By: Geoffrey Bryce
Proposed House Bill Amendment: IL HB2838
A contractor who enters into a contract on or after July 1, 2019 in Illinois is liable for any debt incurred by a subcontractor owed to a wage claimant or third-party on the wage claimant’s behalf.
The proposed amendment means a general contractor could be liable for the trade contractor’s employees – even though the general contractor paid the trade contractor.
The Illinois Department of Labor (DOL) would handle enforcement.
Present Law: Under the current prevailing Illinois Wage Payment and Collection Act, a general contractor is not liable for the prevailing wages owed by a subcontractor to its employer. In Cement Masons Pension Fund, Local 803 vs. William A. Randolph, Inc., 832 N.E.2d 228 (1st Dist. 2005), the First District held that a contractor is not responsible for subcontractor violations of the Act.
Reasons to oppose the proposed bill:
- Payment bonds provide adequate security.
- It is not clear who would receive the statutory penalty.
- The Illinois DOL? The general contractor could be liable for second, third and lower tier defaulting subcontractors.
- General contractors will now be required to supervise the labor payments, adding additional time/overhead costs to the project.
- No notice provision to the general contractor for a defaulting subcontractor.
- It is not clear if attorney’s fees will be awarded against the general contractor.
- If the owner fails to pay the general contractor, must the general contractor now bankroll the subcontractor’s labor payments or risk liability consequences?
Please contact your state representative to take action.