Illinois Enacts Controversial Law
The State of Illinois passed HB 5412, which amends the Illinois Wage Payment and Collection Act. It makes a primary contractor on a construction job responsible for paying the wages and other benefits of the subcontractor's workers if the subcontractor fails to do so. The subcontractor would then be required to reimburse the contractor for any funds paid on its behalf. This includes wages, damages, interest, penalties, or attorney fees that the contractor paid to cover the subcontractor's failure to meet its obligations.
Proponents of the bill, such as the Mid-America Carpenters Regional Council, feel that this new legislation will help to curb wage theft. They claim that failing to pay workers is a rampant problem in the construction industry. Employers also often purposefully misclassify workers as independent contractors to avoid the additional obligations that come with employee status.
Opponents of the law feel that it punishes the entire field of contractors in an effort to punish a few unethical subcontractors. They assert that this will greatly impact small businesses and increase potential costs as well as their ability to compete in the marketplace. It essentially lets the rogue subcontractor off the hook and leaves the contractor with the mess hoping to recoup costs at some point in the future.
Key Points
- Contractor liable for any debt owed to a claimant worker under this statute.
- A primary property owner who acts as his own contractor is exempt from this law.
- Primary contractor's liability shall only extend to unpaid wages, fringe or other benefit payments, interest, penalties and reasonable attorney fees. Contractor shall not be liable for liquidated damages.
- The new obligation of contractors created by this law is in addition to any other duties and obligations contractors already owe to subcontractors and workers on their site.
This law takes effect on July 1, 2022. Should you have any questions or concerns regarding the impact of this new legislation on your business please do not hesitate to reach out to a member of our team.