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People v. E.R.H. Enterprises, Inc.

Supreme Court of Illinois

November 21, 2013


Rehearing denied January 27, 2014

Held [*]

The Prevailing Wage Act’s exemption for “public utilities, ” without defining them, did not apply to a company that was not regulated by the Illinois Commerce Commission and that was simply an outside contractor which operated and maintained a village’s potable water system and parts of its water delivery infrastructure-subpoena for documents upheld.

Appeal from the Appellate Court for the Fourth District; heard in that court on appeal from the Circuit Court of Piatt County, the Hon. John P. Shonkwiler, Judge, presiding.

Lisa Madigan, Attorney General, of Springfield (Michael A. Scodro, Solicitor General, and John P. Schmidt, Assistant Attorney General, of Chicago, of counsel), for appellant.

David K. Cox, of Monticello, for appellee.

JUSTICE KARMEIER delivered the judgment of the court, with opinion. Chief Justice Garman and Justices Freeman, Thomas, Kilbride, Burke, and Theis concurred in the judgment and opinion.



¶ 1 The principal issue before the court in this appeal is whether E.R.H. Enterprises, Inc. (E.R.H.), is subject to the provisions of the Prevailing Wage Act (Wage Act) (820 ILCS 130/0.01 et seq. (West 2008)) by reason of its contract with, and work performed on behalf of, the Village of Bement (Village). The circuit court of Piatt County answered that question in the affirmative, finding that E.R.H. did not qualify for an exemption as a "public utility company" (see 820 ILCS 130/2 (West 2008)), and thus ruling in favor of the Illinois Department of Labor. The appellate court reversed, holding that E.R.H. does qualify for the exemption. 2012 IL App (4th) 110943. We allowed the Department's petition for leave to appeal (Ill. S.Ct. R. 315 (eff. Feb. 26, 2010)), and now reverse the judgment of the appellate court.


¶ 3 Section 1 of the Wage Act declares:

"It is the policy of the State of Illinois that a wage of no less than the general prevailing hourly rate as 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." 820 ILCS 130/1 (West 2008).

¶ 4 Section 2 of the Wage Act defines "public works" as "all fixed works constructed by any public body, other than work done directly by any public utility company, whether or not done under public supervision or direction, or paid for wholly or in part out of public funds." (Emphasis added.) 820 ILCS 130/2 (West 2008). Section 2 defines "construction" as "all work on public works involving laborers, workers or mechanics, " including "any maintenance, repair, assembly, or disassembly work performed on equipment whether owned, leased, or rented." 820 ILCS 130/2 (West 2008).

¶ 5 Subsection (a)(1) of section 3-105 of the Public Utilities Act defines "public utility" as follows:

"(a) 'Public utility' means and includes, except where otherwise expressly provided in this Section, every corporation, company, limited liability company, association, joint stock company or association, firm, partnership or individual, their lessees, trustees, or receivers appointed by any court whatsoever that owns, controls, operates or manages, within this State, directly or indirectly, for public use, any plant, equipment or property used or to be used for or in connection with, or owns or controls any franchise, license, permit or right to engage in:
(1) the production, storage, transmission, sale, delivery or furnishing of heat, cold, power, electricity, water, or light, except when used solely for communications purposes[.]" 220 ILCS 5/3-105(a)(1) (West 2008). Subsection (b)(1) of the Public Utilities Act excludes from the definition of "public utility" "utilities that are owned and operated by any political subdivision, public institution of higher education or municipal corporation of this State, or public utilities that are owned by such political subdivision, public institution of higher education, or municipal corporation and operated by any of its lessees or operating agents." 220 ILCS 5/3-105(b)(1) (West 2008).


¶ 7 A detailed recitation of facts can be found in the appellate court's opinion. 2012 IL App (4th) 110943, ¶¶ 3-12. For present purposes, a brief summary will suffice. Additional facts will be noted as necessary in the course of our analysis.

¶ 8 E.R.H. contracts with the Village to assist the Village in fulfilling its obligation to operate and maintain the Village's potable water facility and parts of the water delivery infrastructure. E.R.H.'s five-year contract with the Village acknowledges that "the Village is responsible for the maintenance and operation of the Potable Water facility and water infrastructure which serves the Village" and that E.R.H. "has agreed to fulfill all requirements set forth under the applicable laws and regulations for the operation of such facility and certain segments of the infrastructure."

¶ 9 Under the contract, E.R.H. helps to maintain the storm and sanitary sewer systems by removing blockages, jetting lines, cleaning basins and repairing water main breaks and lines requiring less than 20 feet of replacement pipe, while the Village is responsible for "repairs of a greater magnitude" and for restoring paving, curbs, streets and sidewalks affected by any repairs. The Village is also responsible for the maintenance, repair, upkeep, and expense of its water tower, as well as the maintenance and expense of telephone lines between the water tower and the pump station.

¶ 10 The contract further provides that the Village must purchase and furnish parts and materials for taps for new customers, with E.R.H. installing the taps. While E.R.H. must maintain fire hydrants, the Village must provide materials to replace the hydrants when necessary. Though E.R.H. must keep equipment in good repair, the Village must replace equipment that does not function adequately if it is beyond repair. The Village also assumes certain costs and expenses, including the costs of capital improvements for additional equipment needed to meet revised permit requirements as well as the cost of electricity to operate any additional equipment or structures. Upon request, E.R.H. is required to submit "paperwork" to the Village to enable the Village to monitor E.R.H.'s correspondence and interaction with the Illinois Environmental Protection Agency.

¶ 11 On May 23, 2008, the Department issued a subpoena duces tecum to E.R.H.'s attorney, requiring him to appear on June 10, 2008, with the employment records delineated in the subpoena. The subpoena referenced an investigation being conducted under the Wage Act regarding E.R.H.'s repair of water main leaks for the Village. In a June 10, 2008, letter, the Department took the position that ...

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