FINAL BILL REPORT
SHB 2312
C 279 L 98
Synopsis as Enacted
Brief Description: Prescribing workers' compensation obligations of employers not domiciled in Washington.
Sponsors: By House Committee on Commerce Labor (originally sponsored by Representatives Doumit, Pennington, Hatfield, Kenney, Clements, Carlson, Kessler, Anderson, Dunn and Tokuda).
House Committee on Commerce & Labor
Senate Committee on Commerce & Labor
Background: Industrial Insurance Coverage Requirements under Reciprocity Agreements. The Washington industrial insurance law, with certain exemptions, covers all workers employed by persons or entities engaged in business in Washington. There may not be coverage, however, if the worker's employment in Washington is subject to a reciprocal agreement with another state. The industrial insurance law permits the director of the Department of Labor and Industries to enter into reciprocal agreements with other states and provinces of Canada to govern jurisdiction over claims that involve a contract of employment in one jurisdiction and an injury in another.
The department has entered into reciprocal agreements with Idaho, Montana, North Dakota, Nevada, Oregon, South Dakota, and Wyoming. Under the Oregon reciprocal agreement, the Washington state fund covers a Washington employer's Washington workers who are injured in Oregon at the employer's temporary Oregon workplace. Oregon is similarly responsible for an Oregon employer's Oregon workers working in a temporary workplace in Washington.
Coverage Requirements for Out-of-State Employers. An out-of-state employer is penalized under Washington's industrial insurance law if the employer has employees working in Washington and, after one of his or her workers is injured, the employer did not have workers' compensation coverage or coverage is inadequate. If that injured worker is entitled to compensation under Washington law because of an injury in Washington, the employer who does not have an account with the state fund in Washington, or is not qualified as a self-insurer, must file a certificate from the employer's state of domicile showing that the employer has coverage for the injured worker.
Filing a certificate appoints the director of the Department of Labor and Industries as the employer's agent for service of process in any proceeding brought by the injured worker under Washington's industrial insurance law. If the employer is insured, the insurance carrier is subject to Washington's industrial insurance law with respect to the claim, up to the amount of its liability under the other state law, unless its contract with the employer provides for coverage equivalent to Washington's coverage. The director may require the employer to file additional security if the insurance coverage is less than the total compensation to which the injured worker is entitled under Washington law. If the employer is self-insured under the other state's law, the employer may be deemed to be a qualified self-insurer under Washington's law.
If the employer does not have coverage in the other state or has inadequate coverage, the injured worker receives benefits from the Washington state fund. The employer is then subject to a penalty of up to 50 percent of the department's cost beyond what is covered by the employer or its insurer. (Washington employers who fail to secure industrial insurance coverage are subject to a penalty of $500 or double the premiums that were incurred before obtaining coverage, and from 50 to 100 percent of the cost of the benefits paid to a worker before coverage is obtained.)
Contractor Requirements. Public entities must contract with registered contractors or licensed electrical contractors on public works projects, unless, on transportation construction projects, the contractor is prequalified. All contractors registering or applying for a license must show an industrial insurance account number covering employees domiciled in Washington. For employees working in Washington who are not domiciled in Washington, the contractor must show evidence of workers' compensation coverage in the employer's state of domicile The employer's unified business identifier account number may be used in lieu of the industrial insurance account number.
Coverage Requirements for Washington Employers Operating in Oregon. Generally, a worker from Washington and the worker's Washington employer are exempt from Oregon's workers' compensation coverage requirements if:
Cthe worker is temporarily working in Oregon;
Cthe employer has workers' compensation coverage for the worker under Washington's law; and
CWashington recognizes Oregon's extraterritorial provisions and has reciprocal exemptions for Oregon employers.
However, Oregon's public works law requires all public works contracts to contain a clause making employers working under the contract subject to Oregon's workers' compensation law.
Summary: Intent. The Legislature finds that a disparity in workers' compensation coverage among the states has created a competitive disadvantage in the construction industry. The intent of the new provisions is to provide an equal footing for all contractors, to ensure that injured workers receive the benefits to which they are entitled, and to not create disincentives for hiring Washington workers.
Industrial Insurance Coverage Requirements for Out-of-State Contractors. Out-of-state contractors who are employing workers in Washington in work that requires the contractor to be registered or licensed, or prequalified on transportation projects, must secure the payment of compensation under Washington law by:
Cinsuring with the Department of Labor and Industries;
Cbeing self-insured in Washington; or
Cas permitted by a reciprocity agreement with the employer's state or province of domicile, filing a certificate of coverage from the other state or province. (The Department of Labor and Industries' authority to subject an out-of-state employer or employer's insurance carrier to liability for an injury occurring in Washington applies if the employer files the certificate.)
If an out-of-state contractor does not comply with this coverage requirement, the injured worker is covered by the state fund and the employer is subject to the same requirements and penalties as Washington employers who fail to comply with industrial insurance requirements.
The contractor registration law and electrical licensing law are made consistent with these new coverage requirements for contractors applying for registration or licensing. A contractor applicant is not permitted to use his or her unified business identifier account number as a substitute for an industrial insurance number unless the applicant will not employ employees in Washington.
Reciprocity Agreements. The director's authority to enter into industrial insurance reciprocity agreements with other states is modified. If the other state's law requires Washington employers to be covered under the other state's workers' compensation law for work which in Washington would require the employer to be a registered contractor or licensed electrical contractor, or be prequalified for transportation projects, then employers domiciled in that other state must purchase coverage under Washington's law when their workers are engaged in that same work in Washington.
Study. The Workers' Compensation Advisory Committee must appoint a subcommittee to review these new provisions and report to the Department of Labor and Industries. The department must submit a final report to the Legislature by January 15, 1999.
Votes on Final Passage:
House940
Senate470(Senate amended)
House980(House concurred)
Effective:June 11, 1998