July 22, 2016
To the Honorable
Members of
The Illinois Senate,
99th General Assembly:
Today
I return Senate Bill 2964, an amendment to the Prevailing Wage Act, with
specific recommendations for change.
The
Prevailing Wage Act requires public bodies, including the State of Illinois,
units of local governments, and school districts, to pay prevailing wage rates
for construction of public works. The law requires each public body to
investigate and ascertain the prevailing wage for each trade every June. The
law also requires the Illinois Department of Labor to conduct its own survey.
In practice, many local public bodies rely upon the Department’s work and adopt
the wage and benefit rates recommended by the Department.
Senate
Bill 2964 would fundamentally change the law to delegate the rate-setting
responsibility to labor organizations and to eliminate local government
involvement. These changes are unconstitutional, would diminish local control
over prevailing wage practices, and hurt taxpayers. I am therefore returning
the bill with recommendations to address these concerns.
Unconstitutional
Delegation of Government Power
Senate
Bill 2964 would require the Department of Labor and each local public body to
adopt the rates specified in collective bargaining agreements whenever as few
as 30% of workers are represented by the union. The Illinois Supreme Court has
previously held this arrangement to be unconstitutional. In 1951 the General
Assembly amended the Prevailing Wage Act to provide that where workers’ wages
are negotiated under a collective bargaining agreement, the wages specified in
that agreement would be the prevailing wage. In Bradley v. Casey (1953),
the Illinois Supreme Court held:
“[D]efining wages under a collective bargaining
agreement as the prevailing rate of wages in a given locality[] is invalid for
the reason that it delegates a discretionary power to private parties and that
it tends to be too restrictive and discriminatory in defining that to be fact
which is not a fact. Upon close analysis it can be seen that this amendment
permits the fixing of the standard rather than finding or ascertaining an
existing fact. This amendment then, being vulnerable to the foregoing
criticism, is clearly unconstitutional.”
Proponents
of Senate Bill 2964 note that, in practice, the Department has historically
relied upon wage and benefit rates taken directly from collective bargaining
agreements. But as the Supreme Court observed, there is a difference between
relying on those agreements in practice and fixing a standard by statute.
Wage
and benefit rates determined by a collective bargaining agreement are a
relevant factor in determining the prevailing wage. But to limit the prevailing
wage to the wage specified in a collective bargaining agreement would mean
disregarding all those workers whose wages are not set by that agreement.
Senate Bill 2964 would fix the prevailing wage to the wage applicable to as few
as 30% of the workers in a given trade, meaning that the wage applicable to the
remaining 70% of workers would be disregarded.
The
bill also creates a presumption in favor of union rates, even where fewer than
30% of workers are represented by the union. The bill would place the burden on
the challenger to prove that fewer than 30% of workers are represented, which
would require the challenger to conduct a comprehensive market analysis – a
virtually impossible task within the time constraints provided and the
resources required.
For
these reasons, Senate Bill 2964 does not meet constitutional standards and
threatens to disregard a significant portion of the workforce. The changes
recommended below would address these concerns while still ensuring that rates
established by collective bargaining agreements are taken into appropriate
consideration when setting prevailing wage rates. Specifically, with these
changes the law would require public bodies to give appropriate consideration
to rates established by collective bargaining agreements. The amended law would
also permit a public body to rely solely upon collective bargaining agreement
rates where the public body has determined that the work is predominantly
performed under those agreements and that consideration of other evidence would
not affect the prevailing wage rates.
Local
Government Involvement
Senate
Bill 2964 would also eliminate the role of local governments in setting prevailing
wage rates. Illinois prevailing wage requirements add to the cost of
taxpayer-funded projects. If the State is going to mandate local government
compliance, the State should also respect the role of local governments in
determining prevailing wage rates, which necessarily vary by county.
The
changes recommended below would retain the role of local governments in
ascertaining and adopting prevailing wage rates. The Department would continue
to conduct a statewide survey. While local governments may continue to rely on
the Department’s investigation, local governments should be ultimately
responsible for setting local wage and benefit rates.
* * * * *
Senate
Bill 2964 does not meet constitutional standards and would not be the best
policy for Illinois or taxpayers. I am returning the bill with specific
recommendations to address these concerns, while still ensuring that rates
established by collective bargaining agreements are taken into appropriate
consideration when setting prevailing wage rates.
Therefore,
pursuant to Section 9(e) of Article IV of the Illinois Constitution of 1970, I
hereby return Senate Bill 2964, entitled “AN ACT concerning employment”, with
the following specific recommendations for change:
On page 1, by replacing line 5 with “Sections
2, 4, and 9 as follows:”; and
On page 5, by replacing lines 11 through 20
with the following: “locality in which the work is performed. The public
body awarding the contract shall ascertain the general prevailing rate of
hourly wages pursuant to this Act.”; and
On page 5, by replacing lines 21 through 25
with “(b) (blank).”; and
On page 6, by replacing lines 1 through 14
with “(c) (blank).”; and
On page 7, by replacing line 4 with
“ascertained by the public body or by the Department of Labor”; and
On page 7, by replacing lines 11 through 24
with the following: “employed by them in the execution of the contract or such
work; provided, however, that if the public body desires that the Department of
Labor ascertain the prevailing rate of wages, it shall notify the Department of
Labor to ascertain the general prevailing rate of hourly wages for work under
contract, or for work performed by a public body without letting a contract as
required in the locality in which the work is to be performed, for each craft
or type of worker or mechanic needed to execute the contract or project or work
to be performed. Upon such notification the Department of Labor shall ascertain
such general prevailing rate of wages, and certify the prevailing wage to such
public body.”; and
On page 8, by replacing line 2 and 3 with
“that not less than the prevailing rate of wages ascertained as found
by the public body or Department of Labor or determined by the court”; and
On page 8, by replacing line 13 with “by the
public body or Department of Labor or determined by the”; and
On page 12, by replacing lines 6 through 8
with the following: “be consolidated in a single hearing before the Department.
Such consolidation shall occur whether each separate investigatory hearing is
conducted by a public body or the Department. The”; and
On page 13, by deleting lines 5 through 18;
and
On page 13, by replacing lines 20 through 24
with the following:
“Sec. 9. To effectuate the purpose
and policy of this Act, each public body shall, during the month of June
of each calendar year, investigate and ascertain the prevailing rate of wages
as defined in this Act and publicly post or keep available for inspection by
any interested party in the main”; and
On page 14, by replacing lines 1 through 4
with the following: “office of such public body its determination of such
prevailing rate of wage and shall promptly file, no later than July 15 of each
year, a certified copy thereof in the office of the Illinois Department of
Labor. The Department of Labor shall,”; and
On page 14, by replacing lines 8 through 26
with the following:
“ascertained on its official website each
year. If a public body does not investigate and ascertain the prevailing
rate of wages during the month of June as required by the previous paragraph,
then the prevailing rate of wages for that public body shall be the rate as
determined by the Department under this paragraph for the county in which such
public body is located. As part of its investigation a public body or the
Department of Labor shall give appropriate consideration to rates of wages
required to be paid under collective bargaining agreements for those crafts and
types of laborers, workers, and mechanics in localities. A public body or the
Department of Labor may limit its investigation with respect to a specific
craft or type of laborer, worker, or mechanic in a specific locality to only
rates of wages required to be paid under collective bargaining agreements if
the public body or the Department of Labor, as applicable, has first determined
with competent evidence that work currently performed in that locality by that
craft or type of laborer, worker, or mechanic is predominantly performed under
a collective bargaining agreement and that consideration of other evidence
would not affect the prevailing rate of wages.
Where the Department of Labor
ascertains the prevailing rate of wages, it is the duty of the Department of
Labor within 30 days after receiving a notice from the public body authorizing
the proposed work, to conduct an investigation to ascertain the prevailing rate
of wages as defined in this Act”; and
On page 15, by replacing lines 1 through 18
with the following:
“and such investigation shall be conducted in
the locality in which the work is to be performed. The Department of Labor
shall send a certified copy of its findings to the public body authorizing the
work and keep a record of its findings available for inspection by any
interested party in the office of the Department of Labor at Springfield.
The public body except for the Department of Transportation with
respect to highway contracts shall within 30 days after filing with the
Department of Labor, or the Department of Labor shall within 30 days after
filing with such public body, publish in a newspaper of general circulation
within the area that the determination is effective or on its public website,
a notice of its determination and shall promptly mail a copy of its
determination to any employer, and to any association of employers and to any
person or association of employees who have filed their names and addresses,
requesting copies of any determination stating the particular rates and the
particular class of workers whose wages will be affected by such rates.”; and
On page 15, by replacing line 23 through 26
with the following: “objectionable by filing a written notice with the public
body or Department of Labor, whichever has made such determination, stating the
specified grounds of the objection.”; and
By replacing page 16 with the following:
“It shall thereafter be the duty of the public
body or Department of Labor to set a date for a hearing on the objection after
giving written notice to the objectors at least 10 days before the date of the
hearing and said notice shall state the time and place of such hearing. Such
hearing by a public body shall be held within 45 days after the objection is
filed, and shall not be postponed or reset for a later date except upon the
consent, in writing, of all the objectors and public body. If such hearing is
not held by the public body within the time herein specified, the Department of
Labor may, upon request of the objectors, conduct the hearing on behalf of the
public body.
The public body or Department of
Labor, whichever has made such determination, is authorized in its discretion
to hear each written objection filed separately or consolidate for hearing any
one or more written objections filed with them. At such hearing, the public
body or Department of Labor shall introduce in evidence the investigation it
instituted which formed the basis of its determination, and the public body or
Department of Labor, or any interested objectors may thereafter”; and
By replacing page 17 with the following:
“introduce such evidence as is material to the
issue. Thereafter, the public body or Department of Labor, must rule upon the
written objection and make such final determination as it believes the evidence
warrants, and promptly file a certified copy of its final determination with
such public body, and serve a copy by personal service, or
registered mail, or electronic mail on all parties to the proceedings.
The final determination by the Department of Labor or a public body shall be
rendered within 30 days after the conclusion of the hearing.
If proceedings to review
judicially the final determination of the public body or Department of Labor
are not instituted as hereafter provided, such determination shall be final and
binding.
The provisions of the
Administrative Review Law, and all amendments and modifications thereof, and
the rules adopted pursuant thereto, shall apply to and govern all proceedings
for the judicial review of final administrative decisions of any public body or
the Department of Labor hereunder. The term "administrative decision"
is defined as in Section 3-101 of the Code of Civil Procedure.
Appeals from all final
orders and judgments entered by the court in review of the final administrative
decision of the public body or Department of Labor, may be taken by any party
to the action.
Any proceeding in any
court affecting a determination of the Department of Labor or public body shall
have priority in”; and
On page 18, by replacing lines 3 through 7
with the following:
“In all reviews or
appeals under this Act, it shall be the duty of the Attorney General to
represent the Department of Labor, and defend its determination. The Attorney
General shall not represent any public body, except the State, in any such
review or appeal.”; and
On page 18, by deleting lines 9 through 25;
and
By deleting page 19.
With
these changes, Senate Bill 2964 will have my approval. I respectfully request
your concurrence.
Sincerely,
Bruce Rauner
GOVERNOR
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