Construction News


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May 22, 2020

Capitol News.

Lawmakers returned to Springfield to start the groundwork for a budget for the state on Wednesday.  As the ongoing Corona Virus COVID-19 continues to wreak havoc on our economies, lawmakers are still tasked with approving a balanced budget for the state.  Lawmakers will grant the Governor unprecedented sweeping authority to move monies between agencies and within line items inside individual agencies.  Illinois is looking at the prospect of a $4 billion dollar deficit.  Compounding the difficulty during this budgeting period is the uncertainty about fiscal help from the Feds.  It is expected that financial help will come for states and local units of government, but the amounts and the timing are still up in the air.  The Governor is still insistent that he “needs” his graduated income tax (raising an additional $3billion in FY 21), that voters will approve or turn down in November.  If the graduated tax does not pass, it will put the state further in debt, perhaps as much as $7billion next year.  As you can see there are a lot of moving parts to this scenario, which makes it difficult to make truly educated decisions, at this time.

Last night, late, the phone lines and emails of legislators started to light up as an attempt was made to take $100 million out of the IDOT budget to help underwrite Transit.  Unions and AGC along with other contractor associations started to reach out to legislators and leaders to stop the raid.  By 9:30 am, today, the language was being drafted to keep the money and jobs at IDOT.  Congratulations

The state budget isn’t the only work that needed to be tackled this week.  Again, COVID-19 is the unwelcome catalyst for required changes to Unemployment Insurance and to Workers Compensation.  AGCI, on behalf of the construction industry is working with other business associations on these to economic drivers for business.  The Illinois Retail Merchants Association (IRMA) takes the lead in negotiating with labor on UI issues, while the Illinois Manufacturers Association (IMA) is the lead business group on Workers Compensation matters.  Below is a synopsis from the IMA and IRMA with links to changes in both UI and WC.  As we’ve shared with you earlier, the Unemployment Insurance trust fund has seen and will continue to see unprecedented financial demands placed upon the system.  Only significant federal intervention can salvage the fund.  Cuts and increased taxes can’t get us out of the mess as you will see below.           

Unemployment Insurance

The Illinois Unemployment Insurance Trust Fund which totaled nearly $2.5 billion at the start of the year has been drained with record layoffs.  It is estimated that the Fund will be in debt by $2 billion by the end of this year.   Early projections indicate that the Trust Fund could be in debt by $8 to $14 billion over the next three years. In order to receive billions of dollars in federal money, Illinois had to take two specific steps including (1) waiving the one-week waiting period, and (2) making the layoffs a non-chargeable event for the employer. The agreement reached today includes:

 1.  Employers will not be charged for layoffs between March 15, 2020, and December 31, 2020. These costs will be  

      socialized in the system.

2. Illinois will receive $2.1 billion in matching federal dollars to pay for the extended benefits (seven weeks) that kick in when the state’s unemployment rate reaches a certain level.

3. Illinois will receive $20 million in federal money to pay for administrative costs at the Illinois Department of Employment Security.

4. Non-instructional educational employees (custodians, bus drivers, etc) that work for school districts (not private companies) will receive unemployment insurance benefits if they are not paid over a 12-month period of time. These are employees who typically take second jobs in the summer and may not be able to find short-term employment this summer. The federal government will fund half of the cost equating to $210 million.

5. Illinois will engage in another unemployment insurance agreed bill process in coming years. Typically, both sides agree to a series of tax hikes and benefit cuts that force both sides to the negotiating table. These “speed bumps” are set at $500 million for both sides in this agreement. Since the 1980s, these “speed bumps” have never become law because both sides reach agreement.

6. Business and labor agreed to cooperate on efforts to obtain additional federal assistance to help resolve the coming Trust Fund deficit. Illinois’ previous record deficit was $3 billion so the coming debt could significantly surpass that total.

7. Eliminated a $50 million “chit” that employers owed to labor from the last agreed bill process because of the significant savings that employers received when the misconduct rules were amended to make it easier to deny benefits for workers who were terminated for misconduct.

Workers’ Compensation

Nearly one month ago, the IMA and IRMA, in conjunction with AGCI and other construction affiliated Associations, filed a lawsuit and blocked Governor Pritzker’s emergency rules that would have created a rebuttable presumption that the workplace was the cause of COVID-19 infections. It was estimated that these rules would have cost employers nearly $4.4 billion, more than doubling the cost of the system. Those rules made it nearly impossible for an employer to defend their business from Workers Compensation claims.

After negotiations that lasted all weekend and into this week, business and labor reached an accommodation. While it allows all essential employees to receive a rebuttable presumption, it makes it far easier for employers to rebut those claims using an ordinary level of rebuttal. This means that an employer simply has to show “some evidence” that the employee could have contracted the virus elsewhere or that the employer engaged in best practices. The agreement includes the following provisions:

1. All essential workers can receive the rebuttable presumption. Labor’s original proposal would have allowed all workers (not just essential workers) to get benefits.

2. Employers can use the lowest standard (ordinary presumption) to rebut the rebuttable presumption. An employer simply has to show that they were following CDC or IDPH guidance and practices. Labor’s proposal sought to impose a “clear and convincing” standard that was included in the Governor’s rules.

3. The employer’s experience modification will not change due to COVID.

4. A home or residence is not the workplace.

5. The presumption ends of December 31, 2020. Labor originally sought no end date.

6. Employers receive a TTD offset for employees that were on paid leave or extended FMLA.

7. The employee has to have been exposed and contracted the virus. Simple exposure does not qualify. Labor’s proposal, and the Governor’s rules, did not even require an employee to show that they had contracted the virus.

8. Before June 15, an employee has to have a positive diagnosis or medical test; on or after June 16, a positive test is required. Again, the Governor’s rules and labor’s proposal did not require a positive diagnosis or test to get benefits.

There were three competing proposals on this table with this comparison chart showing all of the provisions and where the final negotiation landed. Please click here for a copy of the draft legislation and click here for a copy of the legislative intent that will be read into the record.

While this is not a perfect agreement, it will make it far easier for businesses to defend claims and will be a very significant reduction in costs from the Governor’s emergency rules that were stopped in court. It was a difficult negotiation because lawmakers on both sides of the aisle were reticent to vote against benefits for nurses, doctors, firefighters, police officers, and other workers during this public health crisis.

Stay Safe. Stay Healthy.         Mark Strawn and Kevin Morphew

Elimination of Traffic Hazards. During these unprecedented times the traffic volumes on the State’s highway system has been significantly reduced.  However, increased traffic volumes are possible during the Memorial Day period.  In accordance with Article 107.09 of the Standard specifications and insofar as possible, traffic hazards should be eliminated on construction and maintenance work during the period.  The holiday period will be from:

May 22 - Friday - 3:00 p.m. to

May 25 - Monday – 11:59 p.m.

All contractors on all types of contracts and all maintenance forces should be instructed to plan their work during the holiday period in accordance with the provisions of Article 107.09.  Exceptions may be considered on a project by project basis.  Any deviations to these restrictions will require approval of the Regional Engineer.









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