Tag Archives: construction contract

Illinois Prevailing Wage Updates…Yet More Changes That Hurt Contractors & Cost Taxpayers

Contributed by Jeff Risch

Once again, more changes to Illinois’ Prevailing Wage Act are underway, including…

In House Bill 5212, a public body or any other entity (i.e. an upper tier contractor) can fulfill its obligations to provide notice to contractors and subcontractors of any revisions to prevailing wage rates by including in the contract that the prevailing rate is established by the Department of Labor and available on the IDOL website. Unlike federal prevailing wage law, Illinois’ prevailing wage law allows for the wage to actually increase during a given project.  This bill essentially places all financial obligations and liabilities on the shoulders of the contractors and subcontractors. It passed in both Houses and awaits action by the Governor 

Senate Bill 2643 requires local government units to apply the “responsible bidder” requirements of the Illinois Procurement Code. This could very well be in contradiction to federal ERISA law, but that appears not to be stopping Big Labor from trying to push this amendment through.  The most troublesome requirement is that contractors must participate in a U.S. DOL approved apprentice and training program — without any clear definition of what “participation” means and excluding contractors who offer “on the job learning” or rely on the multitude of meaningful apprenticeship and training programs not approved by the U.S. DOL.   Also troubling is that this legislation requires bids to include the total number of straight-time hours to be performed on the job, identified as either “journeyperson” or “apprentice,” for each craft or type of worker or mechanic needed to execute the contract. This bill was not called for a vote in the House, but it is expected to be revisited during the veto session.  Make no mistake – this bill was created by Big Labor designed to “cut out” the non-union contractor.  

Senate Bill 3695 requires contractors to include in record keeping the gross and net wage, hourly overtime rate, fringe benefit rates, and non-union contractors to identify the sponsor and administrator of fringe benefit plans.  This bill will undoubtedly be used against contractors in the audit and investigation process.  Although the bill passed the Senate on a 30-27 vote, it was too late for the House to take it up, but it is expected to be voted in the House during the veto session.

Wake Up Public Bodies and Contractors! Do Not Fall for this Illinois Prevailing Wage Act Trap

Contributed by Jeff Risch

Having handled hundreds of prevailing wage matters and controversies over the years, here’s something I will never understand… Why on earth would a unit of local or state government (aka a “public body”) contractually require compliance with Illinois’ prevailing wage law in circumstances where the Illinois Prevailing Wage Act (IPWA) would not apply?  Quite candidly, it’s an entire waste of resources while breeding unnecessary conflict. 

To appreciate the message delivered here, one must recognize the simple truth that there are exemptions from obligations arising under the IPWA — even when such work is performed on a “public works” construction project. One can look no further than the plain language of the IPWA itself to find expressed exemptions. Specifically, under 820 ILCS 130/3, the IPWA expressly exempts the transportation by the sellers and suppliers of materials or equipment or the manufacture or processing of said materials or equipment in the execution of any public works construction contract. There are also certain exemptions that may apply for work of a purely administrative or supervisory nature. Additionally, there are some exemptions applicable to a bona fide owner/operator, bona fide business owner and bona fide sole proprietor that may apply to a particular set of circumstances. The specifics as to available exemptions are so incredibly nuanced that I cannot possibly provide an ironclad list (nor would I want to through this public forum). However, the undeniable truth is that a “one-size fits all” contract notice used by more and more public bodies throughout Illinois does not recognize exemptions from the IPWA requirements. To be more precise, the Illinois Department of Labor (IDOL) has published its own MODEL CONTRACT LANGUAGE that it recommends as an example of a written statement/notification that public bodies may wish to include in their contracts, purchase orders or advertisement for bids in order to provide required notice under the IPWA.  More and more public bodies are adopting this language and in doing so are unnecessarily applying the IPWA to work otherwise exempt. The IDOL’s “model notice” is as follows:

This contract calls for the construction of a “public work,” within the meaning of the Illinois Prevailing Wage Act, 820 ILCS 130/.01 et seq. (“the Act”). The Act requires contractors and subcontractors to pay laborers, workers and mechanics performing services on public works projects no less than the “prevailing rate of wages” (hourly cash wages plus fringe benefits) in the county where the work is performed. For information regarding current prevailing wage rates, please refer to the Illinois Department of Labor’s website at: http://www.state.il.us/agency/idol/rates/rates.HTM. All contractors and subcontractors rendering services under this contract must comply with all requirements of the Act, including but not limited to, all wage, notice and record keeping duties.

In light of recent amendments to the law, all public bodies and upper tier contractors should be sensitive to the requirement that they must notify all contractors and lower tiered contractors of obligations under the IPWA. However, and this is my point, there are critically important words not included in the above mentioned “model notice” — these words may include:  AS APPLICABLE and/or UNLESS OTHERWISE EXEMPT and/or ONLY TO THE EXTENT AS REQUIRED BY LAW. 

Since some work performed on “public works” construction projects is exempt from the requirements under the IPWA, it is only logical to premise any notification of prevailing wage obligations with some expressed limitations. By routinely inserting the IDOL’s “model notice” into “public works” contracts, the IDOL’s prevailing wage enforcement agents will inevitably use (and have used) the written contract as a vehicle to apply the IPWA to otherwise exempt work.