Session Recap: Union-backed wage theft measure will head to Pritzker

[April 15, 2022]  By JERRY NOWICKI
Capitol News Illinois
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SPRINGFIELD – A major initiative of a regional carpenters’ union that aims to end wage theft in private construction projects will head to Gov. JB Pritzker.

The long-debated measure allows a worker with a wage theft or fringe benefit grievance against a subcontractor to sue the primary contractor to rectify the situation. The primary contractor is the entity that deals directly with the customer and hires the subcontractors to complete a project.

The bill also requires the subcontractor to compensate the primary contractor for any wages, damages, interest, penalties or attorney fees should the primary contractor be forced to rectify a wage theft claim.

“Construction jobs are unique in that they often feature various subcontractors under one general contractor whose job it is to make sure all laws, including wage-related ones, are being followed,” the bill’s sponsor, Sen. Cristina Castro, D-Elgin, said in a statement. “This measure will ensure that the hardworking individuals who are employed by subcontractors receive fair compensation should that subcontractor fail to pay them.”

The measure, House Bill 5412, cleared the Senate on Friday, April 8, on a 38-18 vote after passing the House 62-36 in March. A follow-up measure, House Bill 4600, made minor changes to the original bill aimed at drawing compromise between labor and minority contractor groups. It passed the Senate 39-18 and the House 74-40.

The Mid-America Carpenters Regional Council was the main backer of HB 5412, while minority contractors lobbied against the proposal which they said would drive up costs and limit work opportunities for smaller contractors.

The minority groups, including the Hispanic American Construction Industry Association, the Black Contractors Owners and Executives, and the Federation of Women Contractors, argued that the measure was a union attempt to drive up the cost of non-union labor.

It would not require, but would likely lead to, primary contractors purchasing more performance and bid bonds or requiring subcontractors to purchase bonds showing that they have the funding to pay workers and complete the job adequately.

The minority groups opposed HB 5412’s passage, but were generally supportive of the follow-up measure, which lowered a statute of limitations for filing such a claim to three years from the original bill’s 10-year period. The follow-up bill still allows a wage theft victim to file a complaint with the Illinois Department of Labor, which is the process laid out in current law, in addition to the ability to sue a primary contractor.

House Assistant Majority Leader Marcus Evans, D-Chicago, speaks on the House floor. He was the sponsor of a bill targeting wage theft in the construction industry. (Credit: Blueroomstream.com)

HB 5412 specifically exempts union projects, homes built on private property where the property owner is the general contractor, and projects contracted through state, local and federal governments.

The follow-up measure also exempted any renovations or repairs to existing residential structures, any project that costs less than $20,000 to complete, and construction on any single unit within a multi-family dwelling.

The minority contractor groups and Republicans had pushed for a higher $500,000 threshold under which projects would be exempt, as well as exemptions for all single-family residential projects. They also requested language that would have required proof that the primary contractor knew about the wage theft in order to be held liable, but those three requests were not included in either of the bills that passed.

Sen. Jason Plummer, a Republican from Edwardsville, was among those calling for the measures that were not included in either of the final bills.

“With those three things, I think this would sail through,” Plummer said at a committee hearing on March 30. “But the thresholds that we've created here drives up costs for every family in the state, drives up costs for people that want to live in a house.”

Instead, the measures passed with only Democratic support.

Proponents said the bill’s strength is that it creates accountability for primary contractors who previously walked away with impunity in wage theft disputes involving subcontractors. They said the bill creates an “alternative means of recovery” for wage theft victims of subcontractors who have gone bankrupt or dissolved their business to avoid paying wages.
 

Rep. Marcus Evans, a Chicago Democrat who carried the bill in the House, told Capitol News Illinois in March that the measure was about worker protections, and he compared it to paying for car insurance.

“We're going to cover workers and ensure that their wages are going to be compensated,” he said. “Somebody would have to bear the cost for that. In this piece of legislation, that’s the prime contractors.”

The follow-up measure also created the Bond Reform in the Construction Industry Task Force to report to the General Assembly by March 1, 2023, regarding “innovative ways to reduce the cost of insurance in the private and public construction industry while protecting owners from risk of nonperformance.”

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government that is distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.