Illinois Court Rules in Favor of Prevailing Wage Coverage

McKinley Foundation v. Illinois Department of Labor, No. 4-09-0512

In September 2010, the Fourth District Court of Appeals held that the Illinois Prevailing Wage Act (“IPWA” or “Act”) covered a public works project financed in part from bonds issued by the Illinois Finance Authority, constructed by a not-for-profit corporation (McKinley Foundation v. Illinois Department of Labor, No. 4-09-0512). This decision reversed the lower court opinion, which concluded that the not-for-profit was not a public body and therefore the project was not covered by the Act.

The McKinley Foundation is a not-for-profit corporation that contracted for the construction of a multi-million dollar student housing facility in Champaign, Illinois. Approximately $20 million of the financing for the project was obtained from tax-free bonds issued from the Illinois Finance Authority. Section 2 of the IPWA, defining “public works,” expressly lists “projects financed in whole or in part with bonds issued under … the Illinois Finance Authority Act” (820 ILCS 130/2). Although McKinley agreed that the project was a “public work” as defined under the IPWA, it argued that it was not a “public body,” nor an “institution supported in whole or part with public funds,” therefore the IPWA requirements did not apply. The Illinois Department of Labor, charged with enforcing the IPWA, argued that McKinley was a public body for purposes of the student housing project, since the project was paid for in part with the IFA bonds. Therefore, workers on the project were entitled to be paid the prevailing wage.

Finding that both IDOL’s and McKinley’s interpretations of the IPWA were reasonable, the Court looked to the legislative history of the statute. Reviewing the House and Senate debates concerning the Act, the Court concluded that “[t]he legislative history makes clear the General Assembly intended to expand the coverage of the Act to projects constructed by entities benefiting from financing under an enumerated public-financing mechanism, even if the entity itself was not a traditional public body” (emphasis added). Accordingly, the housing project, financed with IFA bonds, was covered by the Act and required payment of prevailing wages.

The McKinley Foundation has submitted a Petition for Leave to Appeal the decision to the Illinois Supreme Court. The III FFC will post any further development in the case on this site. If you would like more information about the Court’s decision, please contact the III FFC at 815.409.0258.

Download the entire ruling here