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Thursday, November 21, 2013

Prevailing Wage Act Applies to Water Utility Contractor

The Department of Labor filed a complaint against E.R.H. Enterprises, Inc., alleging that E.R.H. violated the Prevailing Wage Act for water main repair work it performed on behalf of the Village of Bement.  E.R.H. argued it was not subject to the Prevailing Wage Act as it fell within the "public utility" exception under the Act.  The trial court ruled E.R.H did not fall within the "public utility" exception of the Act and, therefore, was subject to paying prevailing wages.  The appellate court reversed, concluding E.R.H. did qualify as a public utility, as that term is defined in the Utilities Act.  Specifically, the appellate court determined that E.R.H was responsible for maintaining and operating the Village's potable water facility and certain segments of the water infrastructure, so qualified as a public utility under the Act.  The DOL appealed to the Illinois Supreme Court.
The Illinois Supreme Court first reviewed the language of the Prevailing Wage Act, finding that the legislature did not include a definition of "public utility" nor any rationale for exemption public utilities from the prevailing wage requirement. People of State of Illinois v. E.R.H. Enterprises, 2013 IL 115106 (Nov. 21, 2013).  The Court then reviewed the definition of "public utility" under the Utilities Act as applied by the appellate court, and determined that the appellate court failed to acknowledge a specific exemption in the Utilities Act definition for utilities that are owned by a "municipal corporation."  Based on this language, the Court found that E.R.H. was a contractor, not a public utility company and that the Village was the operator of the water facility, not E.R.H.  Consequently, E.R.H was not exempt from the Prevailing Wage Act and was required to pay its employees prevailing wages for work performed on the Village's water facility and improvements. 


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