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A Better Partnership
May 29, 2014

COA finds that a prevailing wage ordinance is a valid exercise of municipal power when it does not conflict with the Constitution or state law

In Associated Builders and Contractors v City of Lansing, the Michigan Court of Appeals held that the City of Lansing’s (“Lansing”) prevailing wage ordinance was a valid exercise of municipal power because it did not conflict with the state Constitution or state law.  The Court of Appeals determined that the police power of Lansing (as a home rule city) is “of the same general scope and nature as that of the State.”  Once the police power of Lansing was established, the Court further found that the prevailing wage ordinance was constitutional and was not preempted by state law.
In this case, the plaintiff challenged a prevailing wage ordinance (the “ordinance”) enacted by Lansing, arguing that it was unconstitutional and beyond the city’s scope of power.  The trial court granted the plaintiff’s request for summary disposition and determined that Lansing did not have the authority to enact the ordinance, citing the Michigan Supreme Court’s opinion Attorney General, ex rel Lennane v City of Detroit, 225 Mich 631; 196 NW 391 (1923).  In Lennane, the Michigan Supreme Court considered whether the City of Detroit could enact a minimum prevailing wage ordinance that was consistent with the Constitution of 1908 and the Home Rule Act (now known as the Home Rule City Act MCL 117.1a.).  In that case, the Michigan Supreme Court found the ordinance to be invalid and concluded that “cities possessed a very narrow scope of inherent police power,” and that neither the Constitution nor the Home Rule Act granted cities general exercise of police power.  In addition, the Michigan Supreme Court determined that the city’s attempt to set wage rates was invalid because the city was interfering with a matter of state concern.  In Associated Builders and Contractors, the trial court concluded that it was bound by Lennane.
The Michigan Court of Appeals disagreed with the trial court, and found that Lennane was inapplicable because “the reasoning employed in Lennane has subsequently been rejected by amendments to our Constitution and by changes in our caselaw.”  In particular the Court of Appeals pointed out that since Lennane, the Michigan Supreme Court has interpreted the authority granted to cities “in a much more liberal manner.”  The Court cited two constitutional amendments, namely, Const 1963, art 7, § 22, which provides that cities have power to adopt ordinances relating to its municipal concerns, and also Const 1963, art 7, § 34, that adds that the provisions of the Constitution concerning cities “shall be construed in their favor.”  The Court of Appeals then discussed Michigan Supreme Court cases where the Michigan Supreme Court recognized that cities possess a police power of the same scope as possessed by the state.  Because of these changes in the controlling authority, the Court of Appeals rejected the decision in Lennane and proceeded to determine whether Lansing’s ordinance conflicted with the state Constitution or state law.
The Court of Appeals held that the ordinance was constitutional, and thus a valid exercise of Lansing’s police power.  The Court reasoned that the Constitution provides home rule cities “broad powers to enact ordinances for the benefit of municipal concerns,” Rental Prop Owners Ass’n of Kent Co v Grand Rapids, 455 Mich 246, 253; 566 NW2d 514 (1997), and that the police power granted to cities permits the control of wages and salaries for employees of the city as well as other matters of financial concern.   Next, the Court of Appeals determined whether the ordinance was preempted by state law by either 1) directly conflicting with a state statute or 2) by trying to regulate a field that is completely occupied by a state statute.  In finding that there was no preemption by state law, the Court of Appeals resolved that there were no directly conflicting state statutes that prohibited cities from setting prevailing wage rates.  It also decided that the ordinance was not field preempted by applying four factors as provided by Maple BPA, Inc v Bloomfield Charter Twp, 302 Mich App 505, 511; 838 NW2d 815 (2013). 
In finding that Lansing’s prevailing wage ordinance was valid, the Court of Appeals reversed the decision of the trial court, and remanded the case for entry of summary disposition in favor of Lansing.
Chief Judge Pro Tem David H. Sawyer filed a dissenting opinion in this case because he would find the ordinance invalid under Lennane, noting that the Michigan Court of Appeals is required to follow the decisions of the Michigan Supreme Court.  He also argued that the changes in the state Constitution and caselaw were not sufficient enough to warrant the Court of Appeals’s ignoring of Lennane

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