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Tuesday, June 1, 2021

Illinois Supreme Court Emphasizes Public Body’s Duties Under the Prevailing Wage Act

Recently, the Illinois Supreme Court issued a decision interpreting the Prevailing Wage Act  and clarifying the obligations of public bodies and contractors to pay damages for violations of the Act. Valerio et al. v. Moore Landscapes, LLC, 2021 IL 126139,

The case was brought by a group of twelve landscape workers who performed work under a contract between their employer and the Chicago Park District. The case centered around the language of the contract between the Park District and the employer, which provided that the “[c]ontractor shall pay all persons employed by [it], or its subcontractors, prevailing wage rates where applicable.” (emphasis added). The workers claimed they were not paid the prevailing wage rate. 

Although the Park District was not a defendant in this case, the court held that the Park District provided insufficient notice about prevailing wage requirements because it did not specify that landscape employees were owed the prevailing wages. The Court held the contract phrase “where applicable” was too ambiguous and did not give the contractor adequate notice that it was required to pay the higher, prevailing rate for the work in question.

Because the Park District failed to make the contractor aware of its obligations, the court held that the employees’ action against the contractor for certain damages could not be successful. The employees had sought relief for damages under Section 11 of the Act, including penalties, statutory punitive damages, costs, and attorney fees, rather than for merely the underpaid wages they were owed under Section 4 of the Act. Without notice, however, the Court held that the statute does not permit these penalties against the contractor. The Court suggested that when a public body—such as the Park District in this case—fails to make a contractor aware of their obligation to pay prevailing wages, Section 4(g) shifts the liability for interest, penalties, and fines to the public body itself. Note that because the case related only to the sufficiency of the complaint, the court did not decide whether the nature of the landscaping work performed by the employees was subject to the Prevailing Wage Act.

Following this decision, public bodies would be wise to revisit their bid solicitation forms and contract language used to provide notice to contractors that they must adhere to the prevailing wage in their area. Typically, public bodies have placed the burden on their contractors to make the decision whether the Prevailing Wage Act applies. However, based on the ruling in this case, the Supreme Court places the burden more clearly on the governmental body engaged in a public works project. For general guidance on best practices for drafting these contract terms, including sample language, visit the Department of Labor’s page, Prevailing Wage Public Body FAQ.

Written by Adam Simon and Erin Monforti, Ancel Glink


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