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HB 5786

Labor: employment preference; prioritization of local union labor; require for the construction of enterprise data centers. Creates new act. TIE BAR WITH: HB 5785'26, HB 5787'26

2025-2026 Regular Session Introduced by Reggie Miller

The bill requires data center construction contracts to prioritize local union hires and apprentices, with documented good-faith recruitment and reporting under MSF, and penalties

bill electronically reproduced 04/14/2026
#construction:other #labor:employmentpreference #labor:organizations
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Bill Summary · HB 5786

Summary of HB 5786 (Michigan, 2025-2026)

Title

Enterprise data center construction labor act

Purpose and intent

HB 5786 would require that contracts for constructing an enterprise data center include strong labor provisions focused on local union hiring, apprenticeship participation, and documented good-faith hiring efforts. The act targets how construction work is recruited, who gets priority in hiring, and how contractors must document and report their workforce practices. It ties these requirements to tax exemptions and certificates administered by the Michigan Strategic Fund (MSF). The bill is designed to prioritize local union labor and registered apprentices for enterprise data center projects and to enable enforcement through certifications, audits, and potential penalties.

Note: Enactment is contingent on passage of HB 5785 and HB 5787.

Key provisions and changes

Definitions (Sec. 2)

  • Defines terms used in the act, including:
    • Construction
    • Construction contract
    • Enterprise data center (as defined by the General Sales Tax Act)
    • Labor organization
    • Locality (county or prosperity region where the data center is located, per MSF)
    • Michigan Strategic Fund (MSF)
    • Registered apprenticeship program

Priority hiring and apprenticeship requirements (Sec. 3)

  • The owner or owner’s designee must ensure construction contracts require good-faith efforts to:
    • Use a specific hiring priority order: 1) Local labor organization members (within the project locality) 2) Michigan-based labor organization members (outside the locality) 3) Out-of-state labor organization members
    • Ensure at least 10% of total labor hours are worked by apprentices enrolled in registered apprenticeship programs, with a carve-out if MSF determines a particular job classification has no reasonably available apprentices.

Documentation and recordkeeping (Sec. 3-4)

  • Contractors must document good-faith efforts and maintain these records for at least 3 years after project completion (or longer if MSF requires).
  • MSF will prescribe how to maintain evidentiary documents.
  • MSF can determine in writing that certain job classifications have no reasonably available apprentices during a specified period.

Demonstrating good faith (Sec. 4)

  • To prove good-faith compliance, a contractor must:
    • Submit a written referral request to at least one local labor organization for each relevant job classification (include details such as start date, duration, location, shift, pay, and number of workers).
    • Allow a minimum 3-day response window.
    • If insufficient referrals are received or no response, proceed to the next priority level and maintain the documentation of the response or referral attempts.
    • If local labor is unavailable, document and justify recruiting from outside the locality.
    • Document all actions.

Certification and workforce reporting (Sec. 5)

  • MSF requires owners to submit sworn certifications and workforce reports confirming compliance and good-faith efforts.
  • Reports must detail
    • Job classification of each worker
    • Total hours worked and hours per worker
    • Recruiting sources used

Compliance and sanctions (Sec. 6)

  • If MSF determines a violation (failure to meet Sec. 3 or demonstrate good-faith efforts per Sec. 4), the enterprise data center may face:
    • Ineligibility for certain tax exemptions under the General Sales Tax Act (GSTA) and Use Tax Act
    • Suspension or revocation of MSF-issued certificates
  • MSF may audit, inspect, or require supplemental workforce information to ensure compliance.
  • MSF must notify the Treasury if violations occurred and tax exemptions were applied during the violation period.

Complaints and enforcement (Sec. 7)

  • Local labor organizations or individual workers may file complaints with MSF, including supporting documentation.
  • MSF may request additional information to determine violation.

Miscellaneous and limitations (Sec. 8)

  • The act does not:
    • Require project labor agreements
    • Prohibit hiring non-union workers if higher-priority labor sources are not reasonably available
    • Limit MSF’s authority to prescribe forms and documentation for administration

Affected parties

  • Enterprise data center project owners and their contractors/subcontractors
  • Local labor organizations and workers in the locality of the project
  • Michigan workers from other parts of the state and out-of-state labor organizations
  • Apprentices enrolled in registered apprenticeship programs
  • Michigan Strategic Fund (MSF) as the implementing and enforcement authority
  • Michigan Department of Treasury (potentially in coordination for tax exemptions)

Procedural and timeline aspects

  • Effective date contingent on passage of HB 5785 and HB 5787 (enacting sections require both companion bills to become law).
  • Once enacted, MSF would establish procedures for maintaining records, reporting, and audits.
  • Contractors must maintain records for at least 3 years post-completion (or longer if MSF requires).

Practical impact

  • Shifts hiring practices for enterprise data center construction toward local union labor and registered apprentices.
  • Establishes formal reporting and verification mechanisms through MSF.
  • Creates potential financial and administrative consequences if contractors fail to comply, including loss of tax exemptions and possible certificate suspension.
  • Provides a complaint mechanism for workers and unions to raise concerns.

Compiled from official sources — confirm details with the bill’s official record.

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