A new Michigan law quietly requires small contractors to adopt union-aligned labor terms to bid on certain data center projects—and most builders don't know it yet.
Most Michigan construction and trades owners haven't heard about a provision in SB1048 that could affect whether they can work on major data center projects in the state. The surprise: if your utility company's data center contract gets Public Service Commission approval, you won't have a choice about labor terms anymore.
SB1048 amends Michigan's Public Utilities Act (1939 PA 3) by adding Section 10ii. The new rule is straightforward: whenever the Michigan Public Service Commission approves a utility rate or contract for a "qualified data center," every contractor and subcontractor working on that project—no matter the size—must either sign a project labor agreement (PLA) or already operate under a collective bargaining agreement.
In plain terms: if you want to bid on or work for a subcontractor on a PSC-approved data center project, you have to commit to union-aligned labor standards as a condition of the work. This applies to all contractors and subcontractors, including small businesses.
The requirement kicks in for any data center project that meets the definition of "qualified" under the law and receives PSC approval for utility rates or contracts. If you operate in electrical, HVAC, plumbing, carpentry, or any other trade, and a major data center project in your area gets PSC sign-off, this rule applies to you if you want to bid or work on it.
Small contractors are not exempt. The language in Section 10ii(1)(c) covers "all contractors and subcontractors," with no carve-out for businesses below a certain size or revenue threshold.
If you currently operate without a collective bargaining agreement and don't typically sign project labor agreements, you'll face a choice: either negotiate and sign a PLA for the project, or pass on the work. PLAs typically establish wage floors, fringe benefits, dispute resolution, and other terms that differ from your current labor practices.
This is not a temporary requirement. The law takes effect on the effective date of the amendatory act adding this section, and there is no sunset date stated in the statute. That means once it's in place, it stays in place.
For contractors already working under collective bargaining agreements, the impact is minimal—you're already compliant. For others, the decision to pursue data center work will require understanding PLA terms and costs before bidding.
If your firm works in data center construction or related infrastructure, review the full text of SB1048 and Section 10ii(1)(c) of the Public Utilities Act. Understand what "qualified data center" means under the law, and consider whether PLAs align with your business model. If data center work is part of your pipeline, this is worth discussing with your accountant and legal advisor now, before a project comes your way.
Source: SB1048, amending 1939 PA 3 (MCL 460.1–460.11), Section 10ii(1)(c).