Five Things Construction Employers Need to Know About the Illinois Prevailing Wage Act

May, 2016
Ryan L. Young, Esq.

The Illinois Prevailing Wage Act requires employers to pay the prevailing wage rate to employees employed in any public works. Given the increase in Illinois Department of Labor investigations into violations of the Act, it has become increasingly important to understand the Act’s many nuances. Below are five specific aspects of the Act that construction employers need to know.

1. What work the Illinois Prevailing Wage Act covers.

The Prevailing Wage Act applies to laborers, mechanics, and other workers employed in all fixed works constructed or demolished for any public body or paid for with public funds. Under the Act, this work includes any maintenance, repair, assembly, or disassembly work performed on equipment. The Act’s definition of “construction” as “all work on public works involving laborers, workers or mechanics…(including) any maintenance, repair, assembly, or disassembly work performed on equipment…” demonstrates the broad nature of the work covered.

2. There is a hauling exemption but it is extremely narrow.

Contrary to the broad nature of covered work, the Prevailing Wage Act includes a very narrow hauling exemption. There seems to be a mistaken belief that all companies providing hauling services are exempt under the Act; however the exemption only applies to transportation by sellers and suppliers. Specifically, only those employed by contractors or subcontractors in construction work and transportation of materials to or from the job site must be paid the prevailing wage rate. Those employed by sellers or suppliers to haul materials to the jobsite are excluded from coverage.

3. There are different prevailing wage rates for different counties.

The first step in determining the appropriate prevailing wage rate for the work performed on a covered project is establishing which county the work will be performed in. Once the county is identified, an employer can then go to the Department of Labor’s website and download the prevailing wage rates for that county.

4. Public bodies, contractors, and subcontractors must provide written notice of the requirement to pay not less than the prevailing wage rate.

The Act requires the public body, any contractor, and any subcontractor (that in turn subcontracts to another company) to provide written notice that not less than the prevailing rate of wages shall be paid to all laborers, workers, and mechanics performing work on the project. As discussed further below, failure to provide this required notice could result in liability for penalties resulting from an employer failing to pay the prevailing wage rate for work its employees perform on the project.

5. An employer must pay the prevailing wage rate even if it doesn’t receive notice; however, it may escape some of the penalties.

Under the Act, if an employer pays less than the prevailing wage rate, the employer is liable for the underpaid amount regardless of whether or not the employer received notice that the project was a prevailing wage project. In other words, the failure to receive notice does not excuse a contractor or subcontractor from paying the prevailing wage rate. However, the failure to provide proper notice that could place the public body, contractor, or subcontractor responsible for providing the notice at risk of being assessed the penalty for the subsequent failure to pay the prevailing wage.

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