Back in early 2019, one of the very first actions taken by the new administration in Illinois was to amend the Illinois Prevailing Wage Act (IPWA). While many changes took effect in 2019, one material change was set to become effective April 1, 2020. This change requires all contractors to submit their monthly certified transcript of payroll via the Illinois Department of Labor’s electronic database. To be clear, the Certified Transcript of Payroll submission under Illinois’ Prevailing Wage Act is now electronic and should be utilized by all contractors beginning with the April 15, 2020 submission for March 2020 work.
The relevant changes to the IPWA are included here:
820 ILCS 130/5
After the activation of the database created under Section 5.1, the Department of Labor rather than the public body in charge of the project shall keep the records and maintain the database. The records submitted . . . . shall be considered public records, except an employee’s address, telephone number, social security number, race, ethnicity, and gender, and made available in accordance with the Freedom of Information Act.
820 ILCS 130/5.1
Electronic database. The Department shall develop and maintain an electronic database capable of accepting and retaining certified payrolls submitted under this Act no later than April 1, 2020. The database shall accept certified payroll forms provided by the Department that are fillable and designed to accept electronic signatures.
While some local units of government or certain government employees may not be familiar with this new change, contractors of all shapes and sizes performing prevailing wage work pursuant to the IPWA must be intimately familiar with this new administrative mandate. All such contractors must register an account (an Illinois Public ID Account) through the IDOL’s portal as soon as possible. You must have your own Illinois Public ID Account in order to submit the electronic transcript.
The exact impact of this is to be determined. However, it should be rather obvious that this new maneuver will provide the IDOL instant access to all certified transcripts of payroll for any and all prevailing wage projects taken place throughout Illinois. Such changes provide the IDOL instantaneous information that may have taken days and weeks under prior practice; making investigation and enforcement easier and more prevalent in the future. As such, it is more critical than ever to make certain each and every certified transcript of payroll is prepared flawlessly.
On August 13, 2019, Illinois Comptroller, Susana Mendoza, signed an Executive Order (EO) aimed at enforcement of the state’s prevailing wage law (aka mandatory top line union wage/benefits scale) for “construction” projects receiving state money. On the surface, one would say “hey, that’s a pretty good idea.” But… the EO invites more questions than answers. More importantly, it encourages organized labor to target contractors that they have disputes with (without any proof or evidence of actual non-compliance with prevailing wage law) and the Comptroller may take whatever action she wants, including withholding funds.
The EO, in relevant part, reads as
follows (with questions and comments following each main point of the EO):
Grants and Contracts. The Illinois Office of Comptroller shall not accept the submission of any grant, contract, or any other award by the State of Illinois of any type to finance, in whole or in part, public works projects under the Rebuild Illinois program or other public works projects, unless the grant, contract, or other award includes a certification that the contractor of the public works project is in compliance with the Prevailing Wage Act (820 ILCS 130).
BUT… what does “compliance” mean? Could the Comptroller hold up a contract if a
contractor was found to have made a clerical mistake years ago on a prevailing
wage project? What if a contractor
merely classified the worker as a laborer vs. an operator and was assessed by
the Department of Labor for a few hundred dollars?
Duty to Pre-audit. The Illinois Office of Comptroller shall have the duty to pre-audit or cause to be pre-audited each grant, contract, or other award under the Rebuild Illinois program and other public works projects.
Who is going
to conduct the audit? What do they know about prevailing wage? What will they
be searching for?
Publication. The Illinois Office of Comptroller’s official website shall provide information on grants, contracts, and other public works project awards and shall provide a Prevailing Wage Inquiry Form that allows localities, contractors, labor organizations, and other interested parties to submit inquires to the Office.
Okay… so, this
function seems fairly benign. It allows
the public to view what projects are in the works. But… couple this function
with the “Receipt of Inquiries” order and chaos can ensue.
Receipt of Inquiries. The Illinois State Comptroller’s Prevailing Wage Enforcement Officer is designated to receive inquiries from labor organizations or other interested parties regarding the status of a public works contract or grant on file with the Illinois Office of Comptroller and compliance with the Prevailing Wage Act.
we can see efforts by organized labor to target certain contractors that they
have problems with. Again, what does
“compliance” mean? What’s stopping
anyone from making an inquiry about a contractor with absolutely no proof or
evidence that there’s any non-compliance issue to begin with? This third party inquiry piece will invite
unintended (or, perhaps intended) consequences that could impede progress on a
much needed construction project.
Review. The Illinois Office of
Comptroller, through the Prevailing Wage Enforcement Officer, shall work in
collaboration with the Department of Labor and other public works agencies to
address inquires that require further review for potential violations of the
Prevailing Wage Act.
Comptroller’s Office tell the Illinois Department of Labor what to do or who to
target for investigation or audit even without any proof of any non-compliance
Other Necessary Action. The Illinois Office of
Comptroller shall undertake the appropriate action to inform all state agencies
of the requirements promulgated hereunder and shall undertake all necessary
action to implement and effectuate this Executive Order.
will the Comptroller take? Withhold
funds? Delay progress?
Of course, time will tell what the actual impact of this EO will be on contractors and construction projects on a state level in Illinois. But, there are certainly many questions and concerns that anyone working in the construction industry should have with this type of order. Undoubtedly, if anyone is securing, financing, performing or managing public “construction” work in Illinois, an intimate understanding of all things prevailing wage is a must.
Organized labor wasted no time in securing Governor Pritzker’s signature on legislation that undoubtedly calls for the Illinois prevailing wage rate to fall in lock step with the area union contracts. Per the new law, now in effect, the prevailing rate of wages paid to individuals covered under Illinois’ prevailing wage law shall not be less than the rate that prevails for work of a similar character on public works in the locality in which the work is performed under collective bargaining agreements, or understandings between employers or employer associations and bona fide labor organizations relating to each craft or type of worker or mechanic needed to execute the contract or perform such work, and collective bargaining agreements or understandings and successor agreements — so long as said employers or members of said employer associations employ at least 30% of the laborers, workers, or mechanics in the same trade or occupation in the locality where the work is being performed. To be even clearer, the Illinois Department of Labor is the sole government entity to decide the prevailing wage rates.
Of course, contractors may legally challenge the IDOL’s determinations through what is often cited as the Section 9 Hearing process. This procedure is part of the Illinois Prevailing Wage Act. Written objections to any published rate must be timely presented (no less than 30 days following the publication by the IDOL on its website). In the event it is determined, after a written objection is filed and a hearing is held, before an Administrative Law Judge with the IDOL, that less than 30% of the laborers, workers, or mechanics in a particular trade or occupation in the locality where the work is performed receive a collectively bargained rate of wage, then the average wage paid to such laborers, workers, or mechanics in the same trade or occupation in the locality for the 12-month period preceding the Department of Labor’s annual determination shall be the prevailing rate of wage. So, in other words, the burden is squarely on the objector and the cards are clearly stacked.
Curiously, the IDOL does not adopt other aspects of the dominant area union contract for prevailing wage purposes such as: overtime rules, traveling rates or weekend/holiday scale. Accordingly, many union contractors get caught up with prevailing wage issues in Illinois.
Bottom line: Anyone who performs construction work in Illinois needs to be intimately familiar with Illinois’ prevailing wage law. It has one of the more complex and, arguably, the most overbearing prevailing wage laws in the United States. Interestingly, in recent years, more and more states are getting away from prevailing wage laws.
Having handled countless prevailing wage disputes, the local, state or federal administrative agency assigned to administer compliance (i.e. the US Department of Labor) is the only government entity that can lawfully determine whether a contractor is in violation of an applicable prevailing wage law and push for debarment. Ultimately, a contractor who has been determined by a government agency to have violated its prevailing wage obligations (i.e. a clerical mistake, an accounting error, poor or missing paperwork) is a long way from getting on a “debarment list.” First, in order to get debarred from public work, the government is looking for willful violators with a track record of fraud and deceit. This is, of course, very rare. Second, the contractor does enjoy fundamental due process and a chance to be fully heard prior to actual debarment. However, it’s becoming a growing trend for certain labor unions (along with their aligned third party “watch dog” groups) to file prevailing wage complaints against contractors, with who they have an issue. They may do this in order to then use the ensuing government investigation/audit to help soil the name of the contractor who has a pending low bid for a public works construction project.
Take note, there’s no “gatekeeper” when processing such complaints. Generally, anyone can file a complaint against anyone, without limitations, and without actual evidence of any wrongdoing. And, in many jurisdictions, EVERY COMPLAINT must be investigated.
Many public bodies, especially local units of government, are being told that they must reject the bid of a contractor who has any past or pending prevailing wage complaint against it, even when the contractor is the “low bidder.” These public bodies are often being fed “bad information” — “misleading information” — “outdated information” against contractors who have every legal right to bid and perform public works projects. By rejecting bids or terminating contracts with non-debarred contractors, public bodies are depriving contractors of fair due process while ignoring their obligations to the taxpayer.
Contractors must know their rights! Although public bodies have an enormous amount of discretion in ascertaining the “lowest responsible bidder” for public construction projects, they cannot make arbitrary decisions in contradiction to applicable law. Contractors should never be discouraged from submitting bids despite what certain public bodies are being told. From experience and observation, contractors should push back. This push back can be in many forms. Although the filing of a lawsuit or motion seeking injunctive or declaratory relief is sometimes necessary (and, quite effective at times), the public body often simply needs clarity concerning the misinformation it has received. This clarity can usually be achieved through simple letter writing, establishing a dialogue, or other non-legal channels.
Contractors need to be extra cautious and careful in any and all communications with any government agency investigating prevailing wage compliance. To be clear, every complaint must be taken seriously by the contractor to ensure that the record ultimately reflects that the contractor is not only complying with its legal obligations, but also free to bid and perform public construction projects without interference.
With the above in mind, there
are 5 basic rules for anyone performing public construction work:
your legal obligations under any and every local, state or federal prevailing
wage ordinance/law that applies to your business (note: what’s permissible
under Federal Davis-Bacon may be unlawful under Illinois prevailing wage law);
your business is complying with all applicable prevailing wage obligations for
every worker, every day, every week, every job;
allow a prevailing wage audit or investigation to be closed or remain in
limbo without some document that confirms your full compliance with your legal
obligations (you may have to do this yourself);
sign any settlement agreement concerning prevailing wage issues without first
reviewing it with competent legal counsel to help ensure that no admission of
liability or guilt is made and to expressly state that you are free and clear
to bid and perform future public construction work; and
your local units of government on who you are and highlight your good name and
business reputation — get to know the public officials, get involved and form
You may not remember… in 2013, then Governor Quinn
signed into law an amendment to Illinois’ Prevailing Wage Act (IPWA) which sort
of redefined what the PREVAILING WAGE RATE meant by adding one little word.
Effective January 1, 2014,
the IPWA defined “general prevailing rate of hourly wages” as hourly cash wages
plus ANNUALIZED fringe benefits. By inserting the word ANNUALIZED, the
law arguably changed.
For years, many contractors paid the prevailing wage fringe benefits as
cash sums added to the employee paycheck based on prevailing wage hours only. Some
contractors established bona fide defined contribution plans that provide
100% immediate vesting of the prevailing wage fringe benefit (in whole or in
part); usually in the form of health/welfare or retirement savings. The
advantages for the worker are obvious. The money is solely and exclusively in
the control of the worker to do with it however they deem appropriate. In
exchange for such a rich and rewarding benefit, some plans specifically limit
the contribution to only those hours actually worked on “public works projects”
(aka prevailing wage projects).
Well… in 2013, Big Labor went to the Illinois Legislature and successfully
lobbied for the addition of the term “annualized”. Therefore, effective
for all work performed on January 1, 2014 and thereafter, the Illinois
Department of Labor can audit fringe benefit contributions made under a defined
contribution plan, or declared by a contractor in its certified transcripts of
payroll, and will calculate those contributions over all hours worked in
a given period of time.
To establish the proper hourly calculation for allowable fringe
benefits, contractors are expected to divide the total amount they
contribute to a bona fide fringe benefit plan by the total of all hours
worked (including non-prevailing wage projects). According to the
Illinois Department of Labor, a contractor cannot exclusively take the hours
worked and contributions made on public works/prevailing wage jobs to comply
with the hourly fringe benefit component. An example used by the
Illinois Department of Labor includes: If a contractor contributes $520 per
month for single insurance coverage, and the employee works 2080 hours (40 x 52
weeks), then the effective annual contribution rate is determined by
dividing $6,240 ($520 x 12) by 2080 which equals $3.00 per hour. If the health
and welfare portion of the prevailing wage is $5.05 per hour, the
contractor can take a credit of $3.00 per hour and must pay $2.05 ($5.05-$3.00)
additional on the hourly base wage. The same formula will be
applied to Pension, Annuity, 401(k) plans, Training, and Vacation in some
localities that are funded by the contractor.
What’s remarkable is that the annualization
of fringe benefits has been part of the federal prevailing wage law under
Davis-Bacon & Related Acts (DBRA) for years. However, the United States
Department of Labor has always allowed contractors to pay the fringe benefit
component based on prevailing wage hours worked only provided the monies went
directly and immediately to the worker. The Illinois Department of Labor could
adopt a similar approach. However, Big Labor will certainly do everything it
can to ensure that does not happen.
What does this actually mean?
The IPWA allows for certain fringe benefits (Health and Welfare,
Pension/Annuity, US DOL Training, and Vacation in some localities) to
be considered in establishing a prevailing wage rate. The prevailing
wage rate includes an HOURLY base portion and a FRINGE BENEFIT portion.
Contractors may choose to pay the entire prevailing wage rate in the base hourly
rate component (and not take a credit for fringe benefits paid), or they may
choose to take credit for certain allowed fringe benefits. If a
contractor does not pay any allowable fringe benefit or just a portion
of it, then according to the Illinois Department of Labor, the difference
must be made up in the hourly base wage rate in order to comply with this
ANNUALIZATION component to the law. Alternatively, all fringe benefit contributions
must be determined by dividing the TOTAL fringe benefit payout with ALL HOURS
worked. Therefore, the fringe benefit contribution would be diluted in
proportion to the non-prevailing wage hours worked by the employee.
So… while this is yesterday’s news, the
Illinois Department of Labor under Governor Rauner was not extraordinarily
aggressive on this annualization issue. However, under new leadership,
contractors should recognize that the Illinois Department of Labor is actively
enforcing the annualization component of the law. And, with a 5 year
statute of limitations period, bad habits established or just plain ignorance
of the law that may have went unchecked under the Rauner administration will
cost you if you are not fully and completely in compliance with Illinois’
BOTTOM LINE: If you
are performing public work in Illinois, you need to intimately understand
Illinois’ prevailing wage law and the many pitfalls that exist under it. The
stakes for not knowing or understanding how the Illinois Department of Labor
views certain issues are just too high.
Last month, we reported the recent amendment to the Illinois Prevailing Wage Act (IPWA) requiring fringe benefits to now be annualized for purpose of taking a credit for fringe benefit payments. The Illinois Department of Labor (IDOL) recently updated its Frequently Asked Questions (FAQs) to explain how the IDOL interprets the new annualization requirement. In the process of updating its guidance, the IDOL has expanded on how fringe benefits might affect the prevailing base hourly rate that a contractor must pay. See https://www.illinois.gov/idol/FAQs/Pages/contractor-faq.aspx#faq9.
The IDOL now asserts that any prevailing wage fringe benefits paid in cash must be added to the base hourly rate. There is no dispute that the IPWA requires contractors to pay the base wage in addition to fringe benefit payments. Prior guidance from the IDOL explained the requirement as follows:
Fringe benefits or the equivalent are a part of the total prevailing wage just like the basic hourly wage rate. To be in compliance with the Act, all components of the prevailing wage (base and fringes) must be paid by all contractors who perform regardless of their affiliation or lack of affiliation with a union.
In other words, the IDOL recognized that payment of base wages was a requirement separate and distinct from the requirement to pay fringes. Although both components had to be paid to be in compliance, there was no requirement to add the hourly cash equivalent of fringes to the hourly base wage rate. To be sure, IDOL’s prior examples of how to off-set fringe requirements with cash payments clearly identified the hourly cash amount required for that fringe benefit category with no reference or indication that that hourly amount was to be added to the base wage. This made sense and was consistent with federal prevailing wage law where the regulations make it clear that cash fringe benefit payments are not subject to overtime premiums. 29 C.F.R. § 5.32.
IDOL’s revised guidance now states that any prevailing wage fringe benefits paid as an hourly cash equivalent must be added to the base hourly wage rate. The obvious impact is that the hourly cash equivalent for fringe benefits would be subject to overtime premium calculations. As a result, those paying cash fringe benefits will pay more when working overtime (in excess of 40 hours) in any workweek, or when working in excess of 8 hours on an IPWA job Monday through Friday, or for any and all time worked on Saturdays, Sundays or Legal Holidays.
The IDOL claims that this specific application of the IPWA applies equally to those with collective bargaining agreements and those without. In reality, the IDOL is well aware that requiring payment into fringe benefit funds are standard provisions of collective bargaining agreements and the fringe benefit rates under the IPWA are derived directly from such collective bargaining agreements. Payment of cash fringes is rarely, if ever, an option for those with collective bargaining agreements. This new manner of enforcing the IPWA is just another example of how the IPWA is used and applied to give labor unions an artificial advantage when bidding public works projects.
Effective January 1, 2014, the Illinois Prevailing Wage Act will define “general prevailing rate of hourly wages” to mean hourly cash wages plus ANNUALIZED fringe benefits. Thanks to PA 98-482, the law will now read: The terms “general prevailing rate of hourly wages”, “general prevailing rate of wages” or “prevailing rate of wages” when used in this Act mean the hourly cash wages plus annualized fringe benefits for training and apprenticeship programs approved by the U.S. Department of Labor, Bureau of Apprenticeship and Training, health and welfare, insurance, vacations and pensions paid generally, in the locality in which the work is being performed, to employees engaged in work of a similar character on public works.
Many non-union contractors have established bona fide defined contribution plans that provide for 100% immediate vesting of the prevailing wage fringe benefit; usually in the form of retirement savings. The advantages for the worker are endless. For example, the money is solely and exclusively in the control of the worker to do with it however they deem appropriate. In exchange for such a rich and rewarding benefit, some plans specifically limit the contribution to only those hours actually worked on “public works projects” (aka prevailing wage projects).
Big Labor went to the Illinois Legislature and successfully lobbied for the addition of the term “annualized”. Therefore, effective for all worked performed on January 1, 2014 and thereafter, the Illinois Department of Labor will audit fringe benefit contributions made under a defined contribution plan and will calculate all contributions over all hours worked in a given period.
What does this mean???
The Illinois Prevailing Wage Act allows for certain fringe benefits (Health and Welfare, Pension/Annuity, US DOL Training, and Vacation in some localities) to be considered in determining the prevailing rate and be taken into account as part of the component by being an offset to the total in determining compliance with the prevailing rate. Contractors may choose to pay the entire prevailing wage determination in cash or they may choose to pay some in cash and some in allowable fringe benefits. If a contractor does not pay any allowable fringe benefit or just a portion of it, then according to the Illinois Department of Labor the total prevailing wage hourly determination must now be made up in the base hourly wage rate in order to comply with Prevailing Wage Act (which will raise the hourly wage and therefore skew any overtime rates).
Also, to establish the proper hourly calculation for allowable fringe benefits, contractors will be expected to divide the total amount they contribute to a bona fide fringe benefit plan by the total of all hours worked. According to the Illinois Department of Labor, a contractor cannot simply take the hours worked and contributions made on public works/prevailing wage jobs to make the hourly calculation. An example used by the Illinois Department of Labor includes: If a contractor contributes $520 per month for single insurance coverage and the employee works 2080 hours (40 x 52 weeks) then the effective annual contribution rate is determined by dividing $6240 ($520 x 12) by 2080 which equals $3.00 per hour. If the health and welfare portion of the prevailing wage is $5.05 per hour, the contractor can take a credit of $3.00 per hour and must pay $2.05 ($5.05-$3.00) additional on the hourly base wage. The same formula will be applied to Pension, Annuity, 401k plans, Training, and Vacation in some localities that are funded by the contractor.
Obviously, this is a critical change in the interpretation and administration of prevailing wage law in Illinois. Contractors need to immediately review their accounting practices for Illinois prevailing wage purposes.
On March 22, 2013, under pressure from the International Union of Operating Engineers, the U.S. Department of Labor (DOL) published its Memorandum No. 212 on the topic of whether surveyors, survey workers and survey crew members who perform work related to federal construction projects fall under Davis-Bacon and other related acts; thereby triggering the application of federal prevailing wage law to such workers. Despite the DOL’s explanation that it was merely clarifying and supplementing prior DOL Memorandums from the 1960’s, the March 2013 Memorandum signaled a dramatic shift in the DOL’s interpretation. For the first time, the DOL believes that surveyors, survey workers and survey crew members who perform work on federal construction projects may be subject to federal prevailing wage law. The emphasis is on the word “may” because attempting to interpret the meaning behind the DOL’s guidance is mind-numbing.
Memorandum No. 212, reads in relevant part:
Survey crew members who perform primarily physical and/or manual work while employed by contractors or subcontractors immediately prior to or during actual construction in direct support of construction crews, will be deemed laborers or mechanics when employed on-site of the construction work. Also, under the U.S. Housing Act of 1937 and the Housing Act of 1949, the “development of the project” coverage test is broader and thus may allow prevailing wage to cover preliminary survey work. The question of whether a survey worker is a laborer or mechanic is a question of fact to be interpreted by the DOL. Additionally, the DOL goes on to remind the public that bona fide “white collar” exempt employees under the Fair Labor Standards Act 29 CFR 541 (FLSA), such as Professionals, Executives and Administrators, continue to be exempt from federal prevailing law.
Confused yet? Most everyone is. And if trying to comply with federal prevailing wage changes is not hard enough, some states continue to expand the scope of their own prevailing wage laws. For example, Illinois, by and through the Illinois Department of Labor (IDOL), has allowed the operating engineers to petition successfully for recognition of work that has historically not been covered by the Illinois Prevailing Wage Act. Most recently, through persuasion from organized labor, the IDOL has made determinations on its own (without statutory amendments to the actual law) to include Material Testing and Surveying on Illinois construction projects.
According to the IDOL’s prevailing wage rate sheets, Material Testing is defined as:
MATERIAL TESTER I: Hand coring and drilling for testing of materials; field inspection of uncured concrete and asphalt.
MATERIAL TESTER II: Field inspection of welds, structural steel, fireproofing, masonry, soil, facade, reinforcing steel, formwork, cured concrete, and concrete and asphalt batch plants; adjusting proportions of bituminous mixtures.
The IDOL rate sheets now also include Survey Worker, defined as:
SURVEY WORKER – Operated survey equipment including data collectors, G.P.S. and robotic instruments, as well as conventional levels and transits.
Historically, Illinois’ prevailing wage law did not cover testing or inspection activities. The personal and professional opinion of this writer is that the Illinois Legislature never contemplated such activities to fall under Illinois’ Prevailing Wage Act. Furthermore, despite clarity from the U.S. DOL that “professional exempt” workers would not fall under the federal prevailing wage law, the IDOL need not adopt federal guidance with regard to Illinois’ prevailing wage law. Unfortunately, the courts will have to intervene and provide clarity. Until then, interested parties should work with competent legal counsel and various trade associations for insight and assistance.
A Growing Trend: Using a 1st Notice of Prevailing Wage Violation Against a Contractor—The Shame of It All and What Contractors Can Do to “Right the Ship”
Contributed by Jeffrey A. Risch
Having handled hundreds of prevailing wage disputes, the IDOL is the only entity that can lawfully determine whether a contractor is in violation of the IPWA. 820 ILCS 130/11(a) et. seq. Under the IPWA, only the Director for the Illinois Department of Labor is authorized to issue a “Notice of First Violation” of the Prevailing Wage Act to a contractor. 820 ILCS 130/11a. This Notice of First Violation should encompass any and all events that occurred prior to the time of issuance. 56 Ill. Adm. Code 100.24. Per the IPWA, a contractor has no ability to respond, dispute or defend against a Notice of First Violation. 56 III. Adm. Code 100.5, 100.24, 100.26. It is not until the Director for the IDOL issues a “Notice of Second Violation” that a contractor may request a hearing at the department, in order to respond to the charges and defend itself against any claim of violations of the Prevailing Wage Act. 820 ILCS 130/11a; 56 III. Adm. Code 100.5, 100.26.
Only after a Notice of Second Violation is sent to a contractor and a hearing is held, if necessary, can the IDOL make a determination that a contractor is debarred or prevented from participating in a public contract because of violations of the Prevailing Wage Act. 820 ILCS 130/11a; 56 III. Adm. Code 100.5, 100.24, 100.26.
In deciding that the act has been violated and that the issuance of a formal notice of violation is required, the Director of Labor shall base the decision on one or any combination of the following reasons (as per the Illinois Administrative Labor Code):
– The severity of the violations. The Director will consider the following:
The amount of wages that are determined to be underpaid pursuant to the act.
The activity or conduct complained of violates the requirements of the statute and was not merely a technical, non-substantive error. Examples of a technical error include, but are not limited to, mathematical error, bookkeeping error, transposition of numbers, or computer or programming error.
– The nature and duration of the present violations as well as prior history of the contractor or the subcontractor related to the act. The prior history considered cannot exceed seven years before the date of the second notice of violation.
– Whether the contractor or subcontractor filed certified payroll records with the public body in charge of the project; whether the contractor or subcontractor has kept the payroll records and accurate records for 5 years; whether the contractor or subcontractor produced certified payroll records in accordance with Section 5 of the act.
– Whether the contractor or subcontractor has violated any other provision of the act.
Despite this authority, many local public bodies throughout Illinois are being influenced by certain third parties. These public bodies are being told that that they must reject bids or terminate contracts with any contractor who has any prevailing wage discrepancies, even when the contractor is the “lowest responsible bidder.” These public bodies are using “bad information” — “misleading information” — “outdated information” against contractors who have every legal right to bid and perform public works projects. By rejecting bids or terminating contracts with non-debarred contractors, public bodies throughout Illinois are ignoring their obligations under applicable “lowest responsible bidder” statutes, making arbitrary decision beyond their statutory authority, and depriving contractors of fair due process under the law.
Contractors must know their rights! Although public bodies have an enormous amount of discretion in ascertaining the “lowest responsible bidder,” they cannot make arbitrary decisions in contradiction to applicable law. Contractors should never be discouraged from submitting bids despite what certain public bodies are saying. From experience and observation, contractors should push back. This push back can be in many forms. Although the filing of a lawsuit or motion seeking injunctive or declaratory relief is sometimes necessary, often the public body simply needs clarity concerning the misinformation it had received. This clarity can usually be achieved through simple letter writing or other more informal channels.
Since 2002, Illinois’ prevailing wage law has been the target for labor unions in seeking to expand the law’s scope and application. As a management-side labor and employment attorney dedicated to a broad spectrum of workplace laws and regulation for both union and non-union employers, I can’t think of any law that has been modified and amended more often. Nearly every legislative session in Springfield results in some sort of revision to the Illinois Prevailing Wage Act (IPWA). Even without legislative changes, absent a court order or thoughtful strategic push back, the Illinois Department of Labor (IDOL) has and continues to come up with new administrative interpretations while enforcing the law at an all-time high (good, bad or indifferent). Such changes and developments have caused a great deal of confusion, uncertainty and turmoil amongst responsible contractors and public representatives.
The latest developments involve HB 922 and HB3223
HB 922, sponsored by Rep. Frances Hurley (D-Chicago) and Sen. Linda Holmes (D-Aurora), requires construction contractors to retain records under the Illinois Prevailing Wage Act for five years from the date of the last payment received under the contract (instead of the current three years) and extends the right to bring legal action to a clear period of no less than five years.
HB 3223, sponsored by Rep. Dan Beiser (D-Alton) and Sen. Mike Frerichs (D-Champaign), expands various Illinois Prevailing Wage reporting requirements, particularly against non-union contractors. Non-union contractors will now be forced to disclose fringe benefit plan documents and information under more government control and scrutiny. Also, applicable to both union and non-union contractors is a new provision requiring contractors to report net pay which means the potential public disclosure of a worker’s personal payroll deductions. Both bills passed both chambers and await the Governor’s signature.
Unfortunately, these legislative changes will undoubtedly lead to unprecedented regulation, decreased competition in the public bidding process and increased taxpayer costs in maintaining, constructing and repairing our roads, schools, bridges and general public infrastructure.