Topic Thread

Illinois HB2838 Requiring GC's to pickup unpaid payroll of Subcontractors

  • 1.  Illinois HB2838 Requiring GC's to pickup unpaid payroll of Subcontractors

    Posted 6 days ago

    It appears that Illinois HB2838 will go into effect July 1, 2019 if passed by the Senate.  I'm interested in what other General Contractors in Illinois are going to do to limit their liability.  It appears from the amendment made in the Senate that if the General Contractor collects the equivalent of a certified payroll with affidavit filled out from every sub that they won't be liable.  This seems very costly and time consuming to me.  Not only that but I can only imagine this will slow down cash flow for subs since GC's probably won't release payments until a certified payroll is collected.  Any comments or thoughts would be appreciated.

    Thanks,
    Ben Knochel, CPA CCIFP
    Director of Finance
    Catalyst Construction, Inc.




  • 2.  RE: Illinois HB2838 Requiring GC's to pickup unpaid payroll of Subcontractors

    Posted 5 days ago
    Ben,

    As you highlighted, this is causing a stir in the Illinois market.

    The details of the proposal and its applicability / interpretation within the state of Illinois are developing. A similar law however was enacted in California last year (1/1/2018). The law is intended for private work, but there is no precedent that limits applicability to public work. The CA construction market is interpreting the law broadly, and is taking the changes in stride.

    I'm told California GCs have responded by amending their subcontracts. In response to the law, GCs are contractually pushing this risk down to subcontractors. Long story short, the GCs are ensuring the subcontracts contain clauses that permit the GCs full access and auditing rights to the subcontractors' records. GCs are requiring the ability to access/audit subcontractors' records on a weekly, monthly, quarterly etc. basis to ensure subcontractor is paying their own workers.

    Illinois GCs may want to work with legal counsel to pursue a similar strategy or other alternatives.



    ------------------------------
    Mike Grillo
    Senior Broker - Surety Credit
    AON - Construction Services Group
    Chicago, IL
    O: 312.381.3629
    M: 312.256.1664
    mike.grillo3@aon.com
    ------------------------------