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 pay the prevailing wage, the contractor is liable for the difference in the amount paid and the prevailing wage. 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.
What if a contractor fails to give notice of a prevailing wage project to a subcontractor?
If a contractor receives proper written notification and fails to notify a subcontractor of a prevailing wage project, they are liable for the interest, penalties or fines assessed by the Department. A subcontractor is nevertheless responsible for paying the proper prevailing wage rate of pay.
What records does a contractor/subcontractor have to submit to a public body?
While participating on public works, contractors and subcontractors are required to submit at monthly intervals certified payroll records to the public body in charge of the project.
What occurs if a contractor/subcontractor willfully submits a false certified payroll or knowingly fails to file a certified payroll?
In addition to being guilty of a Class A misdemeanor and liable for the other penalties provided under the Act, Section 11 of the Act provides in part that such a contractor/subcontractor is subject to immediate debarment and prohibited from participating in any public works project for four years with no right to a hearing.
If the contractor/subcontractor submits and maintains a copy of a certified payroll is a contractor relieved from keeping and maintaining the other records provided by the Act and/or submitting those records for inspection by the Department?
No. A certified payroll is insufficient to substantiate compliance with the Prevailing Wage Act. A contractor must maintain and keep the underlying records. If a contractor/subcontractor fails to make and keep for not less than three years from date of the 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
- the hourly wage paid (including itemized hourly cash and fringe benefits paid in each pay period),
- the number of hours worked each day, and
- the starting and ending times of work each day constitutes a violation of the Act even if the contractor submits and/or maintains certified payrolls.
What if anything does a contractor/subcontractor have to post on the job site of a public work?
A contractor/subcontractor must post the prevailing wage rates for the county where the work is performed, at the place where laborers, workers, and mechanics regularly visit or provide each laborer, worker and mechanic with a written notice of the prevailing rates for the project.
If I am a non-union contractor do I have to pay the prevailing rate?
The prevailing rate applies to all contractors/subcontractors regardless of union affiliation.
If a contractor/subcontractor is a signatory to a collective bargaining agreement that provides for a wage rate lower than a prevailing wage rate, can the contractor/subcontractor only pay the rate established by the collective bargaining agreement on public works?
No. The prevailing rate must be paid.
If a contractor/subcontractor is a signatory to a collective bargaining agreement that provides for a higher wage rate than a prevailing wage rate, can the contractor/subcontractor ignore the contract rate and only pay the prevailing rate on public works?
The Prevailing Wage Act does not provide a defense to contract violations. The Act provides for not less than the prevailing wage rate to be paid.
How do fringe benefits affect the prevailing base hourly wage rate that a contractor/subcontractor must pay?
The Prevailing Wage Act establishes a total hourly wage determination that must be paid on public works. The Act allows for certain fringe benefits (Health and Welfare, Pension/Annuity, Training, and Vacation in some localities) to be considered in determining the prevailing rate and be taken into account as part of the component by being an offset to the total in determining compliance with the prevailing rate. Contractors/subcontractors may choose to pay the entire prevailing wage determination in cash or they may choose to pay some in cash and some in allowable fringe benefits. If a contractor/subcontractor does not pay any allowable fringe benefits, then the total prevailing wage hourly determination must be made up in the base hourly wage rate in order to comply with Prevailing Wage Act.
Can a contractor/subcontractor pay more in the benefit component and reduce the base hourly wage rate below the wage component established under the Prevailing Wage Act to reach the required total?
No. A contractor/subcontractor cannot reduce the wage component by paying a greater amount in allowable fringe benefit component. Similarly, if a contractor/subcontractor pays less in the allowable benefit component, then the difference must be added to the base wage component, even if the contractor/subcontractor is complying with the terms of a collective bargaining agreement.
How does a contractor calculate the allowable benefit: (Health and Welfare, Pension/Annuity, Training, and Vacation in some localities) component?
To establish the proper hourly calculation for allowable fringe benefits, contractors/subcontractors must divide the total amount they contribute to a bona fide fringe benefit plan by the total of all hours worked on an annualized basis. The annualized rate is calculated by dividing the total amount of contributions by the total hours worked (including all hours worked both prevailing and non prevailing wage work) during the twelve month period ending with the month preceding the month in which the work was performed for which the certified transcript of payroll is being completed. A contractor/subcontractor cannot simply take the hours worked and contributions made on public works/prevailing wage jobs to make the hourly calculation. The contactor/subcontractor who wish to take credit must maintain records to verify any plans for which the contractor/subcontractor participates. The records required for substantiation include but are not limited to records that document all hours worked by all employees on public as well as private works, contributions made, employee co-pays and deductions from employees if any, the total contribution requirements, policies including eligibility requirements, vesting provisions, and calculation of fringe benefit credit taken, if any. It is the burden on the contractor/subcontractor to justify any credit taken.
Examples are as follows:
- Example: If a contractor contributes $520 per month for single insurance coverage and the employee works 2080 hours (40 x 52 weeks) then the effective annual contribution rate is determined by dividing $6240 ($520 x 12) by 2080 which equals $3.00 per hour. If the health and welfare portion of the prevailing wage is $5.05 per hour, the contractor/subcontractor can take a credit of $3.00 per hour and must pay $2.05 ($5.05-$3.00) additional on the hourly base wage.
- Example: If a contractor contributes $520 per months for single insurance coverage and the employee works 2000 hours and the contributions are only made for three months, which happen to coincide to work on public works, then the effective annual contribution is determined by dividing $1560 ($520 x 3) by 2000 which equals 78" per hour. If the health and welfare portion of the prevailing wage is $5.05 per hour, the contractor/subcontractor can take a credit of 78" per hour and must pay $4.27 ($5.05 " 78") additional on the hourly base wage. The contractor/subcontractor cannot take a credit for the amount contributed divided by the hours worked on public works only.
- Example: If a contractor contributed to a bona fide fund $5.05 for every hour worked, the effective annual rate of contribution is $5.05. If the health and welfare portion of the prevailing wage is $5.05 per hour, the contractor/subcontractor can take a credit of $5.05 per hour and does not have to pay any additional amount on the hourly base wage.
- Example: If a contractor contributed to a bona fide health and welfare fund $6.05 for every hour an employee works, the effective annual rate of contribution is $6.05. If the allowable health and welfare portion of the prevailing wage is $5.05 per hour, the contractor/subcontractor can take a credit of $5.05 per hour. The contractor/subcontractor cannot receive an additional credit of $1.00 ($5.05 - $6.05), which can apply to reducing the hourly base wage that must be paid.
The same formula applies to Pension, Annuity, 401k plans, Training, and Vacation in some localities that are funded by the contractor/subcontractor.
Can a contractor/subcontractor take adverse action against an employee who has filed, instituted or cause to be filed or instituted any proceeding under the Prevailing Wage Act or who has testified?
Section 11 of the Act prohibits a contractor from discriminating against an employee who files a complaint and remedies for the employee include but are not limited to reinstatement and compensation for lost earnings. An employer who violates the Act by discriminating against an employee is subject to a $5000 penalty for each violation.
If I am a joint employer with a contractor/subcontractor who violates the provisions of the prevailing wage act, can I be held liable for the penalties under the Act?
Can a contractor/subcontractor which has been debarred have an interest in a new corporation and participate in public works?
Section 11 of the Act provides in part that "no contract shall be awarded to a contractor or subcontractor"or to any firm, corporation, partnership or association in which such contractor or subcontractor has an interest until four years have elapsed from the date of publication of the list containing the name of such contractor or subcontractor."
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.
If I am a sole proprietor or partnership, must I pay myself or partner the prevailing wage?
The Act does not require a contractor engaged in the construction of public works to adopt any particular business model (e.g., corporation, partnership, limited liability company, sole proprietorship, etc.) instead, a contractor is free to choose his/her own business model.
However, if a contractor chooses to engage in the construction of public works in Illinois, he/she must:
- Prepare, maintain and submit certified payroll for all laborers, workers and mechanics who perform services on that public work-without regard to the worker"s status as "employee", "shareholder", "partner", or "member"; and
- Ensure they are paid the prevailing wage.