Prevailing Wage Act Amendment Requires Public Bodies to Notify Contractors When Work Is Not Bid
Recent amendments to the Prevailing Wage Act will require public bodies to provide notice to contractors of the requirements of the Act when work is awarded without a public bid, contract or project specification. Failure to provide this notice may subject a public body to an investigation by the Department of Labor and subsequent liability to pay any interest, penalties or fines that would have been owed by the contractor had notice been provided. However, the amendments do not change the duties of public bodies under the Act when work is put out for bid.
Public Act 96-437 was signed by the Governor in August and will become effective on January 1, 2010. When work covered by the Act is not bid, public bodies will be required to provide written notice of the Prevailing Wage Act requirements on the purchase order or in a separate document. The Department of Labor is charged with investigating complaints of violations of this requirement. If the Department finds that proper notice was not provided, the contractor remains liable for the difference between the wages paid and the prevailing wage, but the public body will be liable for any interest, penalties or fines imposed on the contractor under the Act.
Public Act 96-437 also requires general contractors to provide the same notice to subcontractors when work is awarded without a contract or contract specification. If the general contractor does not provide this notice, it is liable for any interest, penalties or fines that would have been owed by the subcontractor had notice been provided. However, if the general contractor did not receive notice from the public body of the Prevailing Wage Act requirements, then the public body is liable for any interest, penalties or fines that otherwise would have been owed by the subcontractor.
Finally, all subcontractors’ bonds must now include a guarantee that the requirements of the Prevailing Wage Act will be met. Previously, only the general contractor’s bond had to include such a statement.
In addition to the Public Act 96-437, there are other notable changes to the Prevailing Wage Act that public bodies should keep in mind. During the most recent legislative session, demolition projects were added to the definition of “Public Works” (Public Act 96-186). This change will be effective January 1, 2010. Previously, maintenance, repair, assembly, or disassembly work were all added to the definition of “Construction” (Public Act 95-341).
Given the wide range of projects that are now subject to the Prevailing Wage Act, and the potential financial liability associated with a contractor’s or subcontractor’s failure to pay the prevailing wage, public bodies should pay careful attention to the new notice requirement.