09/13/2013

By: Brittany Flaherty Theis

Recent changes to the Illinois Prevailing Wage Act (the “Act”), and the law interpreting it, have expanded and clarified the reach of the Act’s’ requirements and penalties. Enacted in 1941 and amended many times since then, the Act provides that in Illinois all laborers, workers, and mechanics employed by or on behalf of any public bodies engaged in public works must be paid a wage of no less than the general prevailing hourly rate. The prevailing wage is determined based on the amounts paid for similar work in the same locality for public works projects. The Act specifies that the general prevailing rate of wages includes hourly cash wages, plus fringe benefits. It also takes into account legal holiday and overtime work wages. Public bodies pass prevailing wage resolutions on a yearly basis setting forth the general prevailing rate of hourly wages in their localities. The Department of Labor determines the general prevailing rate for legal holidays and overtime work. Projects covered by the Act include the construction or demolition of public works, as well as any maintenance, repair, assembly, or disassembly work performed on public works equipment whether it is owned, leased, or rented.

Understanding the Act is important for all public bodies because they are subject to its requirements and face criminal penalties for failures to comply. Importantly, the Act defines “public body” to include “any institution supported in whole or in part by public funds.” This definition is very broad and has been interpreted to include private developers receiving public funds from a city for development and construction costs, as well as private entities that receive financing for construction projects at least in part from tax-free bonds issued by government bodies. For that reason, public bodies and private entities should be aware that providing financial assistance to a private entity might subject the project to the requirements of the Act.

In 2010, the Act was amended by Public Act 96-0437 to require public bodies awarding public works contracts to provide written notice to contractors specifying that the project is subject to the requirements of the Act. This is true even when the project is awarded without a public bid, contract, or bid specification. Similarly, contractors are required to provide the same written notice to their subcontractors. Both public bodies and contractors that fail to provide the required notice are responsible for interest, penalties and fines if prevailing wages are not paid. The fines and penalties have become stiffer over the past several years. The Illinois Department of Labor has provided sample acceptable notification language that complies with the requirements of Public Act 96-0437. Such language includes:
“1. All Contracts for the Construction of Public Works are subject to the Prevailing Wage Act (820 ILCS 130/1-12).
Or
2. Contractor shall not pay less than the prevailing rates of wages to all laborers, workmen, and mechanics performing work under this contract, and shall comply with the requirements of the Illinois Wages of Employees on Public Works Act (820 ILCS 130-1-12).”
Regardless of notice, the responsibility to pay back-wages for failure to pay the generally prevailing wage rate remains with the contractor or subcontractor that employed the laborer.

Another critical provision of the Act relates to the maintenance and submission of records. The Act provides that contractors and subcontractors that participate in public works must make and keep records of all laborers, mechanics, and other workers and details regarding the workers, their hours worked and wages paid, and start and stop times for each work day. Each month the contractors and subcontractors must file a certified payroll with the public body in charge of the project. Records must be made and kept for at least three years from the last payment on a contract or subcontract for public works.

Amendments to and interpretations of the Illinois Prevailing Wage Act have expanded its reach; added and revised the notice requirements; and created and modified the penalties for noncompliance. If you have any questions about how the Act will affect your next project, contact Whitt Law Attorney Rick Petesch.

This blog/website is made available for educational purposes only. It is not intended to provide specific legal advice to your individual circumstances or legal questions. You acknowledge that your reading of this blog site does not establish an attorney-client relationship between you and the blog/website host or the law firm, or any of the attorneys with whom the host is affiliated. This blog/website should not be used as a substitute for seeking competent legal advice from a licensed professional attorney in your state. Readers of this information should not act upon any information contained on this website without seeking professional counsel.