BILL REQ. #:  H-4028.2 

Prefiled 01/08/10. Read first time 01/11/10.   Referred to Committee on Commerce & Labor.

     AN ACT Relating to improving administration of wage complaints by defining the limitations period for administrative wage claims through the department of labor and industries, tolling the civil statute of limitations, increasing minimum penalties for violators, creating and affecting waiver of penalties for repeat violators and those with a business practice of disregard for wage law, and providing for wage law violation liability for successor businesses; amending RCW 49.48.082, 49.48.083, 49.48.084, and 49.48.086; adding a new section to chapter 49.48 RCW; and prescribing penalties.

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

Sec. 1   RCW 49.48.082 and 2006 c 89 s 1 are each amended to read as follows:
     The definitions in this section apply throughout this section and RCW 49.48.083 through 49.48.086:
     (1) "Citation" means a written determination by the department that a wage payment requirement has been violated.
     (2) "Department" means the department of labor and industries.
     (3) "Determination of compliance" means a written determination by the department that wage payment requirements have not been violated.
     (4) "Director" means the director of the department of labor and industries, or the director's authorized representative.
     (5) "Employee" has the meaning provided in: (a) RCW 49.46.010 for purposes of a wage payment requirement set forth in RCW 49.46.020 or 49.46.130; and (b) RCW 49.12.005 for purposes of a wage payment requirement set forth in RCW 49.48.010, 49.52.050, or 49.52.060.
     (6) "Employer" has the meaning provided in RCW 49.46.010 for purposes of a wage payment requirement set forth in RCW 49.46.020, 49.46.130, 49.48.010, 49.52.050, or 49.52.060.
     (7) "Notice of assessment" means a written notice by the department that, based on a citation, the employer shall pay the amounts assessed under RCW 49.48.083.
     (8) "Wage" has the meaning provided in RCW 49.46.010.
     (9) "Wage complaint" means a complaint from an employee to the department that asserts that an employer has violated one or more wage payment requirements and that is reduced to writing.
     (10) "Wage payment requirement" means a wage payment requirement set forth in RCW 49.46.020, 49.46.130, 49.48.010, 49.52.050, or 49.52.060, and any related rules adopted by the department.
     (11) "Willful" means a knowing and intentional action that is neither accidental nor the result of a bona fide dispute, as evaluated under the standards applicable to wage payment violations under RCW 49.52.050(2).
     (12) "Business practice of disregard for wage law" means that an employer has willfully contravened wage payment requirements at least twice, including actions pertaining to an employee's current complaint, in the five years preceding the date of filing of the employee's complaint.
     (13) "Repeat violator" means any employer that has been the subject of a final and binding citation and notice of assessment within five years of the date of issue of the most recent citation and notice of assessment.
     (14) "Successor" means any person to whom an employer quitting, selling out, exchanging, or disposing of a business sells or otherwise conveys in bulk and not in the ordinary course of the employer's business, a major part of the materials, supplies, merchandise, inventory, fixtures, or equipment of the employer's business.

Sec. 2   RCW 49.48.083 and 2006 c 89 s 2 are each amended to read as follows:
     (1) If an employee files a wage complaint with the department, the department shall investigate the wage complaint. Unless otherwise resolved, the department shall issue either a citation and notice of assessment or a determination of compliance((: (a))) no later than sixty days after the date on which the department received the wage complaint, unless the department extends this time period for good cause((; and (b) no later than three years after the date on which the cause of action accrued, unless a longer period of time applies under law. Such cause of action for wage claims accrues from the date when the wages are due)). The department may not investigate a claim unless it is filed within three years of the date when the last wages were owed. The department shall send the citation and notice of assessment or the determination of compliance to both the employer and the employee by service of process or certified mail to their last known addresses. The wages and interest owed must be calculated from the first date wages were owed to the employee, except that the department may not order the employer to pay any wages and interest that were owed more than three years before the date the claim was filed with the department.
     (2) If the department determines that an employer has violated a wage payment requirement and issues to the employer a citation and notice of assessment, the department may order the employer to pay employees all wages owed, including interest of one percent per month on all wages owed, to the employee.
     (3) If the department determines that the violation of the wage payment requirement was a willful violation, the department also may order the employer to pay the department a civil penalty as specified in (a) of this subsection.
     (a) A civil penalty for a willful violation of a wage payment requirement shall be not less than ((five hundred)) one thousand dollars or an amount equal to ten percent of the total amount of unpaid wages, whichever is greater. The maximum civil penalty for a willful violation of a wage payment requirement shall be twenty thousand dollars.
     (b) The department may not assess a civil penalty if the employer reasonably relied on: (i) A rule related to any wage payment requirement; (ii) a written order, ruling, approval, opinion, advice, determination, or interpretation of the director; or (iii) an interpretive or administrative policy issued by the department and filed with the office of the code reviser. In accordance with the department's retention schedule obligations under chapter 40.14 RCW, the department shall maintain a complete and accurate record of all written orders, rulings, approvals, opinions, advice, determinations, and interpretations for purposes of determining whether an employer is immune from civil penalties under (b)(ii) of this subsection.
     (c) The department shall waive any civil penalty assessed against an employer under this section if the director determines that the employer has provided payment to the employee of all wages that the department determined that the employer owed to the employee, including interest, within ten business days of the employer's receipt of the citation and notice of assessment from the department. However, the department may not waive a civil penalty assessed under this section against a repeat violator, and the department may, but is not required to, waive a civil penalty assessed against an employer under this section if the department determines that an employer has a business practice of disregard for wage laws.
     (d) The department may waive at any time a civil penalty assessed under this section, in whole or in part, if the director determines that the employer paid all wages owed to an employee. However, the department may not waive a civil penalty assessed under this section against a repeat violator.
     (e) The department shall deposit civil penalties paid under this section in the supplemental pension fund established under RCW 51.44.033.
     (4) Upon payment by an employer, and acceptance by an employee, of all wages and interest assessed by the department in a citation and notice of assessment issued to the employer, the fact of such payment by the employer, and of such acceptance by the employee, shall: (a) Constitute a full and complete satisfaction by the employer of all specific wage payment requirements addressed in the citation and notice of assessment; and (b) bar the employee from initiating or pursuing any court action or other judicial or administrative proceeding based on the specific wage payment requirements addressed in the citation and notice of assessment. The citation and notice of assessment shall include a notification and summary of the specific requirements of this subsection.
     (5) The applicable statute of limitations for civil actions is tolled during any wage complaint investigation by the department of an employee's wage complaint against an employer. For the purposes of this subsection, the department's investigation begins on the date the employee files the wage complaint with the department and ends when the department notifies the employer and the employee in writing that the claim has been otherwise resolved or that the employee has elected to terminate the department's administrative action.

Sec. 3   RCW 49.48.084 and 2006 c 89 s 3 are each amended to read as follows:
     (1) A person, firm, or corporation aggrieved by a citation and notice of assessment or a determination of compliance issued by the department under RCW 49.48.083 may appeal the citation and notice of assessment ((or)), the determination of compliance, or the assessment of civil penalty for repeat violations or business practice of disregard for wage law to the director by filing a notice of appeal with the director within thirty days of the department's issuance of the citation and notice of assessment or the determination of compliance. A citation and notice of assessment or a determination of compliance not appealed within thirty days is final and binding, and not subject to further appeal.
     (2) A notice of appeal filed with the director under this section shall stay the effectiveness of the citation and notice of assessment ((or)), the determination of compliance, or the assessment of civil penalty for repeat violations or business practice of disregard for wage law pending final review of the appeal by the director as provided for in chapter 34.05 RCW.
     (3) Upon receipt of a notice of appeal, the director shall assign the hearing to an administrative law judge of the office of administrative hearings to conduct the hearing and issue an initial order. The hearing and review procedures shall be conducted in accordance with chapter 34.05 RCW, and the standard of review by the administrative law judge of an appealed citation and notice of assessment or an appealed determination of compliance shall be de novo. Any party who seeks to challenge an initial order shall file a petition for administrative review with the director within thirty days after service of the initial order. The director shall conduct administrative review in accordance with chapter 34.05 RCW.
     (4) The director shall issue all final orders after appeal of the initial order. The final order of the director is subject to judicial review in accordance with chapter 34.05 RCW.
     (5) Orders that are not appealed within the time period specified in this section and chapter 34.05 RCW are final and binding, and not subject to further appeal.
     (6) An employer who fails to allow adequate inspection of records in an investigation by the department under this chapter within a reasonable time period may not use such records in any appeal under this section to challenge the correctness of any determination by the department of wages owed or penalty assessed.

Sec. 4   RCW 49.48.086 and 2006 c 89 s 5 are each amended to read as follows:
     (1) After a final order is issued under RCW 49.48.084, if an employer defaults in the payment of: (a) Any wages determined by the department to be owed to an employee, including interest; or (b) any civil penalty ordered by the department under RCW 49.48.083, the director may file with the clerk of any county within the state a warrant in the amount of the payment plus any filing fees. The clerk of the county in which the warrant is filed shall immediately designate a superior court cause number for the warrant, and the clerk shall cause to be entered in the judgment docket under the superior court cause number assigned to the warrant, the name of the employer mentioned in the warrant, the amount of payment due on it plus any filing fees, and the date when the warrant was filed. The aggregate amount of the warrant as docketed becomes a lien upon the title to, and interest in, all real and personal property of the employer against whom the warrant is issued, the same as a judgment in a civil case docketed in the office of the clerk. The sheriff shall proceed upon the warrant in all respects and with like effect as prescribed by law with respect to execution or other process issued against rights or property upon judgment in a court of competent jurisdiction. The warrant so docketed is sufficient to support the issuance of writs of garnishment in favor of the state in a manner provided by law in case of judgment, wholly or partially unsatisfied. The clerk of the court is entitled to a filing fee which will be added to the amount of the warrant. A copy of the warrant shall be mailed to the employer within three days of filing with the clerk.
     (2)(a) The director may issue to any person, firm, corporation, other entity, municipal corporation, political subdivision of the state, a public corporation, or any agency of the state, a notice and order to withhold and deliver property of any kind when he or she has reason to believe that there is in the possession of the person, firm, corporation, other entity, municipal corporation, political subdivision of the state, public corporation, or agency of the state, property that is or will become due, owing, or belonging to an employer upon whom a notice of assessment has been served by the department for payments or civil penalties due to the department. The effect of a notice and order is continuous from the date the notice and order is first made until the liability out of which the notice and order arose is satisfied or becomes unenforceable because of lapse of time. The department shall release the notice and order when the liability out of which the notice and order arose is satisfied or becomes unenforceable by reason of lapse of time and shall notify the person against whom the notice and order was made that the notice and order has been released.
     (b) The notice and order to withhold and deliver must be served by the sheriff of the county or by the sheriff's deputy, by certified mail, return receipt requested, or by the director. A person, firm, corporation, other entity, municipal corporation, political subdivision of the state, public corporation, or agency of the state upon whom service has been made shall answer the notice within twenty days exclusive of the day of service, under oath and in writing, and shall make true answers to the matters inquired of in the notice and order. Upon service of the notice and order, if the party served possesses any property that may be subject to the claim of the department, the party shall promptly deliver the property to the director. The director shall hold the property in trust for application on the employer's indebtedness to the department, or for return without interest, in accordance with a final determination of a petition for review. In the alternative, the party shall furnish a good and sufficient surety bond satisfactory to the director conditioned upon final determination of liability. If a party served and named in the notice fails to answer the notice within the time prescribed in this section, the court may render judgment by default against the party for the full amount claimed by the director in the notice, together with costs. If a notice is served upon an employer and the property subject to it is wages, the employer may assert in the answer all exemptions provided for by chapter 6.27 RCW to which the wage earner is entitled.
     (3) In addition to the procedure for collection of wages owed, including interest, and civil penalties as set forth in this section, the department may recover wages owed, including interest, and civil penalties assessed under RCW 49.48.083 in a civil action brought in a court of competent jurisdiction of the county where the violation is alleged to have occurred.
     (4) Whenever any employer quits business, sells out, exchanges, or otherwise disposes of the employer's business or stock of goods, any person who becomes a successor to the business becomes liable for the full amount of any outstanding citation and notice of assessment or penalty against the employer's business under this chapter. If the citation and notice of assessment or penalty is not paid in full by the employer within ten days of the date of the sale, exchange, or disposal, the successor is liable for the payment of the full amount of the citation and notice of assessment or penalty, and payment thereof by the successor must, to the extent thereof, be deemed a payment upon the purchase price. If the payment is greater in amount than the purchase price, the amount of the difference becomes a debt due the successor from the employer.
     (5) This section does not affect other collection remedies that are otherwise provided by law.

NEW SECTION.  Sec. 5   A new section is added to chapter 49.48 RCW to read as follows:
     (1) The department shall assess a civil penalty against any repeat violator in an amount of not less than one thousand dollars or an amount equal to ten percent of the total amount of unpaid wages, whichever is greater. The maximum civil penalty for a repeat violator is twenty thousand dollars.
     (2) The department may assess a civil penalty of not less than one thousand dollars and not more than twenty thousand dollars where the department determines by a preponderance of the evidence that an employer shows a business practice of disregard for wage law. The penalty amount must be consistent with the severity of the violation, as determined by reference to factors not limited to:
     (a) The number of complaints against the employer under this chapter in the previous five years;
     (b) The credibility of the complaints;
     (c) The similarity of the complaints;
     (d) The number of separate alleged violations within the complaints;
     (e) Evidence that the employer willfully violated the provisions of this chapter;
     (f) Evidence that the employer remedies violations only when the department becomes involved; and
     (g) Evidence that the employer attempts to discourage employees from filing wage complaints with the department.