A private developer, which received public funds to build an
industrial complex, entered into a contract with a contractor, which
subsequently entered into a subcontract with a construction company to provide
laborers for the project. During construction of the project, the Illinois
Department of Labor (DOL) received a complaint that the subcontractor had
failed to pay its laborers the prevailing wage. DOL filed a complaint against
the subcontractor alleging a violation of Illinois’ Prevailing Wage Act. But
the subcontractor cried foul.
What happened. The subcontractor, Sackville Construction, claimed that it had no knowledge
that the private developer, Rock Island Industrial Partners (RIIP), had an
agreement with the city of Rock Island, in which the city agreed to contribute
$150,000 for use in the project. DOL calculated that Sackville owed over
$19,000 in unpaid back wages and also sought damages.
A trial court found for Sackville, on the basis that it had
no knowledge of the agreement between the city and RIIP. While noting that the
Act applied, it concluded that it was “unfair to require payment of prevailing
wages when [Sackville] had no reason to believe the project was covered” by the
law. DOL appealed.
What the court said. The Illinois Court of Appeals explained that the purpose of the Act (820 ILCS
130/1 et seq.) is to
“encourage the efficient and expeditious completion of public works by public
bodies by ensuring that workers receive a decent wage.”
The Act’s definition of a “public body” included “any
institution supported in whole or in
part by public funds.” (Emphasis supplied by court.) The court stressed
that RIIP met this definition, even as a private developer, since it was
supported in part by public funds. The Act defines “public works” as “all fixed
works constructed by any public body.” So, since RIIP was a public body, the
project was a public work, and the Act applied to the project.
Finally, the court had to determine whether notice to
Sackville of the prevailing wage contract was required. It determined that
neither the public body nor DOL are required to notify subcontractors that the
Act applies to their project. It reversed the ruling and remanded the lower
court to calculate penalties Sackville owed under the Act. People ex rel. Department of Labor v.
Sackville Construction, Inc., Appellate Court of Illinois, No. 3-09-0006
Point to remember: The court explained that although the Act “requires a public body to include
the prevailing rate in the project specifications and the contract, the statute
does not place a condition precedent on the contractor’s or subcontractor’s
duty to pay the proper wage. The contractors and subcontractors are still
liable to the laborers to pay the prevailing wage.”