HOUSE BILL REPORT
HB 1989
As Reported By House Committee On:
Commerce & Labor
Title: An act relating to employment in the construction industry.
Brief Description: Changing provisions related to employment in the construction industry.
Sponsors: Representatives Lisk, Ebersole and Patterson.
Brief History:
Committee Activity:
Commerce & Labor: 2/27/95, 3/1/95 [DPS].
HOUSE COMMITTEE ON COMMERCE & LABOR
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 7 members: Representatives Lisk, Chairman; Hargrove, Vice Chairman; Thompson, Vice Chairman; Cairnes; Fuhrman; Goldsmith and Horn.
Minority Report: Do not pass. Signed by 4 members: Representatives Romero, Ranking Minority Member; Conway, Assistant Ranking Minority Member; Cody and Cole.
Staff: Chris Cordes (786-7117).
Background:
Third party liability under industrial insurance
Injured workers covered by industrial insurance, or their beneficiaries, are compensated for their injuries under the industrial insurance provisions and are not permitted to sue their employers for damages. However, a worker may file a damage suit against a "third party," if the third party is not the injured worker's co-worker. Workers who are working on the same job site, but who are employed by different employers are not considered to be co-workers.
Third party immunity is granted to design professionals who perform professional services for a construction project, unless the professional assumes responsibility for safety by contract or actually exercised control over that part of the premises where the worker was injured. Design professionals include licensed or authorized architects, engineers, land surveyors, or landscape architects.
Industrial insurance premium payments by workers
The industrial insurance law requires all employers, except self‑insured employers and employers of workers licensed by the Horse Racing Commission, to deduct one‑half of the medical aid fund premium from the wages of their workers. All employers, except those whose employees are licensed by the Horse Racing Commission, also deduct one-half of the supplemental pension premium from workers' wages.
Safety requirements under the Washington Industrial Safety and Health Act
Under the Washington Industrial Safety and Health Act, general contractors are responsible for provision of a safe workplace for their own employees, and for compliance with all safety regulations with respect to all employees on a construction job site. Washington courts have determined that a subcontractor's employee has a cause of action against the general contractor if the injury was caused by a violation of a specific safety regulation at the construction job site.
In 1993, the Department of Labor and Industries issued a regional directive, developed in consultation with labor and management representatives in the construction industry and related industries. The regional directive establishes guidelines for assessing the compliance of general contractors with the requirements for safety applying to the subcontractor's employees.
Summary of Substitute Bill:
Third party liability under industrial insurance for injuries at construction sites
The immunity from liability for workplace injuries for third parties performing services at a construction site is modified.
An injured worker or the worker's beneficiary is not permitted to seek damages for industrial injuries or occupational diseases occurring in the course of employment at a construction project from the owner or developer of the project, or any person performing work, furnishing materials, or providing services for the project, including design professionals, construction managers, general or prime contractors, suppliers, subcontractors of any tier, or their employees. This prohibition applies whether the work is performed at the site under a single contract or multiple contracts.
This immunity does not apply to:
!a person or entity that injures a worker by deliberate intention. It is against public policy to indemnify against this liability.
!manufacturers and product sellers for product liability actions.
!negligent preparation of design plans by a design professional.
Industrial insurance premium payments by workers in the construction industry
Beginning July 1, 1996, the wage deduction to pay part of the industrial insurance premium is modified for workers in the construction industry. These workers will no longer pay any portion of the supplemental pension fund premium.
Safety requirements under the Washington Industrial Safety and Health Act
A statement of the duties to provide a safe workplace at a construction project is added to the Washington Industrial Safety and Health Act (WISHA).
Prime and general contractors have a duty to provide a safe workplace for their own employees working at a construction site and for the employees of any subcontractor working at the site. This duty establishes primary responsibility for compliance with safety regulations with the prime or general contractor and the duty must be considered within the context of standard construction industry practices.
Safety programs specific to the construction site must be implemented that are effective in practice. Lower-tier construction employers must be contractually obligated to comply with the safety program. The plan must be written and must be periodically evaluated. It must be communicated to all of the prime or general contractor's employees and to the subcontractors on the site. Each construction employer on the site must designate a person who is responsible for safety. The name and telephone number of the designated person must be communicated to the prime or general contractor and to each subcontractor's own employees. The name and telephone number of the designated safety person for the prime or general contractor must be posted at the site.
Safety suggestions and hazard identification are to be encouraged. Disciplinary actions may be taken for violation of appropriately communicated requirements, including verbal or written reprimand, suspension from work, and termination for cause, subject to the employer's written policy or written agreement between the employer and the employees, if any.
A violation or citation under WISHA does not effect the immunity granted under the industrial insurance law.
Authority to adopt rules
The Department of Labor and Industries must adopt rules, in consultation with affected parties, to implement the act.
Substitute Bill Compared to Original Bill: The substitute bill deletes a section of the original bill that would have reduced construction workers' contribution to medical aid fund premiums from one-half of the premium to one-third of the premium.
Appropriation: None.
Fiscal Note: Requested on February 23, 1995.
Effective Date of Substitute Bill: The bill contains an emergency clause and takes effect immediately, except for section 2 providing for changes in the supplemental pension premium payments by workers, which takes effect July 1,1996.
Testimony For: (1) The construction site is a very complex workplace. There is a need to simplify the relationships and treat the site as one job. This will preserve the industrial insurance immunity of all the employers on the site. (2) The bill is a fair response to the situation existing on construction sites. Liability needs to be limited to avoid unfair lawsuits. (3) The bill will increase safety incentives because industrial insurance premium costs are a significant economic pressure. Indemnity agreements are not the answer to the liability problem. They just transfer the problem to another contractor. (4) This bill will reduce litigation and increase workers' take home pay. The current liability system wastes resources and does not encourage safety. (5) Very few workers are able to maintain liability suits and even if a large recovery is won, industrial insurance liens will reduce the recovery. The havoc in the industry needs to be solved and in a way that promotes safety. (6) The bill only covers 20 or so classifications that are considered to be "construction" classes.
Testimony Against: (1) Although some parts of the bill are needed in the construction industry, the overall cost is too high considering the employer's increased premium liability. It is important to keep these costs as low as possible to ensure the building of affordable housing. (2) No other jurisdiction provides such broad immunity in the construction industry. The bill seems to protect suppliers who supply bad materials to the site and employees who commit negligent acts that harm other employer's employees. Contractors and subcontractors can work the liability issues out in indemnity agreements. The bill is inconsistent by giving suppliers immunity but not product sellers. (3) Construction workers suffer the greatest health and wage loss when injured on a construction site. The industrial insurance system does not provide long-term compensation for the loss of wage-earning capacity. (4) It is not clear what the effect is for design professionals, but these professions may be considered to be part of the construction industry and therefore subject to the increased employer premiums.
Testified: (In favor of original bill) Larry Stevens, United Subcontractors Association; Andrew Seitz, Mechanical Contractors Association; David Ducharme, Utility Contractors Association; Richard Van Camp, Tri-State Construction; Dan Absher, Rick Slunaker, and Chris Clark, Associated General Contractors; Doug Hoffman; Bob Dilger, Washington State Building and Construction Trades Council; and Kathleen Collins, Sheet Metal and Air Conditioning Contractors. (Opposed to original bill) Tom Kwieciak and William Childress, Building Industry Association of Washington; John Budlong, Washington State Trial Lawyers Association; and Cliff Webster, Architects and Engineers Legislative Council.