H-4194

AN ACT Relating to construction contracts; adding a new section to chapter 39.04 RCW; adding a new section to chapter 35.22 RCW; adding a new section to chapter 35.23 RCW; adding a new section to chapter 36.32 RCW; and creating new sections.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that contractors on public works projects may misclassify employees as independent contractors and therefore fail to pay the costs of insuring employees for industrial insurance or unemployment compensation. The legislature further finds that the failure to pay these costs results in loss of tax revenues to the state, loss of mandated benefits to workers, and a competitive disadvantage and loss of profits for contractors, subcontractors, and material suppliers. Therefore, it is in the interest of the state, its citizens, workers, and businesses, to provide additional enforcement of the laws requiring payment of these costs by creating private remedies for persons harmed by contractors who fail to comply with these laws.

NEW SECTION. Sec. 2. A new section is added to chapter 39.04 RCW to read as follows:

(1) A bidder on a public work contract shall include in its bid the costs for its employees' industrial insurance coverage required under Title 51 RCW, unemployment compensation contributions required under Title 50 RCW, and workers' compensation coverage and unemployment compensation contributions required under federal law. The employment status of a worker for the purposes of this subsection shall be determined in the same manner as employment status is determined under the applicable industrial insurance or unemployment compensation law.

(2)(a) If the successful bidder on a construction contract has violated the requirement to pay for workers' compensation or unemployment compensation coverage, as evidenced by a final order of the appropriate state or federal agency, the successful bidder shall be liable as provided in this section to the second lowest bidder on the contract and to an entity contracting with the second lowest bidder.

(b) The second lowest bidder, or entity contracting with the second lowest bidder, who suffers damage as a proximate result of a competitive bid for a public work project not being accepted because the successful bidder failed to pay for required workers' compensation or unemployment compensation coverage may bring an action for damages against the successful bidder in any court of competent jurisdiction. There is a rebuttable presumption that the bid was awarded to the successful bidder who violated its requirement to pay for workers' compensation or unemployment insurance coverage because the successful bidder was able to lower its bid by not paying for the required coverage.

(c) In an action brought under this section, the court may award costs and reasonable attorneys' fees to the prevailing party.

(3) A second lowest bidder who, within one year prior to filing the bid for a public work, has violated its requirement to pay for workers' compensation or unemployment insurance coverage, as evidenced by a final order of the appropriate state or federal agency, and who has failed to take affirmative steps to correct any violations, is prohibited from bringing an action under this section.

(4) For the purposes of this section:

(a) "Entity contracting with the second lowest bidder" includes any person, firm, association, trust, partnership, labor organization, corporation, or other legal entity that has, before the letting of bids on the construction contract at issue, entered into a contract with the second lowest bidder.

(b) "Second lowest bidder" includes any person, firm, association, corporation, or other legal entity who is the second lowest qualified bidder deemed responsive by the entity or agency awarding the public works contract.

(c) "Successful bidder" includes any person, firm, association, corporation, or other legal entity awarded a construction contract after competitive bidding.

NEW SECTION. Sec. 3. A new section is added to chapter 35.22 RCW to read as follows:

A bidder on a public work, as defined in RCW 39.04.010, for a city of the first class shall include in its bid the costs for its employees' industrial insurance coverage required under Title 51 RCW, unemployment compensation contributions required under Title 50 RCW, and workers' compensation coverage and unemployment compensation contributions required under federal law, and is subject to section 2 of this act.

NEW SECTION. Sec. 4. A new section is added to chapter 35.23 RCW to read as follows:

A bidder on a public work, as defined in RCW 39.04.010, for a city of the second or third class or a town shall include in its bid the costs for its employees' industrial insurance coverage required under Title 51 RCW, unemployment compensation contributions required under Title 50 RCW, and workers' compensation coverage and unemployment compensation contributions required under federal law, and is subject to section 2 of this act.

NEW SECTION. Sec. 5. A new section is added to chapter 36.32 RCW to read as follows:

A bidder on a public work, as defined in RCW 39.04.010, for a county shall include in its bid the costs for its employees' industrial insurance coverage required under Title 51 RCW, unemployment compensation contributions required under Title 50 RCW, and workers' compensation coverage and unemployment compensation contributions required under federal law, and is subject to section 2 of this act.

NEW SECTION. Sec. 6. This act applies only to construction contracts for public works projects in which the call for competitive bids was made on or after the effective date of this act.