Illinois Contractors Face Liability for Subcontractors' Unpaid Wages

Abstract

A pair of amendments to Illinois state law aimed at preventing wage theft make construction contractors liable if subcontractors don't pay their employees. The first amendment, HB 5412, makes the general contractor, construction manager or prime contractor liable for any unpaid wages and benefit payments or contributions owed by a subcontractor for work on a construction, repair, demolition or other project for contracts entered into from July 1 onward. The law also requires a subcontractor to compensate the general contractor for any penalties or other costs it incurs as a result of the subcontractor's failure to pay wages or benefits-unless that failure was caused by the contractor not paying owed money to the subcontractor. Contractors who are party to a project's collective bargaining agreement are not liable for subcontractors' unpaid wages, and neither are contractors working on repairs to an existing single-family home or a single unit in a multi-unit building. "Contractors are going to want to maintain those strong relationships they've had, and they're going to stand by those where they've got a good track record with downstream trades and subcontractors who pay their people," he says. The signed law also includes a 10-day notice requirement to the employer and the primary contractor before a subcontractor employee files a lawsuit, though Mroczkowski notes the requirement is not as robust as some laws from other jurisdictions. A similar law passed in New York last year includes an added protection for contractors via a requirement for subcontractors to provide certified payroll records and allowing contractors to withhold payment if the records aren't provided.