Minority Entrepreneurs Line Up Against Shifting Liability to Combat Wage Theft Capitolnewsillinois.com

Republican lawmakers and minority contractor trade groups — including the American Hispanic Construction Industry Association, Black Contractor Owners and Executives, and the Federation of Women Contractors — speak out against Bill 5412 at a March 10 press conference at the Capitol. (Credit: Blueroomstream.com)

Union-backed measure allows victims of subcontractor wage theft to sue main contractor

Illinois Capitol News

SPRINGFIELD — A union-backed bill blaming prime contractors for wage theft committed by their subcontractors is facing opposition in the General Assembly from minority contractor business groups.

The measure, House Bill 5412, makes prime contractors — those who contract directly with the client — liable for wages, benefits and attorney fees if the subcontractors they hire fail to pay their employees.

In other words, it allows a worker with a grievance against the subcontractor to sue the main contractor to rectify the situation. The statute of limitations under applicable law gives an employee 10 years to file such a complaint.

The bill’s sponsor, Rep. Marcus Evans, a Chicago Democrat who chairs the House Labor and Commerce Committee and is a deputy House Majority Leader, called the bill a pro effort. -worker, as well as ‘big guy tax.

This would not require, but would likely lead to, prime contractors buying more performance and bid bonds or requiring subcontractors to buy bonds proving they have the funds to pay workers and complete the job. work adequately.

Despite the support of a powerful carpenters’ union, the Mid-America Carpenters Regional Council, the bill specifically exempts union projects, homes built on private property, and projects funded by state, local and federal governments. Evans said this is because unions already have a method of redress for wage theft through their union representation.

Minority entrepreneur opposition

Minority contractor trade groups — including the American Construction Industry Hispanic Association, Black Contractor Owners and Executives, and the Federation of Women Contractors — oppose the bill, citing fears that It does not lead to increased costs for small subcontractors and non-unionized workshops.

By adding to the risk a prime contractor takes on by hiring a subcontractor, general liability incentivizes the prime contractor to use in-house labor and avoid hiring outside help, argued the advocacy groups.

According to Octavia Altheimer, executive director of BCOE, additional bonding would also have a disproportionate impact on a sector of the construction industry that includes more minority and women-owned contractors.

“This bill is more about the haves and the have-nots. If you have it – the performance and bid bonds – it’s good for you. If you don’t have it, then you are suffering. Period, close range,” she told a press conference.

In short, they argued, the bill increases the cost of unorganized labor.

“It’s all about risk mitigation at this point for prime contractors,” HACIA executive director Jackie Gomez said at a press conference. “They’re going to demand wealth-based obligations, so if you think about your wage and social obligations, it’s an added cost and burden on our minority and women-owned small businesses that just can’t afford them. be granted.”

Although bond costs differ based on a number of factors, a payday bond typically costs around 1-4% of the amount of a bond, so a bond covering $100,000 in wages would cost the contractor about $1,000 to $4,000, according to advocacy groups.

Evans acknowledged the added cost for prime contractors, but likened the issue to car insurance.

“We will cover the workers and make sure their wages are compensated,” he said. “Someone should bear the cost. In this bill, it’s the prime contractors.

Union support

Terrance McGann, an attorney for the Mid-America Carpenters Regional Council, said the strength of the bill is that it creates liability for prime contractors “who previously got away with impunity” in wage theft disputes. .

“Whether in an organized or unorganized market, the trend we’ve seen is that in many of these construction projects, even medium to large, the lowest bidder usually gets the offer,” he said. -he declares. “And there is no responsibility on the part of the general contractor to ensure the success of these subcontractors.”

Under current law, workers who are stiffed by a subcontractor can sue the subcontractor or file a lawsuit with the Illinois Department of Labor, but it’s often a lengthy process. McGann said the bill addresses the situation where a subcontractor performs work and then files for bankruptcy or becomes insolvent without paying workers.

“And unless we can secure an additional source of payment, there is generally no recourse for these workers and their families,” he said, adding that the bill creates “an alternative means of recovery”.

Another section of the bill that states that the subcontractor shall “compensate the prime contractor” for wage theft creates a legal means for the principal to recover funds expended due to the theft of the subcontractor’s wages, he added.

Other states

Addressing the opposition, Evans pointed to laws in other states such as California, Maryland, Virginia and New Jersey, as well as Washington DC. there will be no chilling effects of the new general liability bill, he said.

“Are they going bankrupt? No,” Evans said. “So we know that minority businesses operate with language like this, and it’s good for the worker.”

Dan Johnson, lobbyist for HACIA, BCOE and FWC, said lawmakers should collect more data on states that have passed such a law to get a clearer picture of the effects.

“Imposing costly liability on tens of thousands of companies without any data to justify such damaging expansion is not responsible,” he said.

Minority business groups have suggested alternative changes to the current law, such as creating a reimbursement fund for workers paid by increased fines for companies that commit wage theft, and creating a list of companies and their executives on the Department of Labor website of those who have committed wage theft.

Senate Outlook

It remains to be seen whether the bill, in its current form, has enough support in the General Assembly to become law.

It passed the House in two tries on March 3, garnering 62 votes – two more than the constitutional majority needed to pass – after failing to meet that threshold earlier in the night. No Republicans supported the bill.

In the Senate, the measure will be sponsored by Sen. Cristina Castro, D-Elgin, after paperwork is filed to transfer sponsorship from Senate Speaker Don Harmon, according to staff. Castro was unavailable for a phone call Monday, but said in an emailed statement that discussions were ongoing.

“I’ve seen some of the concerns raised about the potential costs that contractors could face with this measure, but right now the hard-working laborers on these projects are facing the real burden of wage theft,” he said. she said in a statement. “I understand this can be a difficult topic to navigate, and conversations with other lawmakers as well as stakeholders, including those who currently oppose it, are still ongoing. I look forward to listening with an open mind to any ideas that those involved might come up with. »

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

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