COMMENTS THOMAS W. KELTY, Chief Counsel, Illinois Municipal League

PUBLIC WORKS, PREEMPTION PREVAILING WAGES

THE PEOPLE EX REL. BERNARDI VS. CITY OF HIGHLAND PARK, _ ILL. 2ND _, _, ILL. DEC. _, _ N.E.2ND_, (1986).

"The principal issue in this appeal is whether a home-rule municipality must conform to the requirements of an Act regulating wages of laborers, mechanics and other workers employed in any public works' (citations omitted) (Prevailing Wage Act) in seeking bids in awarding contracts for public works projects."

This concise statement of the issue in the case of Bernardi vs. The City of Highland Park (the "City") is the opening statement in the opinion of the Illinois Supreme Court delivered by Justice Ben Miller that clarified yet another area of home-rule power. In this opinion, the court ruled that the Prevailing Wage Act (the "Act") does not preempt the home-rule power of a municipality.

The Director of the Illinois Department of Labor, Bernardi, and the City did not dispute the facts leading to this litigation. In December of 1983, the City issued contract specifications for a public works project to perform work on an intake line serving the water treatment plant of the City which served the City and five other adjacent communities. Subsequent to the issuance of the specifications, Bernardi filed a complaint in February of 1984 asking for injunctive relief. The complaint alleged that the City was in violation of the Act by failing to ascertain the prevailing wages in the community or adopt figures provided by the Department of Labor, by failing to specify those prevailing wages in the contract specifications and by failing to inform perspective bidders that they would be required to pay the prevailing rates to workers on the project. According to the facts, the City Council intended to award the contract at its next meeting following the filing of the complaint to the successful bidder, Durocher Dock and Dredge Corporation. Based upon the complaint of Bernardi, Circuit Judge Jack Hoogasian granted a temporary restraining order.

Both the City and Durocher, which had been named as defendants in the action, admitted that the Prevailing Wage Act had not been complied with. It was their assertion that the City, a home-rule unit of government under the Illinois Constitution, was not required to comply with the Act. The defendants stipulated that the City's failure to refer to the Act in the contract specifications was "neither a negligent omission nor an error" and that "payment of wages involved with and as prescribed by the Act will result in increased costs to the City for the construction of the water intake extension."

After further hearing on Bernardi's request, the Circuit Judge denied the request for a preliminary injunction, dissolved the temporary restraining order and dismissed the director's action. In reaching this holding, Judge Hoogasian found that the project was essentially a municipal affair and reasoned that it was in the scope of the City's home-rule authority to decide not to comply with the Act in contracting for the work. Additionally, the Circuit Court noted that the legislature had not expressed an intent to preempt home-rule authority in this area. Finally, the Judge reasoned that the City was not required to pass an ordinance to specifically exercise this home-rule authority in not complying with the Act. On appeal, the Appellate Court affirmed the Circuit Court's decision, relying on essentially the same reason.

The Prevailing Wage Act was adopted by the Illinois Legislature in 1941 after previous attempts to place similar legislation in the statutes had been found unconstitutional. Previous versions of the Act had been overturned in 1931 and 1940.

The policy goals stated in the current Act are similar to those that the state had previously attempted to enact.

"It is the policy of the State of Illinois that a wage of no less than the general prevailing hourly rate has paid for work of a similar character in the locality in which the work is performed, shall be paid to all laborers, workers and mechanics employed by or on behalf of any and all public bodies engaged in public works."

The Act is to apply to persons employed in "any public works" by any "public body" and to "anyone under contracts for public works." "Public works" is defined within the Act as "all fixed works constructed for public use by any public body, other than work done directly by any public utility company, . . .". Additionally, the definition of "public body" included in the Act includes "the state or any officer, board or commission of the

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state or any political subdivision or department thereof, or any institution supported in whole or in part by public funds,... and includes every county, city, town, village, township ..."

Operation of the Act requires that the public body proposing to perform a public work is to ascertain the "general prevailing rate of hourly wages 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, . . ." In the alternative, the public body may use figures provided by the Department of Labor to ascertain the general prevailing rate of hourly wages. Public bodies are required in June of each year to investigate and ascertain the prevailing wages, post or keep available for inspection the determination and file a certified copy of the prevailing wages in the office of the Secretary of State. According to the Act, any "call for bids for a public works project" must specify that the prevailing wages are to be paid and this requirement must also be included in the final contract for the work. The Department of Labor is charged with enforcement of the various provisions of the Act and violators are subject to criminal penalties upon conviction.

In a 4 to 3 decision of the Illinois Supreme Court with a descendant authored by Justice Seymour Simon, the court rejects the arguments of the director that the Prevailing Wage Act preempts contrary actions by a home-rule municipality. In reaching this conclusion, the court looks at a broad spectrum of cases pertaining to the preemption issue and makes several pronouncements pertaining to home-rule generally and additional pronouncements pertaining to the specific issue. After a discussion of the facts and the language of the Act, the court quickly presents its holding regarding the issue. "We do not believe that the purposes of the Prevailing Wage Act compel the conclusion that it preempts inconsistent home-rule activity or that it permits only consistent activity."

To support this position, the court notes that, "many decisions have rejected the argument of exclusive state control in areas in which the General Assembly has enacted broad or comprehensive legislation on the subject but has not expressed an intent to preempt local, home-rule activity. In support of this statement, the court cites four Supreme Court cases dealing with gun control, taxation, retirement age for police officers and composition of a board of police and fire commissioners. In addition, the court points out that "to avoid unintended or inadvertent preemption this court has interpreted the provisions as requiring a specific statement by the legislature of its preempt of intent (citations omitted), and this concern has been mirrored in the legislature, which is imposed to similar requirement

Finally, an additional statement of the court disposes of any doubt regarding the intentions of the court. "For a home-rule unit to determine not to conform to the provisions of the Prevailing Wage Act is, we believe, a decision within its home-rule powers. The wages to be paid on the public works projects of home-rule municipalities and county affect local interests and are a manner pertaining to the government and affairs of the local unit."

An additional argument of the director was that a simple failure by the City to comply with the provisions

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of the Prevailing Wage Act was insufficient to constitute and exercise of home-rule authority. According to the director, a specific ordinance rejecting the provisions of the Prevailing Wage Act is necessary. The concluding paragraph of the majority opinion clearly disposes of this issue.

"To acquire the home-rule unit to spell out, in an ordinance, that it was no longer choosing to follow a particular statute would be inconsistent, we believe, with the constitutional provisions setting out methods by which the legislature may express its intent to preempt home-rule authority. Requiring a home-rule unit to formally express its intent to deviate from a statute would mean that, by municipal default, legislation would preempt local activity, even though the legislature had not expressed its preempt of intent."

The dissent of Justice Simon points out the minority's belief that the question was incorrectly analyzed by the majority. According to Justice Simon,

"the question presented by this appeal, however, is not whether Highland Park was foreclosed from contradicting that law because of legislative enactment, but is instead whether Highland Park had the authority under Section 6(a) to act in contravention to the Prevailing Wage Law in such a way as to prejudice the commonwealth in Illinois generally and Lake County particularly."

Justice Simon points out that the contract involved in this litigation has an impact outside of the territorial boundaries of Highland Park. First, Justice Simon feels that allowing Highland Park to "avoid its obligations" under the Act directly impacts wages paid to workers on other public works projects throughout the county. Second, the servicing of other communities than Highland Park by the project could result in an inferior work force and risk delay or "shoddy construction" would effect residents outside of Highland Park.

Finally, Justice Simon expresses a minority view that the "field" of regulation contemplated by the Prevailing Wage Act has been preempted by the state through "a comprehensive scheme of governmental intervention in the workplace." The Justice expresses his concern that this decision by the majority will work to the detriment of other labor laws such as the Worker's Compensation Act, the Wage Assignment Act, the Minimum Wage Law, and several other cited in the opinion. This final point of the dissent was addressed and rejected by the majority through the majority's distinction of the various acts cited in the dissent in terms of their "field" of application to the state as opposed to individual municipalities.

The immediate impact of this decision of the court is to clarify the home-rule preemption issue with respect to the Prevailing Wage Act. The longer term impact is to provide additional case law in the area of preemption generally and to thereby extend the clarification of this issue. The holding by the court and its rationale open further possibilities for expansion of home-rule powers in areas previously thought to be preempted. However, this pronouncement by the court by a vote of 4 to 3 cannot be interpreted as an overwhelming mandate.

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Minor variations in the factual situation or the Act involved could easily tip the balance to an opposite result in another case. If so, although the home-rule preemption waters are a little clearer, some cloudiness and uncertainty still remains.

ADDENDUM

At the time that this Article was being prepared, a truly unique idea for the control of keg beer sales by municipalities crossed my desk. Because of the unique nature of the idea and its potential for resolution of a problem that many municipalities face, I am adding it to this Article for your information.

A city in Central Illinois is considering adopting a system whereby local liquor licensees will be required to maintain a log of those persons purchasing kegs of beer from their establishments. Identification will have to be provided in some positive method in order to determine that the purchaser is over 21. In addition to the maintenance of this log, the seller of the beer will be required to affix to the keg by painting or some other method a unique serial number that will identify the establishment from which the beer was purchased. This serial number will also be recorded along with the information on the person purchasing the beer. Then, in the event that the police department of this municipality is called upon to deal with the problem at a party where keg beer is being served, the officers will be able to determine, with minimal investigation, where the beer was purchased and by whom it was purchased. By having this information readily available, the authorities will be able to determine whether the identification provided by the individual purchasing the beer was false or in the case of a transfer of the keg to a minor, who the original purchaser of the liquor on behalf of the minor was.

I was requested to give an opinion as to the legality of such a system. While I cannot find fault with the system, I believe that it provides the local authorities with a simple, but efficient, enforcement tool in controlling the disbursement of keg beer, especially to minors. Additionally, the seller of the beer is provided with sound protection and proof that beer transferred to a minor was not purchased by the minor thereby providing some protection against a dramshop action.

If the readers of this column have additional thought or ideas on this system, please direct them to my attention. As the system is developed and implemented, I will keep you advised of those developments and the success which this unique enforcement method achieves. •

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