Practice Areas

Test Your Knowledge - May/June 2012

May/June 2012

By: Jennifer Adams Murphy, Esq. and Ryan L. Young, Esq.

FACT OF THE MONTH

Coverage under the Prevailing Wage Act is not dependant on union affiliation. Therefore, every company must pay the prevailing wage rate, regardless of union affiliation. If the applicable prevailing wage rate is higher than the wage rate required by a company's collective bargaining agreement, the company must pay the higher rate.

TEST YOUR KNOWLEDGE!

(See answers below)

Illinois Prevailing Wage Act

1. Which of the following projects are subject to the Illinois Prevailing Wage Act?

a. Projects directed by a governmental body.

b. Projects funded in whole or in part with "public funds".

c. Projects undertaken by an institution supported in whole or in part by public funds.

d. All of the above.

2. Bob owns a company that is performing work on a project covered by the Prevailing Wage Act. Since Bob is an owner, he does not have to pay himself the prevailing wage rate. True or False?

3. The Village of Naperville hires Bradley J Construction Co. to be the general contractor in charge of a construction project that will add a playground and 3 basketball courts to a public park. Bradley J Construction Co. then contracts with RLY Concrete, Inc. to lay concrete for the project. Unfortunately, Bradley J Construction Co. fails to provide RLY Concrete, Inc. with notice that the project is covered by the Prevailing Wage Act and that RLY Concrete, Inc. must pay its workers the prevailing wage rate. Consequently, RLY Concrete, Inc. performs the work without paying its workers the prevailing wage rate. Who is responsible for paying the prevailing wage rate?

a. The Village of Naperville. (They have plenty of money.)

b. Bradley J Construction Co. (They failed to provide notice.)

c. RLY Concrete, Inc. (They failed to pay the prevailing wage rate.)

d. None of the above. (We found a loophole!)

4. RLY Concrete, Inc. violates the Prevailing Wage Act by not paying the prevailing wage rate for work it performed on a public works project in 2011. After being investigated by the Illinois Department of Labor, the company receives a notice of first violation. How will RLY Concrete, Inc. be penalized if it violates the Act again in 2012?

a. The company will have to pay a 50% penalty on the amount it underpaid its employees to the Illinois Department of.

b. The company will have to pay double prevailing wages on the next "public works" project it performs work on.

c. The company will be placed on a debarment list, making it ineligible for performing work on a "public works" project for a period of 4 years.

d. Both A and B.

e. Both A and C.

Answers to Test Your Knowledge

1. D. Any project constituting a "public works" is covered under the Act. Under the Act, "'Public works' means all fixed works constructed or demolished by any public body, or paid for wholly or in part out of public funds." Further, "'Public body' means the State or any officer, board or commission of the State or any political subdivision or department thereof, or any institution supported in whole or in part by public funds." See 820 ILCS 130/2

2. False. Under the Act, "Not less than the general prevailing rate of hourly wages for work of a similar character on public works in the locality in which the work is performed, and not less than the general prevailing rate of hourly wages for legal holiday and overtime work, shall be paid to all laborers, workers and mechanics employed by or on behalf of any public body engaged in the construction or demolition of public works." (Emphasis added.) See 820 ILCS 130/3. Therefore, any company that has an owner engaged in the construction or demolition of public works will need to pay that owner the prevailing wage rate.

3. C. Under the Act, "The failure by a contractor to provide written notice to a subcontractor does not relieve the subcontractor of the duty to comply with the prevailing wage rate, nor of the obligation to pay any back wages, as determined under this Act." See 820 ILCS 130/4(b-2). However, Bradley (the Contractor) will be liable for interest, penalties or fines that would have been owed by the subcontractor had proper written notice been provided to the subcontractor. 820 ILCS 130/4(b-2)

4. E. Both A and C. Aside from paying the difference between the amount paid to employees and the prevailing wage rate, "the contractor or subcontractor shall also be liable to the Department of Labor for 50% of the underpayments payable as a result of the second or subsequent action." See 820 ILCS 130/11. Further, since the company's second violation was within 5 years of the first violation, it is subject to debarment. Under the Act, "The Director of the Department of Labor shall publish in the Illinois Register no less often than once each calendar quarter a list of contractors or subcontractors found to have disregarded their obligations to employees under this Act. The Department of Labor shall determine the contractors or subcontractors who, on 2 separate occasions within 5 years, have been determined to have violated the provisions of this Act...No contract shall be awarded to a contractor or subcontractor appearing on the list, or to any firm, corporation, partnership or association in which such contractor or subcontractor has an interest until 4 years have elapsed from the date of publication of the list containing the name of such contractor or subcontractor." See 820 ILCS 130/11a.