HB3043 100TH GENERAL ASSEMBLY

LRB100 10777 MLM 21008 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB3043

Introduced , by Rep. Jay Hoffman

SYNOPSIS AS INTRODUCED:

New Act

Creates the Living Wage Act. Provides that the State, its agencies, and political subdivisions shall ensure that new contracts and subcontracts include a provision specifying that, as a condition of payment of the contract, the minimum wage to be paid to workers in performance of the contract or subcontract shall be at least $16.36 per hour for new contracts created after January 1, 2018. Provides that for every year thereafter, the Department of Labor shall adjust the amount of the hourly minimum wage by the annual percentage increase in the consumer price index. Sets forth provisions concerning enforcement and penalties. Creates a private right of action to enforce the provisions of the Act. Provides for debarment of certain contractors or subcontractors for violation of the Act. Contains severability provisions. Effective January 1, 2018.

CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning finance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Living Wage Act.

Section 5. Policy. It is the policy of the State of Illinois that in order to increase efficiency and cost savings in the work performed by parties who contract with the State of Illinois or any of its political subdivisions the hourly minimum wage to be paid by those contractors shall be $16.36, and shall be increased annually thereafter by an amount specified herein. It is further the policy of the State of Illinois that raising the pay of low-wage workers increases the productivity and quality of their work, lowers turnover, and reduces supervisory costs. These savings and quality improvements will lead to an improved economy in Illinois and more efficient State procurement.

Section 10. Definitions. As used in this Act:

"Concessions contract" means a contract under which the State of Illinois, or any political subdivision thereof, grants a right to use State property, including land or facilities, for furnishing services. "Concessions contract" includes, but is not limited to, a contract the principal purpose of which is to furnish food, lodging, automobile fuel, souvenirs, newspaper stands, or recreational equipment, or any combination thereof, regardless of whether the services are of direct benefit to the State, its personnel, or the general public.

"Contractor" means any individual or other legal entity that is awarded a contract or subcontract by the State of Illinois, its executive department, its agencies, its political subdivisions, and the like. "Contractor" refers to both a prime contractor and all of its subcontractors of any tier on a contract with the State of Illinois, its executive department, its agencies, its political subdivisions, and the like.

"Contract" means all types of State agreements, regardless of what they may be called, for the procurement, use, or disposal of supplies, services, professional or artistic services; construction or for leases of real property where the State is the lessee; and capital improvements, including renewals, and includes master contracts; contracts for financing through use of installment or lease-purchase arrangements; renegotiated contracts; amendments to contracts; and change orders, as defined in Section 1-15.30 of the Illinois Procurement Code. "Contract" includes all contracts and any subcontracts of any tier thereunder, whether negotiated or advertised, including any procurement actions, lease agreements, cooperative agreements, provider agreements, intergovernmental service agreements, service agreements, licenses, permits, or any other type of agreement, regardless of nomenclature, type, or particular form, and whether entered into verbally or in writing. The term "contract" shall be interpreted broadly as to include, but not be limited to, any contract that may be consistent with the definition provided in the Illinois Procurement Code or any other applicable Illinois law. Contracts may be the result of competitive bidding or awarded to a single source under applicable authority to do so. In addition to bilateral instruments, "contract" includes, but is not limited to, awards and notices of awards; job orders or task letters issued under basic ordering agreements; letter contracts; orders, such as purchase orders, under which the contract becomes effective by written acceptance or performance; bilateral contract modifications; and concessions contracts.

"Minimum wage" means, for purposes of this Act, a wage that is at least:

(1) $16.36 per hour beginning January 1, 2018; and

(2) Beginning January 1, 2019, and annually thereafter, an amount determined by the Department of Labor pursuant to Section 15 of this Act.

"New contract" means a contract that results from a solicitation issued on or after January 1, 2018, or a contract that is awarded outside the solicitation process on or after January 1, 2018. "New contract" includes both new contracts and replacements for expiring contracts. For purposes of this Act, a contract that is entered into prior to January 1, 2018 will constitute a new contract if, through bilateral negotiation, on or after January 1, 2018:

(1) the contract is renewed;

(2) the contract is extended, unless the extension is made pursuant to a term in the contract as of December 31, 2016 providing for a short-term limited extension; or

(3) the contract is amended pursuant to a modification that is outside the scope of the contract.

"Worker" means any person engaged in performing work on or in connection with a contract covered by this Act, other than individuals employed in a bona fide executive, administrative, or professional capacity, regardless of the contractual relationship alleged to exist between the individual and the employer.

Section 15. Establishing a minimum wage for State contractors and subcontractors.

(a) The State, its executive departments, agencies, and political subdivisions shall ensure that new contracts include a provision, which the contractor and any subcontractors shall incorporate directly into lower-tier subcontracts, specifying that, as a condition of payment of the contract, the minimum wage to be paid to workers in the performance of the contract or subcontract shall be at least:

(1) $16.36 per hour; and

(2) beginning January 1, 2019, and annually thereafter, the amount of the hourly minimum wage required by new contracts shall be published by the Department of Labor.

The minimum wage after adjustment under this subsection (a) shall be:

(A) no less than the amount published as the minimum wage effective at the date of determination;

(B) increased from the existing amount by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (Midwest Region, all items);

(C) and rounded to the nearest multiple of 10 cents.

(3) The minimum wage rates shall be calculated on an annual basis, as described herein, and take effect January 1 of each year. The Department of Labor shall publish the minimum wage rates for the upcoming year at least 90 days before the new rates take effect.

(b) When calculating the annual percentage increase in the Consumer Price Index for purposes of item (B) of paragraph (2) of subsection (a) of this Section, the Director of Labor shall compare the Consumer Price Index for the most recent month available with the Consumer Price Index for the same month in the preceding year.

(c) Each worker engaged in the performance of a covered contract by the prime contractor or any subcontractor, regardless of any contractual relationship which may be alleged to exist between the contractor and worker, shall be paid not less than the applicable minimum wage under this Act.

(d) The contractor may not discharge any part of its minimum wage obligation under this Act by furnishing fringe benefits or the cash equivalent thereof.

(e) The contractor shall pay unconditionally to each worker all wages due free and clear and without subsequent deduction rebate, or kickback on any account, except that the provisions of this Act shall not apply as to any deduction made by employers under any title of the federal Social Security Act or the federal Unemployment Insurance Tax Act, or as to any deductions made for union dues pursuant to any bona fide collective bargaining agreement. The payments shall be made no later than one pay period following the end of the regular pay period in which such wages were earned or accrued. A pay period under this Act may not be of any duration longer than semi-monthly.

(f) Nothing in this Act shall be construed as relieving a contractor of any other obligation under federal, State or local law, or under contract or collective bargaining agreement, for the payment of a higher wage to any worker, nor shall a lower prevailing wage under any federal, State, or local law, or under contract, entitle a contractor to pay any worker less than the minimum wage established annually under this Act.

Section 20. Application of wage standards to collective bargaining agreements. Nothing in this Act shall be construed as to interfere with, impede, or in any way diminish the right of employees to bargain collectively with their employers through representatives of their own choosing in order to establish wages or other conditions of employment in excess of the applicable minimum wage standards in this Act.

Section 25. Enforcement, penalties, and private right of action.

(a) Any officer, agent, or representative of any public body who willfully violates, or willfully fails to comply with, any of the provisions of this Act, and any contractor or subcontractor, and any officer, employee, or agent thereof, who as such officer, employee, who willfully violates, or willfully fails to comply with, any of the provisions of this Act, is guilty of a Class A misdemeanor.

(b) The Department of Labor shall inquire diligently as to any violation of this Act, shall institute actions for penalties herein prescribed, and shall enforce generally the provisions of this Act. The Attorney General shall prosecute such violations upon complaint by the Department or any interested person.

(c) Failure to comply with the minimum wage requirement as stated in this Act shall be considered evidence bearing on a contractor's qualification for award of future contracts.

(d) The prime contractor and any upper-tier subcontractor shall be responsible for the compliance by any subcontractor or lower-tier subcontractor with the minimum wage requirements set forth in this Act. In the event of any violation of the minimum wage obligation of this subsection (d), the contractor and subcontractor, if any, responsible for the violation shall be liable for the unpaid wages.

(e) Under this Act, any worker engaged in the performance of a covered contract by the prime contractor or any subcontractor under it who is paid for his services in a sum less than the stipulated rates for work done under the contract shall have a right of action for whatever difference there may be between the amount so paid and the rates provided by the contract, together with costs and any reasonable attorney's fees as shall be allowed by the court. The contractor or subcontractor shall also be liable to the Department of Labor for 20% of the underpayments and shall be additionally liable to the individual employed by the contractor or subcontractor for punitive damages in the amount of 2% of the amount of any penalty to the State for underpayments for each month following the date of payment during which the underpayments remain unpaid.

Where a second or subsequent action to recover underpayments is brought against a contractor or subcontractor and the contractor or subcontractor is found liable for underpayments to any individual working for the contractor or subcontractor, the contractor or subcontractor shall also be liable to the Department of Labor for 50% of the underpayments payable as a result of the second or subsequent action and shall be additionally liable for 5% of the amount of any penalty to the State for underpayments for each month following the date of payment during which the underpayments remain unpaid.

The Department shall also have a right of action on behalf of any worker who has a right of action under this Section. An action brought to recover under this Act shall be deemed to be a suit for wages, and any and all judgments entered therein shall have the same force and effect as other judgments for wages. At the request of any worker engaged in the performance of a covered contract by the prime contractor or by any subcontractor under it who is paid less than the minimum wage rate required by this Act, the Department of Labor may take an assignment of the wage claim in trust for the assigning worker and may bring any legal action necessary to collect the claim, and the contractor or subcontractor shall be required to pay the costs incurred in collecting such claim.

(f) In the event of a failure to pay any worker all or part of the wages due under this Act, the contracting agency may on its own action or after authorization or by direction of the Department of Labor or the Attorney General acting on behalf the Department of Labor and written notification to the contractor, take action to cause suspension of any further payment, advance, or guarantee of funds until the violations have ceased. Additionally, any failure to comply with the requirements of this Act may be grounds for termination of the right to proceed with the contract work. In that event, the State of Illinois, agency, or any political subdivision thereof, may enter into other contracts or arrangements for completion of the work, charging the contractor in default with any additional cost. A breach of the contract clause may be grounds for debarment as a contractor and subcontractor as provided in Section 30 of this Act.

Section 30. Debarment. The Director of the Department of Labor shall publish in the Illinois Register no less often than once each calendar quarter a list of contractors or subcontractors found to have disregarded their obligations to workers under this Act. The Department of Labor shall determine the contractors or subcontractors who, on 2 separate occasions within 5 years, have been determined to have violated the provisions of this Act. Upon that determination, the Department shall notify the violating contractor or subcontractor. The contractor or subcontractor shall then have 10 working days to request a hearing by the Department on the alleged violations. Failure to respond within the 10 working day period shall result in automatic and immediate placement and publication on the list. If the contractor or subcontractor requests a hearing within the 10 working day period, the Director shall set a hearing on the alleged violations. The hearing shall take place no later than 45 calendar days after the receipt by the Department of Labor of the request for a hearing. The Department of Labor is empowered to adopt rules to govern the hearing procedure. No contract shall be awarded to a contractor or subcontractor appearing on the list, or to any firm, corporation, partnership or association in which such contractor or subcontractor has an interest until 4 years have elapsed from the date of publication of the list containing the name of such contractor or subcontractor.

A contractor or subcontractor convicted or found guilty under Section 25 of this Act shall be subject to an automatic and immediate debarment, thereafter prohibited from participating in any public works project for 4 years, with no right to a hearing.

Section 35. Notice requirement. The contractor or subcontractor must notify all workers performing work on or in connection with a covered contract of the applicable minimum wage rate under this Act. With respect workers performing work under contracts subject to prevailing wage requirements where the prevailing wage rate is in excess of the minimum wage rate established under this Act, the contractor may meet this requirement by posting, in a prominent and accessible place at the worksite, the applicable wage determination under those laws. With respect to workers performing work under contracts whose wages are not subject to prevailing wage requirements, or workers performing work under contracts whose wages are subject to prevailing wage requirements where the prevailing rate is less than the minimum wage established under this Act, the contractor must post a notice provided by the Department of Labor in a prominent and accessible place at the worksite so it may be readily seen by workers.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 99. Effective date. This Act takes effect January 1, 2018.