General Contractors Beware! You May Be Responsible for a Subcontractor’s Failure to Pay its Workers

September 16, 2019

HB2838 (“Bill”), which has been passed by the House and is under consideration in the Senate would allow the Department of Labor to hold prime contractors responsible for subcontractors’ unpaid employees, and employees who are paid less than the applicable minimum wage.

Specifically, the Bill would hold prime contractors responsible for “any debt owed to a wage claimant or third party on the wage claimant’s behalf, incurred by a subcontractor at any tier acting under, by, or for the direct contractor for the wage claimant’s performance of labor included in the subject of the contract between the direct contractor and the owner,” as well as attorneys’ fees incurred by the prevailing claimant.  This Bill extends to wages, fringe benefits, and other contributions but not to penalties or liquidated damages.

If signed into law, Illinois will be the second state to impose such liability to general contractors. Under a similar law, the State of California has been successful in lawsuits forcing general contractors to pay sizable settlements for its subcontractor’s failure to pay its employees.

Proponents of the Bill believe the law will put a stop to worker exploitation in the construction industry, which the proponents believe is necessary to bring tax dollars back to the state currently being lost by wage and benefit theft.  On the other side of the aisle, opponents of the Bill argue that holding general contractors responsible for the illegal actions of other businesses that have been paid to do a job would be unjust.

Although the Bill has yet to be signed into law, it is expected to undergo further debate this fall and be presented to Governor Pritzker later this year for signing.

For information on how the Bill may affect your business and for best practice procedures, contact the attorneys at Rock Fusco & Connelly, LLC.