BILL REQ. #:  S-4690.1 

Read first time 01/27/2006.   Referred to Committee on Labor, Commerce, Research & Development.

     AN ACT Relating to prohibiting contractors and general contractors from hiring unregistered contractors; amending RCW 18.27.010, 18.27.020, 18.27.200, and 18.27.340; and prescribing penalties.

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

Sec. 1   RCW 18.27.010 and 2001 c 159 s 1 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1)(a) "Contractor" means any person, firm, or corporation who or which, in the pursuit of an independent business undertakes to, or offers to undertake, or submits a bid to, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish, for another, any building, highway, road, railroad, excavation or other structure, project, development, or improvement attached to real estate or to do any part thereof including the installation of carpeting or other floor covering, the erection of scaffolding or other structures or works in connection therewith or who installs or repairs roofing or siding; or, who, to do similar work upon his or her own property, employs members of more than one trade upon a single job or project or under a single building permit except as otherwise provided herein.
     (b) Solely for the purposes of RCW 18.27.200 (2) and (3) and 18.27.340(3)(b), "contractor" includes any party that retains the services of a general contractor or specialty contractor to alter, repair, or improve an existing residential homeowner owned and occupied structure that has been damaged by an accident, fire, or weather-related or other natural event.
     (c) "Contractor" includes any person, firm, corporation, or other entity covered by this subsection, whether or not registered as required under this chapter.
     (2) "Department" means the department of labor and industries.
     (3) "Director" means the director of the department of labor and industries or designated representative employed by the department.
     (4) "General contractor" means a contractor whose business operations require the use of more than two unrelated building trades or crafts whose work the contractor shall superintend or do in whole or in part. "General contractor" shall not include an individual who does all work personally without employees or other "specialty contractors" as defined in this section. The terms "general contractor" and "builder" are synonymous.
     (5) "Partnership" means a business formed under Title 25 RCW.
     (6) "Registration cancellation" means a written notice from the department that a contractor's action is in violation of this chapter and that the contractor's registration has been revoked.
     (7) "Registration suspension" means a written notice from the department that a contractor's action is a violation of this chapter and that the contractor's registration has been suspended for a specified time, or until the contractor shows evidence of compliance with this chapter.
     (8) "Residential homeowner" means an individual person or persons owning or leasing real property:
     (a) Upon which one single-family residence is to be built and in which the owner or lessee intends to reside upon completion of any construction; or
     (b) Upon which there is a single-family residence to which improvements are to be made and in which the owner or lessee intends to reside upon completion of any construction.
     (9) "Specialty contractor" means a contractor whose operations do not fall within the definition of "general contractor".
     (10) "Unregistered contractor" means a person, firm, corporation, or other entity doing work as a contractor without being registered in compliance with this chapter. "Unregistered contractor" includes contractors whose registration is expired, revoked, or suspended. "Unregistered contractor" does not include a contractor who has maintained a valid bond and the insurance or assigned account required by RCW 18.27.050, and whose registration has lapsed for thirty or fewer days.
     (11) "Unsatisfied final judgment" means a judgment that has not been satisfied either through payment, court approved settlement, discharge in bankruptcy, or assignment under RCW 19.72.070.
     (12) "Verification" means the receipt and duplication by the city, town, or county of a contractor registration card that is current on its face, checking the department's contractor registration data base, or calling the department to confirm that the contractor is registered.

Sec. 2   RCW 18.27.020 and 1997 c 314 s 3 are each amended to read as follows:
     (1) Every contractor shall register with the department.
     (2) It is a misdemeanor for any contractor to:
     (a) Advertise, offer to do work, submit a bid, or perform any work as a contractor without being registered as required by this chapter;
     (b) Advertise, offer to do work, submit a bid, or perform any work as a contractor when the contractor's registration is suspended or revoked;
     (c) Use a false or expired registration number in purchasing or offering to purchase an advertisement for which a contractor registration number is required; or
     (d) Transfer a valid registration to an unregistered contractor or allow an unregistered contractor to work under a registration issued to another contractor.
     (3) It is (a) unlawful for a general contractor to employ an unregistered contractor; but (b) not unlawful for a general contractor to employ an unregistered contractor who was registered at the time he or she entered into a contract with the general contractor, unless the general contractor or his or her representative has been notified in writing by the department of labor and industries that the contractor has become unregistered.
     (4) All misdemeanor actions under this chapter shall be prosecuted in the county where the infraction occurs.
     (5) A person is guilty of a separate misdemeanor for each day worked if, after the person receives a citation from the department, the person works while unregistered, or while his or her registration is suspended or revoked, or works under a registration issued to another contractor. A person is guilty of a separate misdemeanor for each worksite on which he or she violates subsection (2) of this section. Nothing in this subsection applies to a registered contractor.
     (6) The director by rule shall establish a two-year audit and monitoring program for a contractor not registered under this chapter who becomes registered after receiving an infraction or conviction under this chapter as an unregistered contractor. The director shall notify the departments of revenue and employment security of the infractions or convictions and shall cooperate with these departments to determine whether any taxes or registration, license, or other fees or penalties are owed the state.

Sec. 3   RCW 18.27.200 and 2002 c 82 s 6 are each amended to read as follows:
     (1) It is a violation of this chapter and an infraction for any contractor to:
     (a) Advertise, offer to do work, submit a bid, or perform any work as a contractor without being registered as required by this chapter;
     (b) Advertise, offer to do work, submit a bid, or perform any work as a contractor when the contractor's registration is suspended or revoked;
     (c) Transfer a valid registration to an unregistered contractor or allow an unregistered contractor to work under a registration issued to another contractor; or
     (d) If the contractor is a contractor as defined in RCW 18.106.010, violate RCW 18.106.320.
     (2) It is a violation of this chapter and an infraction for any contractor to employ an unregistered contractor. It is not a violation for a contractor to employ an unregistered contractor who was registered at the time he or she entered into a contract with the general contractor, unless the contractor or his or her representative has been notified in writing by the department of labor and industries that the contractor has become unregistered.
     (3) Each day that a contractor works without being registered as required by this chapter, works while the contractor's registration is suspended or revoked, employs an unregistered contractor, or works under a registration issued to another contractor is a separate infraction. Each worksite at which a contractor works without being registered as required by this chapter, works while the contractor's registration is suspended or revoked, or works under a registration issued to another contractor is a separate infraction.

Sec. 4   RCW 18.27.340 and 1997 c 314 s 17 are each amended to read as follows:
     (1) Except as otherwise provided in subsection (3) of this section, a contractor found to have committed an infraction under RCW 18.27.200 shall be assessed a monetary penalty of not less than two hundred dollars and not more than five thousand dollars.
     (2) The director may waive collection in favor of payment of restitution to a consumer complainant.
     (3) A contractor found to have committed an infraction under RCW 18.27.200 for:
     (a) Failure to register; or
     (b) Employing an unregistered contractor,
shall be assessed a fine of not less than one thousand dollars, nor more than five thousand dollars. The director may reduce the penalty for failure to register, but in no case below five hundred dollars, if the person becomes registered within ten days of receiving a notice of infraction and the notice of infraction is for a first offense. The director may reduce the penalty for employing an unregistered contractor, but in no case may reduce the penalty below seven hundred fifty dollars, if the notice of infraction is for a first offense for employing an unregistered contractor.
     (4) Monetary penalties collected under this chapter shall be deposited in the general fund.