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Illinois preference law rattles contractors along the border

Construction  workers and contractors confer over blueprints while building a new home in Springfield, Ill., Wednesday, June 30, 2010. From left to right is Steve Washko, Ed Lawrence, and Joe Hubbell. Construction spending declined in May as residential building fell after a popular homebuyers' tax credit expired. (AP Photo/Seth Perlman)

Construction workers and contractors confer over blueprints while building a new home in Springfield, Ill. An Illinois law requiring the use of state residents on public projects may hurt Wisconsin contractors. (AP Photo/Seth Perlman)

By Tony Anderson
Special to The Daily Reporter

An Illinois law requiring the use of state residents on public projects has Wisconsin contractors gauging the potential damage to their bottom lines.

The amended law requires contractors use a work force of at least 90 percent Illinois residents when unemployment reaches 5 percent for two months in a row. The law creates fines for violations of the residency requirement. It also gives people who feel harmed by violations the right to sue contractors on the public projects.

Prior to the amendment June 16, the law required 100 percent use of Illinois residents during periods of high unemployment. Many contractors along the Wisconsin side of the border working between the states said that law was unenforceable.

In 1984, Illinois and federal courts determined an earlier law with a similar requirement was unconstitutional because it violated the U.S. Constitution.

Larry Rasch, president of Kenosha-based Rasch Construction & Engineering Inc., said the amended law could hurt contractors along both sides of the state line whose workers reside in Wisconsin and Illinois.

Even companies that are from Illinois have people who are from Wisconsin working for them,” Rasch said.

“So to try and enforce something like that, especially when you are on the state line, doesn’t make a whole lot of sense.”

Rasch said up to 20 percent of his company’s work includes Illinois public projects — such as courthouses and schools — that receive state money.

The residency requirement places Wisconsin contractors at a disadvantage when it comes to bidding projects, he said. It puts those companies in the position of hiring additional, and unfamiliar, workers from Illinois. That uncertainty could lead to higher bids.

“If it’s a larger project that requires a lot of our labor,” Rasch said, “it would be very difficult for us to come up with 90 percent and have good control of the project.”

Not every Wisconsin contractor is as concerned about the amended law. Some even said the shift to 90 percent residency offers some breathing room when it comes to staffing projects.

About two-thirds of Kenosha-based Camosy Construction’s work is in Illinois. Camosy also has an office in Zion, Ill. John Camosy, the company’s president, estimated his work force’s residency is split down the middle between the two states.

“It’s a pain, but it’s doable,” Camosy said. “Now we can have one or two guys (from Wisconsin) on a crew and make life a little easier.”

The biggest challenge comes from making sure the dispatcher knows which projects require Illinois residents so Wisconsin workers are not accidentally sent to the wrong job sites, he said.

Like Rasch, Camosy said even if a mistake were made, the prior law was unenforceable.

The amended law establishes fines for violations of up to $1,000 per worker, per day for first violations; up to $5,000 for each violation in a second investigation; and up to $15,000 for each subsequent violation.

Rasch said contractors and other businesses looking to work on public projects in Illinois will have to get some legal advice. He said he is concerned about how quickly those fines could add up. If a company has 10 additional Wisconsin workers on a project for just one day, the fine could be $10,000.

“That would be very hard to absorb into a project,” Rasch said.

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