Workers around the state have new protections to help ensure they are paid what’s owed to them under new legislation that passed the Illinois General Assembly on April 8.
HB5412 makes a primary contractor liable for the failure of a subcontractor to pay wages owed to its workers. The subcontractor would in turn be required to compensate the primary contractor for any wages, damages, interest, penalties or attorneys’ fees as a result of the subcontractor’s failure to pay wages.
Advocacy for the new primary contractor liability law was led by the Mid-America Carpenters Regional Council to hold cheating subcontractors accountable and level the playing field for contractors who play by the rules. The bill’s lead sponsors were House Assistant Majority Leader Marcus C. Evans, Jr. (D-Chicago) and Sen. Cristina Castro (D-Elgin).
“All of us in the Carpenters Union are thrilled to see the Legislature take action on this landmark legislation,” said Gary Perinar, executive secretary-treasurer of the Mid-America Carpenters Regional Council.
“We have been leading the fight against worker exploitation in every state, and Illinois is showing that hardworking men and women are valued and protected here. When workers are getting ripped off and not paid what they are owed, that should outrage every single person on a job site. I thank Senate President Don Harmon, Speaker Emanuel “Chris” Welch, Leader Evans, and Senator Castro for their unwavering commitment throughout this process to support working families.”
In the construction industry, wage theft and tax fraud most often comes in two forms: paying employees in cash, and purposely misclassifying employees as independent contractors. In addition to the losses suffered by workers, wage theft and tax fraud forces the state to lose out on key revenue because cheating subcontractors are not paying income taxes, employment taxes for Social Security and Medicare, and contributions for workers’ compensation and unemployment insurance.
A recent study from the Illinois Economic Policy Institute said 20 percent of construction workers in Illinois are victims of payroll fraud. Factoring in lost wages and benefits, this costs the state $186 million in lost revenue every year. In addition, a new study by the UC Berkeley Labor Center found that 34 percent of the families of construction workers in Illinois are enrolled in at least one safety net program at an annual cost of over half a billion dollars in public funds.
HB 5412 seeks to close the state’s tax fraud and wage theft loopholes and provide protections for exploited workers.
“If a worker gives his or her time on a job then they deserve to be paid no matter what,” said Rep. Evans, the House sponsor. “Bad actors who use workers, benefit from workers, and fail to pay workers will not be tolerated in the State of Illinois.”
Added Sen. Castro, the bill’s Senate sponsor: “Construction jobs are unique in that they often feature various subcontractors under one general contractor whose job it is to make sure all laws, including wage-related ones, are being followed. This measure will ensure that the hardworking individuals who are employed by subcontractors receive fair compensation should that subcontractor fail to pay them.”
For more information about tax fraud and wage theft, watch this video here.