Responding to MDOT “Certified Payrolls, Deficient Notice 1”

All MITA POA contractors who received the MDOT “Certified Payrolls, Deficient Notice 1” as a prime contractor or a subcontractor will soon be required to submit their response to that notice inquiry as the 30-day response deadline approaches. Linked below is a sample response letter we are recommending that all MITA POA contractors use as their response to their project engineer.

This sample letter lays out the facts about our contractors’ actions related to their prevailing wage compliance and the egregious and unlawful actions of the trustees of the fringe benefit funds to return the subject fringe benefit contributions. The sample letter provides a compilation of the legal initiatives executed to attempt to legally resolve the unprecedented actions of the trustees of the fringe benefit funds, and it provides a brief summary of MITA’s plan to seek U.S. Department of Labor (USDOL) approval of a “guaranteed escrow” concept as a “qualified” plan under the Davis-Bacon Act. USDOL approval of a guaranteed escrow as a “qualified” plan would provide that “safe harbor” where the returned fringe benefit contributions could be deposited and safeguarded pending injunctive relief granted in any one of the legal proceedings or the execution of a new collective bargaining agreement with the OE 324.

Most importantly, the sample letter closes with the request that MDOT grant a 90-day extension of their certified payroll deficiency inquiry process to appropriately allow one or more of the legal proceedings to reach a legal conclusion and/or for MITA to get USDOL approval of the “guaranteed escrow” concept as a qualified plan under the Davis-Bacon Act.

MDOT leadership has expressed an understanding of the unprecedented facts surrounding these returned fringe benefit contributions, and, as such, we suggest you be attentive to the timing of your response to your project engineer such that it is submitted only a day or two prior to your 30-day deadline in order to maximize the time available to you.

Click here for the Sample Response Letter to MDOT.

This bulletin is intended to provide guidance to only MITA POA contractors who are working on Davis-Bacon prevailing wage or State of Michigan prevailing wage (i.e. awarded before the repeal of state prevailing wage) required projects and who have received the MDOT “Certified Payrolls, Deficient Notice 1”.

For MITA POA contractors working on non-prevailing wage projects where there are no Davis-Bacon or state prevailing wage requirements, you may simply put the fringe benefit contributions (other than the vacation fringe, which is taxable and must be paid on the employee’s weekly check) into a segregated escrow account (i.e., separate from your other corporate funds) until some sort of resolution is reached.

If you have any questions, please contact Mike Nystrom, Executive Vice President, at 517-896-1493, or Glenn Bukoski, Vice President of Engineering Services, at 517-256-0741.