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Prevailing wages are standardized minimum wage rates for blue-collar workers involved in public works projects.
These laws apply to construction workers in specific occupations and federal contracts for goods and services at the federal level. At the state level, they apply to all state-funded construction and public works projects.
Illinois is among the 27 states with state-specific prevailing wage laws.
This article explores the fundamentals and fine points of Illinois prevailing wage laws. We’ll discuss everything from the basics to how they’re determined and enforced.
Let’s jump right into it.
Understanding Prevailing Wage Laws in Illinois
A prevailing wage is a standard minimum hourly rate contractors and subcontractors working on government projects must pay specific types of workers in the same locality.
Contractors and subcontractors working on state-funded projects must pay specific blue-collar workers no less than the prevailing wage rate plus fringe benefits. These rates vary with employees’ job classifications and the locality, and failure to abide by this law could result in harsh penalties and punitive damages.
As per 820 ILCS 130/0.01, or the Prevailing Wage Act, all laborers, mechanics, and workers employed by or on behalf of any public body engaged in public works must be paid at least the general hourly prevailing rate.
Prevailing wages usually apply to mechanics, laborers, plumbers, and other blue-collar workers. Workers in this category also include those involved in assembling, disassembling, repairing, and maintaining equipment used in these works.
However, it’s worth noting that engineers, architects, and other white-collar workers are exempt from such payments.
Unlike other states, Illinois doesn’t have a minimum threshold for how much a project should cost for the prevailing wage rate to apply. This means even projects costing $2,000 or less (most states’ threshold) still qualify for the prevailing wage rate.
Under Illinois law, “public works” includes any work paid wholly or partly by public funds, such as bonds, loans, grants, and other state funding options.
Most state projects under the Prevailing Wage Act are funded by bonds issued under one of the following programs:
- Industrial Project Revenue Bond Act
- Build Illinois Bond Act
- Industrial Building Revenue Bond Act
- Illinois Sports Facilities Authority Act
For example, let’s say a contractor wins a competitive bid for a private developer’s project funded by the Industrial Building Revenue Bond. The project involves rehabilitating a run-down business complex in Adams County. It will involve a few dozen laborers, several plumbers, and three mechanics for equipment maintenance.
Under Illinois law, the contractor must pay no less than Adams County’s prevailing wage rate for the qualifying occupations.
The contractor will check the prevailing wage rate for Adams County laborers, mechanics, and plumbers and pay the required hourly rate, despite working for a private entity.
Contractors, subcontractors, and employers can pay their workers above the current state prevailing wage rate. Although rare, some do so to attract and retain talent or boost employee morale.
Purpose and Goals of Prevailing Wage Rates in Illinois
The prevailing wage concept was first introduced during the economic depression of 1914, when unemployment was at a record high. A flood of unemployed jobseekers meant contractors and subcontractors could get away with paying ultra-low wages. This would compromise the general population’s spending power and worsen the economic situation.
In 1931, congress passed the Davis-Bacon Act, which introduced a prevailing wage rate for specific workers engaged in public works projects. All employers, contractors, and subcontractors had to pay this wage rate.
Whether or not this legislation improved the economy is still inconclusive, but it gave rise to a new set of laws that changed the country’s infrastructure and construction landscape.
In Illinois, prevailing wage rates serve various purposes and goals. Let’s examine some of them more closely:
Ensure Fairness
Arguably, the primary purpose of prevailing wage laws in Illinois is to ensure fairness across the board.
In a highly competitive environment, contractors would undercut each other in bids to gain an advantage. Contractors would have to lower worker wages to maintain profit margins, resulting in huge disparities among workers involved in similar public projects.
Prevailing wage laws protect workers from underpayment and help maintain their living standards. It also encourages competition among contractors, focusing on competence rather than the lowest quotation.
Workers also maintain high work standards because merit is the primary bidding criterion.
Promote the Local Economy
As mentioned, lower wages reduce the local population’s spending power.
Blue-collar workers represent a considerable portion of the state’s economy. Underpaying them would mean less money in circulation, which would hurt the local economy.
Prevailing wage laws establish a standard minimum wage, which prevents worker underpayment and promotes the economy. Prevailing wages alone contribute $1 billion to Illinois’ economy annually.
Develop a Strong and Skilled Workforce
Workers, regardless of their occupation, are likely to work better with appropriate financial incentives. Low wages discourage workers from giving their best in whatever they do and dissuade newcomers from learning and joining specific lines of work.
Prevailing wage laws allow Illinois to attract and retain skilled workers in certain occupations. This allows the state to develop a strong, skilled workforce and a conducive job market for subsequent generations.
Determining Prevailing Wages in Illinois
The Illinois Department of Labor (IDOL) oversees all matters regarding prevailing wages. This includes setting the prevailing wage rates and handling any claims by disgruntled employees.
Under section 5 of the state’s Prevailing Wage Act, prevailing wage rates vary by county and occupation and follow monthly schedules issued by the Illinois Department of Labor.
The public bodies overseeing public works in each county must inform contractors and subcontractors about any changes to current wage rates.
This begs the question, what warrants these changes, and how are wage rates determined?
Aside from the current average wage, several factors come into play when determining the prevailing wage. Some Factors include:
- PAYMENT ABILITY: The Illinois Department of Labor must determine whether the industry can meet payment demands. Industries running into losses will have lower prevailing wages for workers in different occupations.
- MARKET FORCES: Market forces of demand and supply also affect the prevailing wage rate. Prevailing wage increases when supply exceeds demand and vice-versa.
- COST OF LIVING: One reason for prevailing wages is to enhance blue-collar workers’ standard of living. If the cost of living increases, so will prevailing wages.
- BARGAINING POWER OF EMPLOYER ORGANIZATIONS: Stronger employer organizations usually attract higher prevailing wages. Their strength typically depends on their financial standing, membership population, and leadership.
- PAYMENT ABILITY: The Illinois Department of Labor must determine whether the industry can meet payment demands. Industries running into losses will have lower prevailing wages for workers in different occupations.
- PAYMENT ABILITY: The Illinois Department of Labor must determine whether the industry can meet payment demands. Industries running into losses will have lower prevailing wages for workers in different occupations.
Under Section 820 ILCS 130/4, Illinois determines the prevailing wage rates for different occupations by conducting surveys and consulting various stakeholders. The Illinois Department of Labor will use surveys and consultations to check the current rates for works of a similar nature in that specific locality.
The process for calculating the prevailing wages is as follows:
Step 1: The public entity determines the general prevailing wage for the locality where the public works is set to be executed.
This includes the rates for each type of worker, mechanic, and craft involved. These rates will be stipulated in collective bargaining agreements and written agreements between employers and employees under bona fide associations and labor organizations.
However, to qualify, these employer associations and labor organizations must employ no less than 30% of workers in that occupation in the specific locality. The public body may let the Illinois Department of Labor ascertain the wage rate through a written request.
Step 2: The public body must conduct investigations, establish the prevailing wage rates for different occupations, and post them publicly in its main office for investigations from interested parties in June of every calendar year.
The public body has until July 15th to submit a certified copy of the prevailing wages to the Illinois Department of Labor.
Step 3: In June of every calendar year, the Illinois Department of Labor analyzes and establishes the prevailing wage for each county. It keeps a written record of its findings for scrutiny by any interested party.
Step 4: When handling road projects, all public bodies, except the Department of Transport, will have 30 days from filing with the Illinois Department of Labor to publish a notice of determination. The Illinois Department of Labor also has 30 days from filing with the public entity to do the same.
The notice of effective determination must be published in a newspaper in general circulation in that specific area. Either party must also mail a copy of this determination to employer and employee organizations and other relevant parties.
From the day the Illinois Department of Labor publishes its determination, any interested party has up to 30 days to object in writing. Alternatively, they can file a written notice stating their ground for objection to the Illinois Department of Labor or the public body responsible for the determination.
It’s not uncommon for counties to lack figures on agreed-upon wage rates and fringe benefits. This is mainly because these counties lack agreements from employer associations and other such organizations.
If the Illinois Department of Labor cannot “reasonably and fairly” apply a wage rate and fringe benefits, it will use similar works in the most relevant, comparable, neighboring locality with these agreements to determine wage rates.
A “stand-in” prevailing wage rate applies for 12 months in localities where less than 30% of qualifying workers are under a collective bargaining or employer agreement. This is usually the average wage of workers in the same occupation in that region.
The Illinois Department of Labor will publish the prevailing wage rate for various counties and occupations after those 12 months.
Contractors, subcontractors, and employers should check with the Illinois Department of Labor at least once every month for any changes to the prevailing wage rates. If they don’t receive official communication, they can check the IDOL website for current prevailing wage rates.
Here’s a breakdown of the current prevailing wage rates as of January 25th, 2024. This includes the minimum wage, plus some fringe benefits for notable construction trades in the five most populous Illinois counties.
Cook County
Occupation
Base
Foreman
Holiday
Heath/Welfare
Pension
Training
Laborer
$48.90
$49.65
$2.00
$17.37
$15.91
$0.91
Brick Mason
$50.81
$55.89
$2.00
$12.50
$23.01
$1.16
Plumber
$56.80
$60.20
$2.00
$17.00
$17.29
$1.73
Roofer
$49.25
$54.25
$2.00
$11.83
$16.13
$1.11
Carpenter
$53.51
$55.51
$2.00
$12.29
$25.26
$0.81
DuPage County
Occupation
Base
Foreman
Holiday
Heath/Welfare
Pension
Training
Laborer
$48.90
$49.65
$2.00
$17.37
$15.91
$0.91
Brick Mason
$48.90
$55.89
$2.00
$12.50
$23.01
$1.16
Plumber
$56.80
$60.20
$2.00
$17.00
$17.29
$1.73
Roofer
$49.25
$54.25
$2.00
$11.83
$16.13
$1.11
Carpenter
$53.51
$55.51
$2.00
$12.29
$25.26
$0.81
Lake County
Occupation
Base
Foreman
Holiday
Heath/Welfare
Pension
Training
Laborer
$48.90
$49.65
$2.00
$17.37
$15.91
$0.91
Brick Mason
$48.90
$55.89
$2.00
$12.50
$23.01
$1.16
Plumber
$56.80
$60.20
$2.00
$17.00
$17.29
$1.73
Roofer
$49.25
$54.25
$2.00
$11.83
$16.13
$1.11
Carpenter
$53.51
$55.51
$2.00
$12.29
$25.26
$0.81
Will County
Occupation
Base
Foreman
Holiday
Heath/Welfare
Pension
Training
Laborer
$48.90
$49.65
$2.00
$17.37
$15.91
$0.91
Brick Mason
$48.90
$55.89
$2.00
$12.50
$23.01
$1.16
Plumber
$56.80
$60.20
$2.00
$17.00
$17.29
$1.73
Roofer
$49.25
$54.25
$2.00
$11.83
$16.13
$1.11
Carpenter
$53.51
$58.86
$2.00
$12.29
$29.38
$0.81
Kane County
Occupation
Base
Foreman
Holiday
Heath/Welfare
Pension
Training
Laborer
$48.90
$49.65
$2.00
$15.28
$18.00
$0.91
Brick Mason
$48.90
$55.89
$2.00
$12.50
$23.01
$1.16
Plumber
$56.80
$60.20
$2.00
$17.00
$17.29
$1.73
Roofer
$49.25
$54.25
$2.00
$11.83
$16.13
$1.11
Carpenter
$53.51
$55.51
$2.00
$12.29
$25.77
$0.81
Compliance With Illinois Prevailing Wage Laws
Contractors, subcontractors, and employers are responsible for complying with prevailing wage laws, regardless of whether the public body or the Illinois Department of Labor notifies them.
Compliance means more than just paying the required wage and fringe benefits. Employers must observe many other recordkeeping practices and protocols to comply with Illinois prevailing wage laws.
To ensure full compliance, employers must:
- Ensure they pay their laborers, mechanics, and other affected workers nothing less than the state's current prevailing hourly wage rate plus the required fringe benefits.
- Post the current prevailing wage rates in a visible and accessible location on the work site. Alternatively, they can post it at their business location or send every worker a written notice.
- Prepare certified payroll reports and submit them to the public body responsible for prevailing wage rate determination every month.
- Maintain accurate records of the project going back three years. These records include timesheets, worker classification, and general laborer information (name, address, etc.)
In addition to contractor/employer compliance, the party soliciting bids must ensure compliance by acquiring the appropriate wage rates and correctly classifying the required works. They must also have a contract clause indicating that all qualifying workers must be paid the appropriate wage rate.
Without a public bid (non-competitive bid), the public body must inform the contractor in writing that laborers must not be paid anything less than the prevailing wage. Otherwise, the public body will be liable for any penalties, interests, and fines the contractor would pay should the notice have been sent.
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Penalties for Non-Compliance With Illinois Prevailing Wage Laws
Non-compliance with Illinois prevailing wage laws attracts severe legal ramifications. Below is a brief overview of penalties for non-compliance with these laws:
- Contractors who violate prevailing wage laws for the first time must pay the affected workers their undue balance. They also have to pay a 20% penalty to the Illinois Department of Labor. Those who fail to pay their workers their unpaid balances will pay an additional 2% each month the balance remains unpaid.
- Contractors who violate prevailing wage laws for the second time will face even harsher penalties. They'll still have to pay the workers the unpaid balance plus a 50% penalty to the Illinois Department of Labor. They'll also pay an additional 5% to affected workers for every month their balances remain unpaid.
It’s worth noting that contractors who receive two notices of violations within five years will be disbarred from public projects. This means they cannot work on public projects for at least four years.
That said, violations and penalties extend to parties that fail to give notice, regardless of whether they underpay their workers.
For instance, a contractor may pay their workers the required wage but not notify the subcontractor who underpays them. If so, the subcontractor will pay the undue balances, but the contractor will pay the 20% penalty to the Illinois Department of Labor.
Here are additional resources to help you stay compliant:
- The official Illinois Employer Handbook
- Illinois Secretary of State Business Services
Navigating Prevailing Wage Rights
Here are some tips for employees to protect their rights under Illinois prevailing wage laws:
- The first step is understanding the crucial aspects of prevailing wage law. These include the current wage rates for their occupations and specific locations as described by the Illinois Department of Labor.
- When filing claims for prevailing wage violations, workers should also document hours worked, wages earned, and tasks performed as evidence.
- Workers can report any prevailing wage law violation to the Illinois Department of Labor, who will take appropriate action.
- Professional assistance from legal experts can help workers better understand their rights and get justice for any employer infringement.
Employers must also comply with prevailing wage laws or risk hefty penalties and fines. Below are a couple of tips on how they can do just that:
- Contractors/employers must stay updated on the latest prevailing wage laws, including the current wage rates and any repeals (although rare). They should check monthly with the Illinois Department of Labor to keep up with the latest developments.
- To ensure compliance, employers must also keep accurate and up-to-date records of hours worked and wages paid.
- Contractors must closely monitor subcontractors and ensure they adhere to applicable prevailing wage laws.
- Contractors should also seek advice from HR experts and lawyers to ensure full compliance.
One often overlooked aspect of prevailing wage law is the certified payroll. As mentioned, contractors must submit certified payroll reports to the public body determining the prevailing wage rate.
For a payroll report to be certified, it must have:
- Employees’ names
- The craft and type of work they performed on the project
- Employees’ wages
- The number of hours worked
- The gross wages
- Details of any amounts withheld, including reasons for withholding
However, certified payroll reports aren’t enough evidence to prove compliance with prevailing wage laws. To show complete compliance, the contractor must also maintain other underlying records like timesheets, pay stubs, and the like.
Common Challenges and Solutions to Illinois Prevailing Wage Compliance
- WORKER CLASSIFICATION: Most contractors struggle with worker classification, especially when taking on huge contracts. The best way employers can sidestep this issue is by adopting an all-in-one system for classifying workers. They can work backward from the work needed and the workers needed to accomplish these tasks. Next, they can classify them appropriately and assign their respective wages. Alternatively, they can hire an HR firm to do the heavy lifting.
- TRACKING EMPLOYEE TIME: Accurate time tracking is important for maintaining accurate records. Contractors looking to track employee time accurately should consider investing in time-tracking apps with geo-fencing that lets employees clock in and out only when on- and off-site, respectively.TRACKING EMPLOYEE TIME: Accurate time tracking is important for maintaining accurate records. Contractors looking to track employee time accurately should consider investing in time-tracking apps with geo-fencing that lets employees clock in and out only when on- and off-site, respectively.TRACKING EMPLOYEE TIME: Accurate time tracking is important for maintaining accurate records. Contractors looking to track employee time accurately should consider investing in time-tracking apps with geo-fencing that lets employees clock in and out only when on- and off-site, respectively.TRACKING EMPLOYEE TIME: Accurate time tracking is important for maintaining accurate records. Contractors looking to track employee time accurately should consider investing in time-tracking apps with geo-fencing that lets employees clock in and out only when on- and off-site, respectively.
- FAILING TO PAY OVERTIME: Overtime laws still apply to prevailing wage laws. Different overtime rates apply under prevailing wage laws. When checking the prevailing wages, contractors should also check the overtime rates, track overtime, and pay the required wage.
- SUBCONTRACTOR COMPLIANCE: Contractors must also ensure their subcontractors comply with prevailing wage laws. Subcontractors are more likely to comply with these laws if they understand the contractor's standard operating procedures and protocols – long-term relationships are key!
- USING INCORRECT FORMS: It's not uncommon for contractors to use the wrong forms. The contracting body will not accept incorrect forms, leading to an automatic violation. Employers can avoid this issue by sourcing their forms directly from the Illinois Department of Labor's or the public body's website for their specific contract(s).
- USING INCORRECT WAGE DATES: The wage determination date that applies is the date when the project is bid. For instance, last year's prevailing wage will apply to projects a contractor bid for last year, even if the project starts during the second half of this year.
Conclusion on Illinois Prevailing Wage Laws
It is challenging for employers and employees to stay on top of prevailing wage laws throughout Illinois.
It’s important to understand every detail of prevailing wage laws and ensure full compliance to avoid the legal ramifications and to play your part in strengthening Illinois’ economy and infrastructure.
You can always increase your knowledge by exploring case studies on prevailing wage projects and the impact of different wage rates on the economy. You can also read more on Illinois labor laws to stay current with the state’s broader labor laws and maintain business compliance in the state.
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