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Contractors Beware (of where your workforce resides): The New Employment of Illinois Workers on Public Works Act

Posted on July 26th, 2010 by Kevin Green

On June 16, Governor Pat Quinn signed House Bill 6349 (Public Act 96-929, found at 30 ILCS 570) which is aimed at enhancing the Employment of Illinois Workers on Public Works Act, commonly referred to as the Illinois Preference Act, by establishing monetary penalties for violations of the Act, clarifying the law’s coverage, and adding a private right of action to allow individuals to seek remedies regarding violations of the law. These changes are effective immediately.

Under the revised law, contractors on State public works projects are required to employ a workforce that is comprised of at least 90% Illinois laborers during periods of excessive unemployment. If you are a contractor or subcontractor, a few questions may immediately come to mind. What is a public works project? What is a period of excessive unemployment? How is an Illinois laborer defined? Does this apply to me? What happens if I do not comply? Here is a brief analysis of the new law that should help you understand how this new law affects your business.

What is a public works project?

The law defines a public works project as “any fixed work construction or improvement for the State of Illinois or any political subdivision of the State if that fixed work construction or improvement is funded or financed in whole or in part with State funds or funds administered by the State of Illinois.” Thus, a public works project includes any project funded or financed in whole or in part with State funds or funds administered by the State of Illinois. This includes federally funded projects when the federal funds are administered by the State of Illinois. The law places the focus of defining a public works project on how the project is financed, not the recipient of the project. Consequently, an entity building a new road for Illinois without any public funds would not be subject to the 90% requirement.

What is a period of excessive unemployment?

For the law to be applicable, there must be a period of excessive unemployment. Such a period occurs when the level of unemployment in Illinois has exceeded 5% for at least 2 consecutive months. In Illinois, the unemployment rate for the past year has been hovering between 10 and 12% according to the U.S. Bureau of Labor Statistics, meaning we are currently in a period of excessive unemployment.

What is an Illinois laborer?

An Illinois laborer “refers to any person who has resided in Illinois for at least 30 days and intends to become or remain an Illinois resident.” The revised law still allows every contractor on a public works project or improvement to place no more than 3 of his regularly employed non-resident executive and technical experts, even though they do not qualify as Illinois laborers

Does this law apply to me?

The revisions to this law mean that those under contract to construct or build a public work today must know the residence of their employees and ensure that 90% of them reside in Illinois or have resided in Illinois for at least 30 days with the intent to become or remain Illinois residents. More importantly, the revised law appears to apply to both contractors and subcontractors. The new law applies if any “person or entity is charged with the contractual duty of constructing or building any public works.” Moreover, an entity “means any sole proprietor, partnership, firm, corporation, limited liability company, association, or other business enterprise,” but does not include the State or the Federal Government. Additionally, “every public works contract let by any such person shall contain a provision requiring that such labor be used.”

Because the law was just passed, there is no case law analyzing its scope; however, the language of the statute suggests it has a broad sweep, applying to both contractors and subcontractors. Additionally, the complaint form found at the Department of Labor’s website contains check boxes for both contractors and subcontractors, suggesting both are subject to the law. The language of the statute could even be read to suggest that a contractor is on the hook for a subcontractor’s violation of the law, even if the subcontractor is the party that did not employ the proper workforce.

What happens if I do not comply?

The new law makes major changes to the enforcement and penalty provisions. Under the old version, the Attorney General, on behalf of the Department of Labor, could sue for injunctive relief against the awarding of any contract or the continuation of any work under any contract for public works or improvements for violations of the Act.

Now, the law explains that the Department of Labor has the power to conduct investigations, and any investigator with the Department is authorized to visit and inspect, at all reasonable times, any places covered by the Act. Additionally, the inspector can inspect documents related to the determination of whether a violation of the Act exists. Furthermore, the Department may compel, by subpoena, the attendance and testimony of witnesses and the production of books, payrolls, records, papers, and other evidence in any investigation and may administer oaths to witnesses.

The revised law also enhances the Attorney General’s enforcement mechanisms. In addition to injunctive relief, the Attorney General can issue and cause to be served a cease and desist order and “take affirmative or other action as deemed reasonable to eliminate the effect of the violation,” and collect any civil penalties assessed by the Department.

These civil penalties are a new addition. Under the old version, a violation of the Act resulted in a Class C misdemeanor. Each separate failure to use Illinois laborers constituted a separate offense. Now, any person or entity that violates the provisions of the Act is subject to a civil penalty. The Act sets maximum fines for first, second, and third offenses.

1st offense – $1000 max for each violation
2nd offense – $5,000 max for each violation
3rd offense – $15,000 max for each violation

Each violation of the Act for each worker and for each day the violation continues constitutes a separate and distinct violation.

Finally, the revised law adds a private right of action, meaning that in addition to an action brought by the Attorney General, any interested party or person aggrieved by a violation of the Act or any rule adopted under the Act may file suit in Circuit Court, in the county where the offense occurred or where any party to the action resides. These private actions can only be brought:

(1) 30 days or more after a complaint has been filed with the Department of Labor or
(2) any time after the filing of a complaint if the Department of Labor gives notice that it will not proceed with the complaint.

Actions can be brought by one or more person or entity for and on behalf of themselves and other persons or entities similarly situated. A person is entitled to collect attorneys fees and costs and compensatory damages not to exceed $500 for each violation.

Let’s make this a bit more concrete with an example. A general contractor enters a contract to build a new gym at a public high school. The project is partially funded by federal funds administered by the State of Illinois. The unemployment rate at the time is 10.8%. These facts establish that the law is applicable. The contractor must be sure to comply with the law or face civil penalties. If the contractor has a workforce of 1,000, it may hire no more than 100 non-Illinois residents. If the contractor hired 105 non-Illinois residents (5 more non-Illinois residents than the law allowed), it would have 5 separate violations. If it kept these 5 employees working for 5 days, it would have 5 separate violations for each worker, leading to 25 violations (5 workers x 5 days). If this was the first offense for the contractor and the maximum penalty was applied in a case brought by the Attorney General, the contractor would owe $25,000 ($1,000 x 25 violations). Moreover, an Illinois resident that was not hired might bring a private civil action against the contractor seeking compensatory damages at $500 per violation ($12,500) and attorney fees and costs.

It is easy to see how a contractor not knowing the residence of its workforce could quickly become expensive. Because it does not appear that the unemployment rate for the State of Illinois will dip below 5% any time soon, contractors should be aware of the Employment of Illinois Workers on Public Works Act and continue (or start) accounting for the residence of their workforce.

To discuss this or another Business or Commercial legal issue, please contact the author, Kevin Green.

Defamation on the Internet – Be Careful What You Say, er, Write

Posted on June 25th, 2010 by Jena L. Borden

The internet is rapidly becoming society’s way of learning about current events and hot topics of the day. Newspapers are quickly becoming a thing of the past. Most newspapers now have websites on the internet.

Whenever I read a news article on the internet, I always scroll down to view the reader comments to the piece. Why? Because people seem to pull no punches when putting their opinions in writing. And I always think-if they were actually speaking the words for the world to see, would they have put it the same way? I venture to guess that most would not. People seem to feel much safer posting comments on the internet than they would be with verbalizing them in a public forum, for example, saying them on TV. There is anonymity to the process of posting web comments that leads people to be more lax in their choice of words. Some comments can be downright vitriolic.

But, the old rhyme that ends with “names will never hurt me” didn’t take into account the tort of defamation.

Defamation is the communication of a statement that makes a claim, expressly stated or implied to be factual, that may give an individual, business, or group a negative image. It is usually, but not always, a requirement that this claim be false and that the publication is communicated to someone other the party defamed. Although both require “publication”, slander is spoken defamation and libel is written.

What those who post comments on websites need to realize is that they can be held liable in a lawsuit for the statements they make.

Most news organizations are taking the position that under the First Amendment, which deals with freedom of speech and of the press, they are not required reveal the identity of the person posting the comment. However, some courts are forcing the news organizations to reveal the identities of parties who are accused of making defamatory statements. For example, an Illinois Appeals court just recently held that the identity of two website commenters must be disclosed by an Ottawa, IL newspaper. The comments involved allegations that a local couple bribed certain officials in order to obtain approval for a zoning request for a bed and breakfast addition. Once the identities are revealed, these parties will be facing a defamation lawsuit.

A good rule of thumb when posting on the internet is this: if you wouldn’t feel comfortable saying it in person, DO NOT put it in writing. We all must take ownership of our statements and what we publish for the world to see on the internet. And then be ready and able to deal with the consequences that typing those words may bring.

Please feel free to contact Jena Borden to discuss this or any other legal topic.

Robert Rowland Answers Asbestos Victims’ Frequent Questions

Posted on June 25th, 2010 by Robert D. Rowland

Lawyers and Settlements (LAS): How long does a client have to wait before his or her case comes to trial?

Robert Rowland (RR): Typically, here in Madison County, living mesothelioma victims are able to obtain a trial date within six months of getting their basic information filed with the court. I don’t know of any jurisdiction where a victim can get their day in court sooner. We have set about 95 cases for trial per year over the last two years.

LAS: Is settling more advantageous for the client rather than going to trial?

RR: In a lot of ways, it is. It allows us to get money to our clients and their families sooner and help ease the financial burden caused by this devastating disease.

LAS: Who is your typical client?

RR: Many of our clients are members of labor unions in various types of work such as refineries, power plants and steel mills; they built big department stores, grade schools, highways and bridges—all typical examples of people who have asbestos-related disease. Most of our clients are men over 60 years old. We also have represented women—wives and daughters—whose only connection to asbestos was washing their husband or father’s clothes. We bring a measure of hope to our clients, even those diagnosed with mesothelioma. We are able to take care of their families and relieve that pressure while they are battling the disease.

I recently got a call from a family and immediately went to the hospital. I talked with and asked questions to a man wearing an oxygen mask because he probably wasn’t going to live through the night. He died that night and there is ongoing litigation on behalf of his family.

LAS: Many victims believe there is no hope of litigation if the company they worked for is no longer operational or bankrupt.

RR: That’s a misconception. We tell our clients not to assume anything; let us work on the case because a lot of people don’t realize the scope of asbestos-containing products. For example, drywall joint compound contains asbestos, so we would go after the manufacturer. Many different exposures could contribute to asbestosis. Most of our asbestos experts say that one single fiber can cause mesothelioma.

In regard to bankrupt companies, bankruptcy trusts have been set up to partially compensate people. Unfortunately, they only pay pennies on the dollar, which is why we go after asbestos exposure throughout a victim’s lifetime.

LAS: At what stage of the disease should someone file a claim?

RR: Every state has a statute of limitations that creates a deadline to file a lawsuit. For instance, here in Illinois, we have a two-year statute of limitations, and the discovery rule means that your time to bring a lawsuit starts when you have an injury and when you know, or should have known, that is was wrongfully caused.

In the past, clients would come to us after a loved one died and the death certificate read, “Cause of death was mesothelioma or lung cancer.” They only knew it was cancer, but when you have mesothelioma you go downhill so fast; it is a cancer that is unique because it has only one known cause: asbestos.

LAS: What is the next step, after a loved one has died from cancer, for a family member to determine whether they have a claim?

RR: A family member should get in touch with a lawyer if they suspect cancer fatality was related to asbestos exposure. The attorney will then contact a pathologist to review a biopsy of the decedent’s lung tissue in order to make a diagnosis that the death was essentially caused by asbestos exposure.

Without the lung tissue or cytology (which is fluid drawn from the lungs), it is very difficult to make a post-mortem diagnosis of mesothelioma. If someone is diagnosed with lung cancer, however, it is possible—with a B Reader x-ray—to determine whether a person had underlying asbestosis. And typically if you have lung cancer combined with underlying asbestosis, that is compensable.

LAS: Is it easier for the plaintiff to reach a settlement now, with more asbestos awareness, than in the past few decades?

RR: OHSA [Occupational Health and Safety Administration] came out with asbestos exposure guidelines in 1972, which put the industry on notice; the first lawsuits came soon afterward. Of course, companies in the asbestos industry knew about the dangers of asbestos exposure back in the 1930’s and before. Next, asbestos was banned in home construction by the Consumer Products Safety Commission in the late 1970’s. As government regulation increased, it raised public awareness of asbestos dangers and lawsuits followed.

Nationally, the courts are more in favor of plaintiffs, but defendants have fought the whole way—it is an ongoing battle. Now defendants use the excuse that bankrupt companies had a more dangerous product than the current company and therefore the fault lies with the bankrupt company. Their primary defense is, “The danger created by my product is insignificant.” They say their product is minor—based on the type of asbestos fiber—compared to others so they should be able to walk away scot-free. That is called the Chrysotile Defense. [Chrysotile is a mineral and a known human carcinogen. As with other forms of asbestos, exposure to chrysotile can cause asbestosis, lung cancer and mesothelioma.]

LAS: What happens when a defendant appeals, and what is the general time frame?

RR: If a jury finds in favor of the plaintiff at trial and the defendant appeals, the case is transferred to an appellate court. The appeals process can take years. Typically, each case involves 20-30 defendants and most defendants settle prior to the trial date.

LAS: Is asbestos a mass tort?

RR: A mass tort technically means an incident of widespread exposure and disease and a demonstrable level of causation between exposure and disease. Think Vioxx and previous large drug cases – they were mass torts. In many ways, asbestos was likely the first mass tort.

LAS: What makes prosecution of mesothelioma cases so difficult?

RR: Exposure is not an isolated event and the latency period between exposure and onset of the disease can be 30 years or more. This time frame makes the prosecution of asbestos cases unique and a law firm’s experience matters. A potential client comes into my office and we need to talk about what happened 30 or even 40 years ago. We need to piece together work history, home remodeling and even shade tree mechanic work to get a complete history of asbestos exposure. An even more difficult case involves a widow retaining a lawyer after her spouse has died from mesothelioma and she has to try to figure out what her husband did at work. The clock is ticking and you should seriously consider filing a claim sooner than later.

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The first asbestos exposure mesothelioma case was filed in 1929, making asbestos lawsuits the longest running mass tort in US history. Since that time, more than 600,000 people have filed lawsuits against 6,000 defendants after being diagnosed with mesothelioma, asbestosis or other asbestos-related diseases.

Robert Rowland and Goldenberg Heller Antognoli & Rowland, PC have produced extraordinary results in excess of half a billion dollars for their asbestos clients through litigation, settlement and trial. The firm is the most experienced asbestos litigation firm in the metropolitan St. Louis area.
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Please feel free to contact Robert Rowland to discuss any questions you or a loved one may have regarding Asbestos or Mesothelioma.

The Future of Creditors and Charging Orders

Posted on June 12th, 2010 by David L. Antognoli

It didn’t take long to surmise that the distinguished panel of Appellate Court justices had no previous exposure to a charging order, an important weapon in a creditor’s collection arsenal. Indeed, at the outset of the oral argument, one judge asked counsel directly and candidly, “What is a charging order anyway?” The question – posed by a seasoned jurist with a long background in commercial law—highlights the arcane nature of charging orders. But charging orders are not likely to remain obscure; the growth of the limited liability company (“LLC”) as a business entity of choice, coupled with current distressed economic conditions, will force creditors to resort to the remedy of a charging order with increasing frequency.

A charging order is a collection remedy with two unique features: (1) it applies only to a limited category of assets (i.e., LLC and partnership interests); and (2) it is the exclusive means to enforce a judgment against a debtor’s interest in an LLC or partnership. The remedy is designed to minimize disruption of an LLC’s business operations when a creditor of an individual member seeks to enforce a judgment against his LLC interest. A charging order gives the creditor the right to receive any distribution from the LLC that the debtor-member would otherwise be entitled to receive. However, the credit does not obtain the debtor-member’s voting rights or any other right to participate in management of the company.

A variety of practical issues detract from the efficacy of a charging order. Unless the LLC authorizes a distribution, the creditor receives nothing. And the creditor has no voice in the LLC’s decision whether to authorize a distribution. Although the court may order a foreclosure sale of interest subject to the charging order, bidders will be few and far between. Even after the creditor acquires the interest at foreclosure, he remains unable to participate in the LLC’s management and, therefore, may be at the mercy of management. Nonetheless, the charging order is the only method available to collect a judgment from a debtor-member’s LLC interest.

The LLC is rapidly becoming the business entity of choice among real estate developers and investors. Illinois first recognized this form of business entity in the mid-1980s. It gradually increased in popularity during the 1990s. Now our real estate clients now overwhelmingly favor the LLC over any other form of business entity. LLCs not only offer asset protection but also tremendous flexibility and avoid “double” income taxation associated with conventional business corporations.

A number of high-flying investors and developers who rode the real estate boom have crashed. Their creditors are struggling to find assets to satisfy tremendous liabilities. Since many of these debtors own membership interests in LLCs, their creditors must resort to the charging order remedy. As the demand for this remedy increases, it will emerge from obscurity. As resort to the charging order expands, a variety of unanswered legal issues will also emerge.

Some of these unanswered issues surfaced in the case described above, which involved multiple creditors competing for the same LLC interests. Creditor A used conventional collection methods and obtained a citation lien against the debtor’s LLC interest but never obtained a charging order. Creditor B obtained a charging order, but only after Creditor C had obtained a pre-judgment attachment. When Creditor C reduced its claim to judgment, it obtained a charging order, but its charging order came later than Creditor B’s. The trial court struggled with the tangled issue of priority for months, doubtless as a result of the striking lack of precedent in Illinois case law. Ultimately, the trial court ruled in favor of Creditor B. The Appellate Court has the case under advisement.

To discuss this or any legal issue related to Commercial Law or Real Estate Law, please contact the author, David Antognoli.

Take Me Out To the Ballgame

Posted on June 9th, 2010 by John B. Woelfel

As a father of four, my favorite time of year is baseball/softball season. All of my kids love the sport and their games become the centerpiece of our time together as a family. With the 6 year-old in Tee Ball, the 7 year-old playing soft pitch softball, the 11 year-old playing fast pitch softball and the 13 year-old playing fast pitch baseball, there are lots of ups, downs and learning opportunities.

I love being a lawyer almost as much as I love being a Dad. As a lawyer, it’s important to me I teach my children how to respect the law and be aware of how to behave properly. One of the best ways of getting them to listen to me, not always an easy task when it’s Dad talking about the office, is to make stories about sports analogous to life lessons about the law.

I explain how Tee Ball is similar to the start of a case. You are learning the fundamentals about the defendants and your client, trying to figure out which base to run to and where to throw the ball. Then I try and illustrate to the 7 year-old how the next step is more complicated, investigating product identifications and placing certain products around the environment of our clients that could help our case. It’s similar to learning the subtleties of reading the pitcher before you attempt to steal second base. Finally, we move on to the “Big Leagues” where the competition intensifies, just like with the older kids and fast pitch. That’s where the combination of skill, preparation and work ethic determine success. Being able to read the seams on a pitch to determine whether it’s a fastball or a changeup can be the difference between success and failure. I try to impart to them how hard I work is as important to winning a case as it is to them winning a game.

Succeeding at the highest level of law means delivering for your clients. Doing your best is fulfilling as an attorney, much like it is as a father, and beneficial for our clients and children. Along the way, we deal with the other team, opposing counsel. However, at the end of the day we are friendly with each other, displaying good sportsmanship. We understand that each team is trying to do their best for their clients.

Finding satisfaction in a job well done, we can rest easy when we go home at night to hear about the kid’s day at practice. The next morning we wake up anticipating what the day will hold as we come into the office and work together as a team in order to win cases for our clients and hoping our kids get the game ball.

Feel free to contact John Woelfel if you would like to discuss this or any legal matter.