IDOL Services
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Informational
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PREVAILING WAGE ACT
CONTRACTOR FREQUENTLY ASKED QUESTIONS
• As a contractor or subcontractor, must I be notified that prevailing wage is required to be paid on a project?
Yes. Pursuant to Section 4 of the Act, the public body that awards the project must provide proper written notice to the contractor that prevailing wage is required to be paid to all laborers, workers and mechanics performing work on the project. Similarly, contractors must provide proper written notice to all subcontractors that prevailing wage is required to be paid. For example, proper written notice could be in the contract, call for bids or purchase order. For more information, click here 820 ILCS 130/4.
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• If I am NOT notified that prevailing wage is required, what are my responsibilities and rights?
Contractors and subcontractors are required to pay prevailing wage regardless of whether or not they were properly notified and are responsible for any back wages owed to their workers. The public body that awards the project is required to provide the contractor with written notification that prevailing wage is required. If the public body fails to provide proper written notice, the public body will be liable for any interest, penalties and fines assessed by the Department. Similarly, contractors that fail to properly notify their subcontractors that a project is subject to prevailing wage requirements will be liable for any interest, penalties or fines assessed by the Department. For more information, click here 820 ILCS 130/4.
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• If I am NOT notified that prevailing wage is required, what are my responsibilities and rights?
Contractors and subcontractors are required to pay prevailing wage regardless of whether or not they were properly notified and are responsible for any back wages owed to their workers. The public body that awards the project is required to provide the contractor with written notification that prevailing wage is required. If the public body fails to provide proper written notice, the public body will be liable for any interest, penalties and fines assessed by the Department. Similarly, contractors that fail to properly notify their subcontractors that a project is subject to prevailing wage requirements will be liable for any interest, penalties or fines assessed by the Department. For more information, click here 820 ILCS 130/4.
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• Do contractors and subcontractors have to keep time and payroll records?
Yes. Contractors and subcontractors must keep accurate records for at least 3 years showing the name, address, telephone number, social security number, classification/occupation, hourly wages (including itemized hourly cash and fringe rates), hours worked each day, gross and net weekly wages (itemizing deductions) for each laborer, worker and mechanic employed on public works. The records shall be open at all reasonable hours to inspection by the public body awarding the contract, and the Department of Labor. The public body and the Department of Labor may also subpoena the production of all books, records, and other evidence related to an investigation or hearing. For more information, click here 820 ILCS 130/5 and 10.
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• Are contractors and subcontractors required to submit monthly certified payroll records to the public body?
Yes. While participating on public works, contractors and subcontractors are required to submit monthly certified payroll records to the public body in charge of the project. Furthermore, public bodies are required to keep these records for at least 3 years and these records are considered public records under the Freedom of Information Act.
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• What are the penalties for violations of the Act?
If a contractor is found to have violated the Act, they shall be liable to the Department for a 20% penalty of any underpayment owed and to the worker for 2% of the amount of any such penalty for each month during which underpayments remain unpaid. For a second or subsequent violation, a contractor shall be liable to the Department for 50% of the underpayment owed and to the worker for an additional 5% of such penalty for each month during which underpayments remain unpaid. In addition, if a contractor receives two Notices of Violation within a five-year period, the contractor may be barred from contracting for public works for a period of four years. For more information, click here 820 ILCS 130/11 and 11a.
Some examples of violations are: (1) records are not kept; (2) records are not provided or access is denied; (3) contractors are not notified that the project is subject to the prevailing wage; (4) the required prevailing wage rates (base + fringe benefits) are not paid.
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• I am a signatory to a union contract. What wage rate controls on a public works project?
The prevailing wage rate applies to all contractors regardless of union affiliation. If the applicable prevailing wage rate is higher than required by your collective bargaining agreement, you must pay the higher rate. For more information, click here 820 ILCS 130/3.
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• I am a non-union contractor. Am I required to pay prevailing wage, including fringe benefits?
Yes, fringe benefits or the equivalent are a part of the total prevailing wage just like the basic hourly wage rate. To be in compliance with the Act, all components of the prevailing wage (base + fringes) must be paid by all contractors who perform work regardless of their affiliation or lack of affiliation with a union. See term "general prevailing rate of hourly wages.” For more information, click here 820 ILCS 130/2.
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• How are the benefits portions of the prevailing wage to be calculated?
In instances where contractors pay the benefits portion (health and welfare) of the prevailing wage rate into a bona fide fund rather than directly to the employee, the following calculation should be used:
52 (# of weeks in a year) x 40 (# of hours in a week) = 2,080
$X (contribution per month) x 12 (# of months in a year) = $XX
$XX/2,080 = $XXX (amount of credit)
$XXX is the amount that can be credited (subtracted) per hour for the benefit portion of the wage rate.
*The multipliers remain the same for all calculations for credits to benefits portions.
*If the benefit amount does not meet or exceed what the prevailing wage requires, then the deficient amount must be made up to the employee in the form of wages.
For example, if a contractor contributes $86.66 per month to a bona fide fund then the calculation would be as follows:
$86.66 X 12 = $1,040
$1,040/2,080 = $0.50
$0.50 is the credit allowed.
Therefore, if the health and welfare portion of the wage rate is $5.05 per hour, the contractor would pay $4.55 per hour because they have already contributed $0.50 to the bona fide fund.
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• What should I do if I cannot find a classification for the type of work that my company's employees perform?
For clarification, please call the Conciliation and Mediation Division of the Illinois Department of Labor at (217) 782-1710.
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• What is "training" and how does it apply to me?
"Training" became a component of the Illinois Prevailing Wage Act effective January 1, 2000 (Public Act 91-0105). All contractors subject to the Illinois Prevailing Wage Act must pay the training component as part of the prevailing wage. If you do not have a U. S. Department of Labor registered apprenticeship program, the training component must be paid directly to the employee. Similarly, if you have a U.S. Department of Labor registered apprenticeship program, but your per-hour training cost is less than the training component required by prevailing wage, the difference must be paid to the employee. For more information, click here 820 ILCS 130/2.
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• What rate do I pay an apprentice?
The rate for an apprentice will be determined by the U.S. Department of Labor, Office of Apprenticeship based upon the information your registered program submits to their office.
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• If there is an increase in any component of the prevailing wage rate during a project, am I required to pay my employees the increase even though I bid the project at a lower rate?
Yes. If the Department revises the prevailing wage rate, the revised rate shall apply to such contract. If the rate increases during a project, the workers must be paid the revised rate. If not informed of the increase, the contractor is still required to pay the revised rate. For more information, click here 820 ILCS 130/4.
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• How am I to know when rate increases occur?
Illinois Prevailing Wage rates are posted on the Department's web site. Revisions are posted approximately two weeks before the effective date. By regularly checking the web site, you will be aware of any increases prior to any hours being worked at a new rate.
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• Am I required to post the prevailing rates at the job site?
You must post the prevailing wage rates for the county where the work is performed at the job site, at your place of business 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. For more information, click here 820 ILCS 130/4.
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• 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:
i) 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
ii) ensure they are paid the prevailing wage.
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