New Contractor / Sub-contractor Laws

November 9, 2017

Recently, Illinois passed two laws that have implications that will affect many contractors and their payments to subcontractors.  The first new law deals directly with Illinois Department of Transportation (IDOT) mobilization payments.  A mobilization payment is an advance payment made for the preparatory work and operations necessary to move personnel, equipment, and supplies to a project site or other incidental costs for operations of beginning work on a project.  The new law provides that when IDOT enters into a contract providing for mobilization payments and the contractor is using the services of a subcontractor, the subcontractor agreement must include terms requiring mobilization payments to be made to the subcontractor.  The percentage of mobilization payments are determined by the initial value of the subcontractor agreement.  It is important to remember that these provisions only apply to contracts entered into by IDOT.

The second new law relates directly to subcontractor pay under public contracts.  Contractors are required to provide payments to subcontractors for work performed, provided the prime contractor has received that payment from the State of Illinois, and that there is not a reasonable cause to withhold payment from the subcontractor.  Furthermore, the new law establishes a process before an Administrative Law Judge in which a subcontractor can make a claim that a prime contractor improperly withheld payment.  This new law carries serious weight, as there is potential for a contractor to be barred from entering into construction contracts with the State if the contractor is found to have violated this requirement.  The attorneys at Rock Fusco & Connelly, LLC, are experienced in construction law and can help your business understand and comply with these new laws in future contract agreements.

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