Another way this gets messy (and yet another post).

Can the MnPWA Apply To Non State-Funded Projects?

Actually, yes.  The Minnesota Municipal Contracting Law (Minn. Stat. 471.345) allows municipalities to adopt prevailing wage requirements (wages, hours, and working conditions), so long as it is agreed to by the contractor before the contract is awarded, and before the furnishing of any labor, material, supplies, or service have taken place.  Minnesota metropolitan cities and counties, such as Minneapolis and St. Paul, often have their own prevailing wage ordinances.  For example, Minneapolis projects are subject to its public works prevailing wage ordinance- Title 2, Chapter 24, overseen by its Contract Compliance Division.  Minneapolis’ ordinance 24.220 – Prevailing wage required states:

“All invitations or request for proposals and all contracts entered into where, pursuant to ordinance or statute, a formal written contract or performance bond is required to which the city is a party, for constructions, alteration and/or repair, including painting, decorating, sodding and landscaping of public buildings, or similar public works of the city and which requires or involves the employment of mechanics and/or laborers shall contain a provision stating that all federal labor standards and prevailing wage provisions applicable to federal contracts in accordance with the federal Davis-Bacon and related acts are applicable to this contract as if fully set forth herein and all contractors and subcontractors shall fully comply with such provisions regardless of any contractual relationship which may be alleged to exist between the contractor or subcontractor and his employees. (83-Or-284, § 2, 11-23-83)”

Similarly St. Paul’s prevailing wage ordinance, called the Little Davis-Bacon City Ordinance, is overseen by St. Paul’s Contract Compliance & Business Development Department.  So, be sure to know what sandbox you are playing in.

Don’t Overlook Contracts with School Districts or on Tribal Property!

Speaking of sandboxes, in addition, while many school district projects are locally funded, the related contracts may require the parties to follow the MnPWA as if state funding was received (thus requiring state prevailing wages to be paid).  Tribal Employment Rights Offices (“TERO”) may also require prevailing wage rates on tribal projects, common in Minnesota for work at casinos.  They commonly refer to them as “TERO wages,” which adopt Davis-Bacon rates or state prevailing wage rates.  Finally, certain private customers (e.g., hospitals, malls) may require contractors and subcontractors to voluntarily adhere to prevailing wage rates, even though no federal or state statute requires the payment of prevailing wages.

So, you can see how easy it is for contractors to unknowingly get into trouble. Some ask if the project is state-funded and upon learning it is not, assume that the MnPWA does not apply.  They bid it at their usual rates (assuming its a non-union contractor) not taking into account that there is a paragraph (or sentence) in the bidding documents referring to the applicability of the MnPWA.  The contractor gets project (of course, because the bid was so low based on merit shop rates) and then is asked for a certified payroll.  Think deer-in-headlights moment. Then we get the call, and try to sort out a remedy.

The takeaway here is that, if there is a shred of doubt whether the MnPWA or other prevailing wage act or ordinance applies, and you are told it does not, get the general and/or owner to put it in writing.  If they refuse, there’s your sign.