H-3386

AN ACT Relating to construction contracts; adding a new section to chapter 4.24 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; adding a new section to chapter 39.04 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 construction projects, including 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, and may fail to pay prevailing wages on public works projects. 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 4.24 RCW to read as follows:

(1) A bidder on a construction 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 fails to pay for the required workers' compensation or unemployment compensation coverage, as evidenced by a final order of the appropriate state or federal agency, or fails to pay prevailing wages as required under chapter 39.12 RCW, the successful bidder shall be liable as provided in this section to an unsuccessful bidder on the contract and to an entity contracting with the unsuccessful bidder.

(b) The unsuccessful bidder, or entity contracting with the unsuccessful bidder, who suffers damage as a proximate result of the unsuccessful bidder's competitive bid for the construction project not being accepted because the successful bidder failed to pay for required workers' compensation or unemployment compensation coverage or failed to pay prevailing wages 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 because the successful bidder was able to lower its bid by not paying for the required workers' compensation or unemployment compensation coverage or not paying prevailing wages.

(c) In an action brought under this section, the court shall award treble damages, and may award costs and reasonable attorneys' fees to the injured party. The measure of damages suffered by the unsuccessful bidder or entity contracting with the unsuccessful bidder shall be equal to the profit projected by the unsuccessful bidder on its bid for the construction contract, or to the profit projected by the entity contracting with the unsuccessful bidder on the contract between it and the unsuccessful bidder, or to the wages that would have been paid under the labor contract for the construction project, as applicable.

(3) For the purposes of this section:

(a) "Construction contract" means "construction contract" as defined in RCW 4.24.370, and includes contracts for public works as defined in RCW 39.04.010.

(b) "Entity contracting with the unsuccessful 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 unsuccessful bidder.

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

(d) "Unsuccessful bidder" includes any person, firm, association, corporation, or other legal entity who is a qualified bidder deemed responsive by the entity or agency awarding the construction contract.

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. A new section is added to chapter 39.04 RCW to read as follows:

A bidder on a public work, as defined in RCW 39.04.010, 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. 7. This act applies only to construction contracts for construction projects in which the call for competitive bids was made on or after the effective date of this act.