Tuesday, June 6, 2017

What Is the Prevailing Wage Act?

The Prevailing Wage Act applies to a significant percentage of local government expenditures, and therefore local governments would be wise to familiarize themselves with this law. The Prevailing Wage Act (820 ILCS 130/0.01, et seq.) requires public entities, like state and local governments, to pay workers employed in the construction of “public works,” like roads, bridges, and public buildings, the general prevailing wage that is paid for similar work in the area.

The Act defines a “public work” broadly, as “all fixed works constructed or demolished by any public body, or paid for wholly or in part out of public funds.” 820 ILCS 130/2. This also includes projects financed with bonds or grants. Projects to repair damage caused by a natural disaster qualify as “public works” for which the prevailing wage must be paid, even if the repairs are made in an emergency.

The prevailing wage must equal the wage paid for similar construction projects in the area. The Act states that prevailing wages must be “[n]ot 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.” 820 ILCS 130/3.

The local government is responsible for determining the prevailing wage. The government, however, can use the prevailing wage set by the Illinois Department of Labor. If the prevailing wage changes at any time during a contract, the new wage applies, and the local government must notify the general contractor and each subcontractor of the wage change.

Additionally, any contractor or subcontractor working on a project requiring the payment of the prevailing wage must submit a payroll to the municipal entity on a monthly basis. This payroll must be certified, and must consist of each worker’s name, address, telephone number, social security number, job classification, hourly wages paid in each pay period, number of hours worked each day, and starting and ending times of work each day. The payroll must be accompanied by a statement signed by the contractor or subcontractor stating that the records are true and accurate, that the hourly rate paid to each worker is not less than the general prevailing wage, and that the contractor or subcontractor is aware that filing a certified payroll that he or she knows to be false is a Class A misdemeanor. Failure to file a payroll, or filing a false payroll, is a Class B misdemeanor.

The Prevailing Wage Act does not require local governments to use union labor, nor does it require them to hire only general contractors. The Act merely requires local governments to pay their employees similar rates to those received by union workers.

Contact an experienced attorney if you have questions about the Prevailing Wage Act.