BILL REQ. #:  H-0799.1 

Read first time 01/19/09.   Referred to Committee on Commerce & Labor.

     AN ACT Relating to industrial insurance coverage for the owners of drywall installation or finishing businesses; amending RCW 51.12.020 and 51.08.070; adding a new section to chapter 51.12 RCW; adding a new section to chapter 51.04 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   The legislature finds that there is continued evidence of underreporting and nonpayment of workers' compensation premiums by employers in the drywall installation and finishing industry. This abuse is created when employers improperly claim owner exemptions for individuals who are really workers and who later claim and receive benefits provided for in Title 51 RCW. Untangling this web of deceit is complicated and costly to the system and often only comes to light when a claim for benefits is made. To end this cycle of abuse the legislature therefore declares that all owners of drywall installation and finishing businesses are subject to mandatory coverage under Title 51 RCW.

NEW SECTION.  Sec. 2   A new section is added to chapter 51.12 RCW to read as follows:
     (1) All owners of businesses engaged in the installation or finishing of drywall are within the mandatory coverage of this title.
     (2) In consultation with the advisory committee created under section 5 of this act, the department shall adopt rules to implement this section. Rules shall be designed to be the least burdensome to employers and to encourage voluntary compliance.

Sec. 3   RCW 51.12.020 and 2008 c 217 s 98 are each amended to read as follows:
     The following are the only employments which shall not be included within the mandatory coverage of this title:
     (1) Any person employed as a domestic servant in a private home by an employer who has less than two employees regularly employed forty or more hours a week in such employment.
     (2) Any person employed to do gardening, maintenance, or repair, in or about the private home of the employer. For the purposes of this subsection, "maintenance" means the work of keeping in proper condition, "repair" means to restore to sound condition after damage, and "private home" means a person's place of residence.
     (3) A person whose employment is not in the course of the trade, business, or profession of his or her employer and is not in or about the private home of the employer.
     (4) Any person performing services in return for aid or sustenance only, received from any religious or charitable organization.
     (5) Sole proprietors or partners, except as provided in section 2 of this act.
     (6) Any child under eighteen years of age employed by his or her parent or parents in agricultural activities on the family farm.
     (7) Jockeys while participating in or preparing horses for race meets licensed by the Washington horse racing commission pursuant to chapter 67.16 RCW.
     (8)(a) Except as otherwise provided in (b) of this subsection and section 2 of this act, any bona fide officer of a corporation voluntarily elected or voluntarily appointed in accordance with the articles of incorporation or bylaws of the corporation, who at all times during the period involved is also a bona fide director, and who is also a shareholder of the corporation. Only such officers who exercise substantial control in the daily management of the corporation and whose primary responsibilities do not include the performance of manual labor are included within this subsection.
     (b) Alternatively and except as provided in section 2 of this act, a corporation that is not a "public company" as defined in RCW 23B.01.400(24) may exempt eight or fewer bona fide officers, who are voluntarily elected or voluntarily appointed in accordance with the articles of incorporation or bylaws of the corporation and who exercise substantial control in the daily management of the corporation, from coverage under this title without regard to the officers' performance of manual labor if the exempted officer is a shareholder of the corporation, or may exempt any number of officers if all the exempted officers are related by blood within the third degree or marriage. If a corporation that is not a "public company" elects to be covered under subsection (8)(a) of this section, the corporation's election must be made on a form prescribed by the department and under such reasonable rules as the department may adopt.
     (c) Determinations respecting the status of persons performing services for a corporation shall be made, in part, by reference to Title 23B RCW and to compliance by the corporation with its own articles of incorporation and bylaws. For the purpose of determining coverage under this title, substance shall control over form, and mandatory coverage under this title shall extend to all workers of this state, regardless of honorary titles conferred upon those actually serving as workers.
     (d) A corporation may elect to cover officers who are exempted by this subsection in the manner provided by RCW 51.12.110.
     (9) Services rendered by a musician or entertainer under a contract with a purchaser of the services, for a specific engagement or engagements when such musician or entertainer performs no other duties for the purchaser and is not regularly and continuously employed by the purchaser. A purchaser does not include the leader of a group or recognized entity who employs other than on a casual basis musicians or entertainers.
     (10) Services performed by a newspaper carrier selling or distributing newspapers on the street or from house to house.
     (11) Services performed by an insurance producer, as defined in RCW 48.17.010(5).
     (12) Services performed by a booth renter. However, a person exempted under this subsection may elect coverage under RCW 51.32.030.
     (13) Except as provided in section 2 of this act, members of a limited liability company, if either:
     (a) Management of the company is vested in its members, and the members for whom exemption is sought would qualify for exemption under subsection (5) of this section were the company a sole proprietorship or partnership; or
     (b) Management of the company is vested in one or more managers, and the members for whom the exemption is sought are managers who would qualify for exemption under subsection (8) of this section were the company a corporation.

Sec. 4   RCW 51.08.070 and 2008 c 102 s 2 are each amended to read as follows:
     (1) "Employer" means any person, body of persons, corporate or otherwise, and the legal representatives of a deceased employer, all while engaged in this state in any work covered by the provisions of this title, by way of trade or business, or who contracts with one or more workers, the essence of which is the personal labor of such worker or workers. Or as an exception to the definition of employer, persons or entities are not employers when they contract or agree to remunerate the services performed by an individual who meets the tests set forth in subsections (1) through (6) of RCW 51.08.195 or the separate tests set forth in RCW 51.08.181 for work performed that requires registration under chapter 18.27 RCW or licensing under chapter 19.28 RCW.
     (2) For purposes of chapter 51.44 RCW, "employer" also includes: (a) Any person or body of persons, corporate or otherwise, who is within the mandatory coverage of this title under section 2 of this act; and (b) the legal representatives of a deceased person who is within the mandatory coverage of this title under section 2 of this act.

NEW SECTION.  Sec. 5   A new section is added to chapter 51.04 RCW to read as follows:
     (1) The drywall oversight committee is created to advise the department on the development of rules to implement section 2 of this act and to otherwise advise the department on issues affecting the drywall industry.
     (2) The committee shall be composed of the following eight members to be appointed by the director: Four drywall contractors, two construction related trade association representatives, and two labor representatives.
     (3) Members of the committee shall serve without compensation, but shall be reimbursed for travel expenses as provided in RCW 43.03.050 and 43.03.060.