Recent Changes to Illinois Wage Payment and Collection Act

Recent Changes to Illinois Wage Payment and Collection Act Creates New Risk for Primary Contractors

The Illinois Wage Payment and Collection Act (Wage Act) is a powerful statute which creates significant penalties for employers who fail to pay their employees earned wages and benefits. A significant feature of the Act, which gives teeth to the provisions, is the ability of the plaintiff to collect attorney’s fees and costs for bringing an action against an employer. This provision makes it easier for employees to make claims against employers and increases an employer’s risk of a potentially costly lawsuit.

On June 10, 2022, Illinois Governor J.B. Pritzker approved HB 5412, which has now been enter into law as Public Act 102-1076. These amendments to the Illinois Wage Payment and Collections Act, 820 ILCS 115 et seq., render owner-retained “prime” contractors entering into construction contracts in Illinois liable for claims brought under the Wage Act against their subcontractors at any tier.

The Act amends the Wage Act by adding section 13.5, Primary Contractor Responsibility for Wage Claims in Construction Industry. This amendment takes immediate effect and applies to “all contracts entered into on or after July 1, 2022.” The Act does not specify whether or how it will be applied in the event of preexisting contractual relationships (such as ongoing contracts modified by amendment or master-project agreements).

Primary contractors are now liable under the Wage Act for claims against a subcontractor which includes:

  • Unpaid wages;
  • Fringe or other benefit payments or contributions;
  • Interest owed;
  • Penalties assessed by the Illinois Department of Labor; and
  • Attorney’s fees and costs.

While the statute requires the subcontractor to indemnify the primary contractor, it also provides for the parties to contract otherwise. Primary contractors should reach out to review their subcontractor agreements, including those already in force, to determine whether they are at risk of unexpected and potentially costly wage claims.

If you need information contact Attorney Andrew Szocka.  To schedule a free initial consultation, call the office at (815) 455-8430.

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