Posts Tagged ‘Labor & Industries’

Model Disclosure Statement Required in Washington To Protect Lien Rights When Contracting With Owner

Ask yourself these three questions:

1)     Are you a contractor of any sort?

2)     Did you or do you contract directly with the property owner on any construction project(s)?

3)     Is the residential project’s contract more than $1,000.00, or commercial project’s contract less than $60,000.00?

If you answered yes to these three questions, pay very close attention here.   You must deliver a Model Disclosure Statement to the property owner before beginning work.

The Model Disclosure Statement is furnished to contractors by the Washington Department of Labor and Industries.   It’s very, very easy to fill-out.

You must furnish the form to the property owner, have the property owner sign it, and keep a copy of the signed form in your files for a “minimum of three years.”

If you fail to do this, not only do you lose the right to file any mechanics lien on the project, but you can also be fined by the Labor & Industries, and may be in violation of Consumer Protection laws.

Unfortunately, too few contractors in the State of Washington are aware of this requirement.   If you do business directly with property owners, get your hands on this form and present it to the owner at the beginning of every project.

Download the form from the Labor and Industries by Clicking Here.

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Two New Washington Laws Contractors Must Know From the 2009 Legislature

As we enter it a new year, we thought it was prudent to review what the Washington legislature passed last year that is now law and affecting the construction industry.

Earlier this week, we wrote about the small amendments to the Contractor Registration Act.

More changes to Washington’s regulatory scheme passed into law in 2009 aside from these small amendments.   In this post, we’ll discuss SB 5613 which authorizes L&I to issue stop work orders on employers not in compliance with workers compensation requirements, and SB 5904 which defines an “independent contractor” on public works projects.

Stop Work Orders Allowed on Contractors Who Do Not Pay Workers Compensation

SB 5613 was passed by the Washington legislature, and became effective in July 2009.   This new law provides Labor & Industries with an additional mechanism to enforce the worker’s compensation requirements for contractors:  stopping work.

Previously, L&I could fine employers and contractors in violation of the workers compensation provisions, but couldn’t actually force the contractor to stop work.   Now, a new section has been added to RCW §51.48 giving L&I this stop work authority.

If an employer is in violation of the workers comp requirements, L&I can force the employer to stop work on that project (and other projects where there are violations) until the employer gains compliance.   Becoming compliant will require the payment of any assessed penalties and interest.

What happens if the employer doesn’t stop work after being so ordered?   Paragraph (4) of the new section subjects the employer to a $1000 per day penalty until the employer is in compliance.

The new section is clearly aimed at punishing employers dearly if they are not compliant with the workers compensation statutes.   Where penalties alone didn’t always work in the past, now L&I can hurt contractors on jobs.  If an employer must stop work, obvious problems arise:  will they get paid for work done?  will they be responsible for delay damages on the project?   will the job be given to another contractor?

Getting clever and opening a new entity with less baggage will be of little use under the new section.  Paragraph (7) contemplates this circumstance, and provides that stop work orders are effective against “any successor…business entity that has one or more of the same principals or officers…”

Read the passed SB 5613 here.

Independent Contractor Defined for the Purposes of Prevailing Wages

In the past, much argument has ensued on public works between Washington’s Department of Labor & Industries and contractors over whether a party or entity is an employee or an independent contractor.

The consequence to the distinction is clear.   If an employee, prevailing wage rates must be paid.  If an independent contractor, the prevailing wage rate may not be required.

Well, SB 5904 adds a section to RCW 39.12 to clear up the ambiguity.

Regardless of how an employer attempts to label a party/entity, they will be considered a laborer, worker or mechanic unless all of these factors are met:

  1. They have been and is free from control or direction over the performance of the service, but unde under the contract and in fact;
  2. The service provided is either outside the usual course of business for the hiring contractor or the service is performed outside the places of business for the hiring contractor;
  3. The party/entity is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the instant contract;
  4. The party/entity is responsible for filing at the next applicable filing period a schedule of expenses with the IRS;
  5. The party/entity has an active and valid certificate of registration with the department of revenue, and all other required registrations;
  6. The party/entity maintains a separate set of books or records reflecting all items of income or expense of the business; and
  7. The party/entity is a registered contractor, if required.

Read the passed bill’s full text here.

This article was originally posted on Wolfe Law Group’s topic-specific Northwest Construction Law Blog.

Posted in:     Labor Law, Prevailing Wages, Washington  /  Tags: , , , ,   /   Leave a comment

Did You Notice the Amendments to Washington's Contractor Registration Act?

Now that 2009 has drawn to a close, we have decided to review some movement in the Washington Legislature last year as it affects the construction industry.   Later this week, we’ll write about two new laws, one about workers compensation insurance enforcement, and the other about the definition of an “independent contractor” on prevailing wage jobs.

Today, however, we’ll focus on some small changes to the Washington Contractor Registration Act.

We previously wrote about the Contractor Registration Act in Washington, highlighting that the failure to comply with statutory requirements can result in severe penalties.  Many may not have taken notice of HB 1555 in the Washington legislature in 2009, but it passed the House and Senate, was signed by the governor and is now already law in the state.

The Reasoning Behind Amendments

All of these amendments were suggested (and passed) at the recommendation of the legislative task force on the underground economy in the construction industry.   This is a group put together in 2007 that has spent the past two years investigating those instances where contractors have worked without a license…and came up with ways to stop it.

The recommendations were made to the Washington legislature at the beginning of the 2009 legislative session, and have evolved into law.

What Has Changed?

This bill made some significant amendments to Washington statutes regulating contractor licensing.  Here are a few examples of important amendments:

  • Contractors must maintain and have available for L&I to inspect a list of all direct subcontractors and a copy of their certificate of registration.  Clearly, this is intended to make enforcement easier for L&I and shift the burden on contractor licensing up the chain.
  • Licensing Agencies are now granted authority to check on a company’s licensing status with another department.   So, for instance, when a contractor seeks a business license from King County, the county can contact L&I and ensure that that the contractor is registered according to law.
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Posted in:     Law Changes & Updates, Licensing  /  Tags: , , ,   /   Leave a comment

Are Washington Cranes and Crane Operators Ready for New Regulations Starting in 2010?

Most in the Pacific Northwest should remember the 2006 crane collapse in Bellevue, WA that killed a Microsoft employee.   What many might not know is that in response to the collapse, the 2007 Washington State Legislature increased the state’s regulation of cranes and crane operators.    Compared to other states, the Washington regulations are quite extensive, Washington being only the 2nd state (California) to have licensing requirements for cranes and crane operators.

The question is whether the state is ready for the January 1, 2010 effective date for the new regulatory scheme.   With the effective date only days away, Labor & Industries is worried that the answer is no.

The Puget Sound Business Journal reports that as of December 22, 2009, less than 10% of cranes have been certified.  Fortunately, the lag seems isolated to the certification of the cranes themselves, as the crane operators have mostly become compliant. reports that as many as 2000 crane operators have received their licenses.

What You Need To Know

Labor & Industries has issued WAC, Part L, §§ 296-155-525 through 296-155-533 setting forth the certification requirements for cranes and crane operators.

Here are three critical things to keep in mind:

Cranes Must Be Inspected

Every crane used in Washington construction projects must be inspected by a certified inspector (see below).   The general guidelines for a crane inspection are set forth in WAC 296-155-53200, which among other things requires review of the crane’s maintenance records, safety devices, wire rope in light of manufacturer’s specifications, and the performance of load tests.

Inspectors Must Be Certified

Not just anyone can inspect Washington cranes and certify them…the inspectors themselves must be first certified by Labor & Industries.   Becoming a certified inspector of cranes not only requires properly applying for the license, but a mixture of know-how and experience with cranes, and passing examinations.

Crane Operators Must Be Licensed

In addition to the cranes themselves being subject to a strict inspection process, those in charge of operating the cranes are also regulated by the new provisions, and must have a license starting January 1, 2010.   The crane operator requirements are found within WAC 296-155-53300.   The regulation requires operators to:

(1) Pass a substance abuse test;

(2) Have a specific number of hours of experience in operating cranes; and

(3) Hold a valid crane operator certificate for the type of crane being operated, issued by a crane operator testing organization accredited by a nationally recognized accrediting acgency, which includes a successful passing of a written and practical examination.

#1 and #2 are non-ambiguous requirements.   #3, however, can be subject to interpretation and circumstance.    The Division of Occupational Safety and Health issued DOSH Directive 8.60 on December 23, 2009, to address this requirement.   The Directive states in its § IV that:

[I]f compliance staff encounter crane equipment in use for which there is no nationally accredited operator written or practical test established and the equipment is operated by a non-certified operator, the CSHO shall not cite the employer for a violation of WAC 296-155-53300(1)(a).  Instead, the CSHO shall include a message on the citation or notice issued advising the employer that once an appropriate certification is avaialble as described in the rule that the employer has one year to ensure that such non-certified crane operators become certified.   The employer will be allowed to continue operating the crane provided the employer makes documentation readily available to the department indicating that the operator has been competently trained, evaluated and tested by the employer on the operating procedures for the piece of equipment in use as recommended by the crane equipment manufacturer.

Certainly, we’ll soon run into questions about what is “competent” training, evaluation and testing…  For now, however, the most important issue is getting your crane certified and your operator in compliance with the new WAC requirements.   Starting January 1st, Labor & Industries will be checking projects for compliance, and in these times when margins and schedules are tight, a L&I violation on these new crane requirements is something worth avoiding.

Check out International Union of Operating Engineers, Local 302, announcement of the Rule Change, which has some usable information, and a “Crane Operator Experience Declaration Form.”  This form is to be signed by crane operators, who will declare their pre-2010 experience with a specific crane to employers.

This article was originally posted on Wolfe Law Group’s topic-specific Northwest Construction Law Blog.

Posted in:     Regulations, Safety, Washington  /  Tags: , , , , , ,   /   Leave a comment