Legislative updates

The following construction-related legislation saw action in front of the Illinois State Legislature. The bills that would have done the most damage to the construction industry did not pass, due in part to efforts by the Builders Association and other industry associations.

Senate Bill 0001-Gross Receipts Tax

The Gross Receipts Tax was would have applied a .85 percent tax on all gross billings made by Illinois contractors. In addition, Illinois material suppliers and distributors would have been subject to a 1.95 percent Gross Receipts Tax.

The Builders Association opposed the bill, which did not pass. The GRT would have greatly increased the cost of construction.

House Bill 555-Construction Indemnity Hold Harmless

The Builders Association was opposed to this bill, which did not pass. According to the bill, any time a subcontractor’s employee was injured on a jobsite and filed suit against the GC/CM, there would be a dispute with the subcontractor’s insurer about whether or not the GC/CM was owed a defense. 

House Bill 1795-Worker Misclassification

The Builders Association adopted a neutral stance on this bill, which passed. The goal of this bill is to reduce the amount of employers who commit fraud by misclassifying their employees. Often these employees are classified as independent contractors in order to avoid paying for workers compensation, among other taxes.

The law will go into effect January 1, 2008.

House Bill 743-Contractor Prompt Payment Act 

House Bill 743, which the Builders Association remained neutral on, was passed. On construction jobs where work has been completed in the manner agreed upon, the owner must pay the contractor within 15 days of payment approval. The General Contractor must pay subcontractors within 15 days of receipt of payment.

Many contractors remained neutral on this law because they are routinely paid in a timely manner or routinely pay their subs in a timely manner. Others felt that the law was not easily enforceable and would force subcontractors to go through a huge amount of legal action in order to collect from a late paying general contractor.