Recently, the Illinois Department of Labor released a new interpretation to Illinois’s Prevailing Wage Act. Specifically, this new interpretation concerns the question: “Are construction projects financed in whole or in part by Sales Tax Rebates covered by the Prevailing Wage Act?”

Ordinarily, the Prevailing Wage Act sets the wages by which contractors or subcontractors are required to pay their laborers working on public works projects. The rate by which these wages are set is dependent upon the county/locality in which the work is being performed, as well as the classification in which the work falls. As consequence, municipalities are required to pay the “prevailing wage rate” whenever contracted work is performed.

In an effort to reduce governmental costs, the Illinois Department of Labor has released an interpretation to this Act limiting its breadth. In answering the above question in the negative, IDOL explained that a “Sales Tax Rebate is not considered a bond, grant, loan, or other funding made available by or through the State or any of its political subdivisions, and does not make the project a public work subject to the “[Act].” IDOL subsequently went on to state that “As long as no other funds used for construction are public in nature, the Prevailing Wage Act does not apply.” Therefore, so long as construction projects are wholly funded through a Sales Tax Rebate, the Prevailing Wage Act will not apply, thereby, reducing the cost to the State and its municipalities.

IDOL’s interpretation will seemingly reduce the cost to the State and its municipalities by reducing the number of projects which must comply with Prevailing Wage requirements.

David W. McArdle

Authors: David McArdle, Jacob Caudill