Are Your Federal Construction Projects Now Subject to the Illinois Prevailing Wage? What Contractors Must Know

Federal and state prevailing wage mandates are colliding on construction projects in Illinois, exposing owners, developers, and contractors to conflicting compliance obligations and increased project costs. With the enactment of Illinois HB 1189, projects that long fell exclusively under the federal prevailing wage law (Davis-Bacon) may now also be subject to the state’s prevailing wage law mandates.

While the Illinois Department of Labor (IDOL) has issued guidance for contractors, there is little clarity on how to reconcile fundamental and incompatible differences between state and federal prevailing wage laws. Contractors operating in this environment must understand where these mandates conflict and take deliberate steps to protect pricing, performance, and profitability.

Illinois Prevailing Wage Act’s Expanded Definition of “Public Works”

The Illinois Prevailing Wage Act’s (IPWA) definition of “public works” was expanded greatly on August 14, 2025, when HB 1189 went into effect. Under HB 1189, all federal construction projects that are administered or controlled by a public body in Illinois are considered “public works” pursuant to the IPWA if the federal wage rate is equal to or less than the established Illinois prevailing wage rate for the same type of construction used to classify the federal construction project.

A “public body” is defined under the IPWA as “the State or any officer, board or commission of the 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, school district, irrigation, utility, reclamation improvement or other district and every other political subdivision, district or municipality of the state whether such political subdivision, municipality or district operates under a special charter or not.”

Illinois Department of Labor’s Guidance on HB 1189

The Illinois Department of Labor (IDOL) has issued guidance on HB 1189. Specifically, the IDOL published Frequently Asked Questions on its website, in material part, as follows:

How will HB 1189 apply to projects that are already in progress?

In this initial implementation phase, IDOL will not focus enforcement resources on federally funded projects where the bid was previously formulated and selected based on Davis-Bacon Act (DBA) rates. The effective date of the HB 1189 is August 14, 2025.  Projects bid after that date should conform with the requirements of HB 1189.  

What will public bodies need to do to comply with HB 1189 moving forward?

Public bodies should review all federally funded contracts and grant agreements entered into after August 14, 2025, and include in those contracts and grant agreements notification that Illinois Prevailing Wage Act (PWA) rates may apply.

What will contractors need to do to comply with HB 1189 moving forward?

Contractors should think about what trades will be needed on the project, determine if the Illinois prevailing wage rate or DBA rate will apply to each trade classification, and formulate their bids informed by the anticipated required wage rates.

If a contractor determines that PWA rates apply on their federally funded public works project, they should also maintain payroll records and upload certified transcripts of payroll to the online payroll portal as part of ongoing compliance with the Act. Where a contract may be subject to both the DBA and the PWA, the contract may refer to both federal prevailing wage rates and the most recent Illinois prevailing wage rates, noting that the Illinois rates are updated regularly.

Additional information about these reporting requirements is forthcoming.

There are some types of construction, such as residential construction, for which there are Davis-Bacon Act wage determinations, but no corresponding Illinois prevailing wage determination. Which law applies in that situation?

Where there is no corresponding Illinois prevailing wage determination for the type of construction, the DBA rate applies. However, there are other types of construction (for example, “building” or “heavy/highway”) for which there are DBA wage determinations and corresponding PWA determinations. 

There are some trade classification descriptions under the Davis-Bacon Act for which there is no corresponding Illinois prevailing wage trade classification. What rate needs to be paid in that situation?

HB 1189 requires that workers on federally funded projects administered by an Illinois public body must be paid the PWA rate for their trade classification description, if that rate is equal to or higher than the rate for the corresponding DBA classification description. If the DBA classification description does not correspond to a parallel or higher Illinois PWA rate, then the DBA rate applies.

HB 1189 Ignores Fundamental Differences Between the IPWA and Davis-Bacon 

While this guidance attempts to address certain questions, it fails to discuss and contrast the vast differences between Illinois and federal prevailing wage requirements. They are fundamentally not the same in scope, coverage, and necessary record keeping and reporting mandates.

For instance, how does the construction industry reconcile the fact that while Illinois prevailing wage rates can change month to month, federal prevailing wage rates can be locked in and not subject to variation throughout the entirety of a particular project.

Other substantial differences in the application of federal and Illinois mandates include the following:  

• Transportation of equipment, supplies, and materials to and from a construction project;
• Coverage as to bona fide owners self-performing construction-related work;
• Routine repair and/or maintenance work, particularly with a monetary value of up to $2,000, since Davis-Bacon only applies to projects exceeding that value.

This is not an exhaustive list, but it clearly appears that HB 1189 encroaches on federal funding and authority in several critical areas. HB 1189 reflects a fundamental lack of understanding by the State of Illinois with respect to federal prevailing wage law.

Moving forward, when owners, developers, and contractors are evaluating any federally funded construction contract or grant agreement, they will be obligated to determine whether any Illinois “public body” is administering or controlling the federal contract or grant. If so, there will undoubtedly be conflicting obligations under both the IPWA and Davis-Bacon, causing confusion along with time and financial resources to be needlessly drained.

What Contractors Need to Know

Nonetheless, contractors in Illinois dealing with federal construction projects that are administered or controlled by an Illinois public body can take several courses of action moving forward:

• Review (and re-review) all bids issued after August 14, 2025, including all related specifications;
• Identify and compare federal and state prevailing wage rates;
• Consider what project-specific trades are needed while also determining which wage rate will apply, in order to formulate appropriate bids and to ensure compliance on past bids;
• Be familiar with both state and federal record keeping and payroll reporting obligations; and
• Consult with competent legal counsel to ensure compliance, but to also contemplate available legal challenges to Illinois’ encroachment on federal projects.