What is the Prevailing Wage Act?
The Prevailing Wage Act governs the wages that a contractor or subcontractor is required to pay to all laborers, workers and mechanics who perform work on public works projects. The Act also sets forth the record keeping requirements for a contractor or subcontractor and sets forth the obligations of municipalities and other public bodies to establish the prevailing wage as well as, to notify in writing all contractors and subcontractors regarding the Prevailing Wage Act when bidding and awarding contracts, as well as on work orders.
When is the payment of prevailing wage required?
A contractor or subcontractor is required to pay not less than the prevailing wage to all laborers, works, and mechanics engaged in the construction or demolition of public works. Construction means all work performed on public works by laborers, workers or mechanics and includes maintenance work.
What makes a project subject to the Act?
All fixed works constructed by any public body or paid in whole or in part with public funds, including all projects funded or financed in whole or in part with bonds, grants, loans or other funds made available by or through the State or any of its political subdivisions, or undertaken by an institution supported in whole or in part by public funds. Landscape or modifications to real estate are included within the definition of fixed work. A project does not have to be for public use to be covered.
Are construction projects financed in whole or in part by Sales Tax Rebates covered by the Prevailing Wage Act?
No, a Sales Tax Rebate is not considered a bond, grant, loan, or other funding made available by or through the State or any of its political subdivisions, and does not make the project a public work subject to the Prevailing Wage Act. As long as no other funds used for construction are public in nature, the Prevailing Wage Act does not apply.
Is the Prevailing Rate the same throughout the State?
The rate is dependent upon the county/locality in which the work is being performed as well as the classification in which the work falls. The rate of pay is determined by the prevailing wage as ascertained under the Act paid to laborers, workers and mechanics employed on public works projects and is not determined based upon the rates paid on non public works. It is not an average or median of rates paid.
What happens where the Prevailing Rate changes in the midst of an ongoing public works project?
When there is a change in the prevailing wage, the revised rate applies to all projects currently underway as well as future projects. The public body is also responsible for notifying the contractor of the revised rates.
What do I pay an apprentice?
Only persons who are enrolled in a U.S. Department of Labor certified apprenticeship program may be paid an apprenticeship rate of pay. The rate of pay is determined by the U.S. Department of Labor apprenticeship program, but a contractor must pay the same fringe benefits as required for a tradesman. A contractor may not establish different subcategories of apprentices and pay a different rate. There are no rates for persons who may be called "pre-apprentice". The only exception to the prevailing rate is for USDOL Certified Apprentices.
What if I am not notified by a public body or contractor, if I am a subcontractor, that the prevailing wage is required to be paid on the job?
Failure of a public body to notify a contractor does not relieve a contractor from the responsibilities to pay the prevailing wage and if the contractor fails to do so, the contractor is liable for the difference in the amount paid and the prevailing wage rate. However, because a public body has an obligation of notification, the public body and not the contractor will be liable for any interest, penalties and fines the Department might assess.
Similarly where a contractor fails to notify subcontractors that a project is subject to the prevailing wage, the subcontractor is nevertheless responsible to comply with the Act's requirements regarding paying the prevailing wage for all hours worked, but the General Contractor will be liable for any interest, penalties or fines that might be assessed by the Department.
Are contractors/subcontractors who perform work on prevailing wage projects required to keep and submit specific records for the project?
Contractors/subcontractors are required to make and keep for not less than three years from date of last payment on a project;
- records of all laborers, mechanics and other workers employed by them on the project, which records must include each worker's name, address, telephone number when available, social security number,
- classification or classifications of such workers
- the workers gross and net wages
- the number of hours worked each day by the workers
- the worker’s starting and ending times of work each day
- the worker’s hourly wage rate
- the worker’s hourly overtime rate
- the worker’s hourly fringe benefits rate
- The name and address of each fringe benefit fund
- The plan sponsor of each fringe
- The plan administrator of each fringe benefit
However, a contractor or subcontractor who remits contributions to fringe benefit funds that are jointly maintained and jointly governed by one or more employers and one or more labor organizations in accordance with the federal Labor Management Relations Act shall make and keep certified payroll records that include the information required under items 1through 7 of the above items only. However, the information required under items 9 through 11 shall be required for any contractor or subcontractor who remits contributions to a fringe benefit fund that is not jointly maintained and jointly governed by one or more employers and one or more labor organizations in accordance with the federal Labor Management Relations Act.
In addition contractors/subcontractors are required to submit on a monthly basis (by the 15th of the following month in which the work was performed) while working on public works, certified payroll records to the public in charge of the project. Public Bodies are required to keep these records for no less than three years.
Upon 7 business days' notice, the contractor and each subcontractor shall make available for inspection and copying at a location within this State during reasonable hours, the records identified above to the Director of Labor and his deputies and agents.
Is a contractor/subcontractor required to produce to the Department copies of records?
The records are public records and shall be open to the Department of Labor, the Public Body, and to federal, state, or law enforcement agencies and prosecutors for inspection at all reasonable hours. Upon demand from the Department of Labor for records the contractor /subcontractor must submit a sworn statement of the accuracy of the records.
Are there consequences to a contractor's failure to maintain all the records required under the Act and/or failing to produce the records?
A contractor/subcontractor who fails to maintain the required records and /or fails to produce the records violates the Act and is subject to a Notice of Violation. Two Notices of Violation within a five year period can lead to debarment from working on public works projects.
Are there consequences to failing to submit a certified payroll as required under the Act or for submitting a false certified payroll?
If a contractor/subcontractor fails to submit a certified payroll, the Contractor violates the Act and is subject to a Notice of Violation. If a contractor or officer or employee or agent of a contractor fails to file a certified payroll before the due date or who willfully files a false certified payroll as to a material fact is guilty of class A misdemeanor and who is found guilty is subject to immediate debarment for four years without a hearing.
Are there monetary penalties for violations of the Act?
If the Department finds that a contractor/subcontractor has violated the Act, the contractor/subcontractor is liable for the difference between what was paid to the employees and the prevailing wage for all hours worked and owes the Department of Labor a 20% penalty of the underpayment. In addition the worker(s) is owed 2% of the amount of any such penalty for each month during which underpayments remain unpaid. For a second or subsequent violation the 20% penalty is increased to 50% and the 2% penalty is increased to 5%.
Is landscape work covered under the Prevailing Wage Act?
Is transportation, manufacturing or processing of materials or equipment covered?
Where a worker transports materials or equipment to or from a Public Works job site, the time involved is covered by the Prevailing Wage Act. The transportation of such materials or equipment by the sellers or suppliers would not be covered. Where the equipment is driven rather than transported that time involved is still considered hours worked under the Prevailing Wage Act. This time is not considered commuting time, which is not covered. The manufacturing or processing of materials is not covered.
Are projects funded through TIF financing covered by the Act?
Funds received from Tax Increment Financing do not qualify as “public funds”. A private project that is funded by means of TIF financing, whether via credits, reimbursement of eligible expenses through a TIF, or direct payments from the TIF, is not covered by the Prevailing Wage Act unless it also receives funding from another source which does qualify as public funds. However, if a project is undertaken by a public body, whether it is a governmental body or an institution supported in whole or in part with public funds, it will be subject to the Act.
Are projects funded through PACE financing covered by the Act?
Projects that receive funds from a PACE financing qualify as "public works." A private project that is funded by means of PACE financing through the issuance of PACE bonds by a governmental unit or the Illinois Finance Authority is covered by the Prevailing Wage Act. Similarly, interim financing of a private project secured by one or more assessment contracts under the PACE Act is covered by the Prevailing Wage Act because the loans or other funds are made available by or through the governmental unit's execution of the applicable assessment contracts. However, a PACE refinancing is a financial transaction and not a public works. A contractor or subcontractor is not required to pay the prevailing wage on any work performed prior to the recording of an assessment contract under the PACE Act.