BILL REQ. #:  S-3738.1 

Read first time 01/24/14.   Referred to Committee on Commerce & Labor.

     AN ACT Relating to registration requirements for contractors; amending RCW 18.27.030 and 18.27.070; 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 are too many individuals illegally engaging in business in the construction industry and that should be registered under chapter 18.27 RCW, should have state industrial insurance accounts, should be paying state industrial insurance premiums in accordance with Title 51 RCW to protect their workers, should have state unemployment insurance accounts in accordance with Title 50 RCW, should be paying state unemployment insurance taxes in accordance with Title 50 RCW, and should be paying state business taxes and remitting state sales taxes in accordance with Title 82 RCW. These illegal businesses are competing unfairly against legally registered contractors that are paying their state industrial insurance premiums, paying their state unemployment taxes, paying their state business taxes, and remitting their sales taxes, and are taking work away from the employees of the legally operating businesses. It is the intent of the legislature to curtail the operations of illegal businesses in the construction industry and hereby enact legislation to require businesses that apply for a contractor registration under chapter 18.27 RCW to have a state industrial insurance account in accordance with Title 51 RCW and have a state unemployment insurance account in accordance with Title 50 RCW, in addition to having a state business tax account in accordance with Title 82 RCW. In addition, the legislature will encourage an owner, officer, or partner of a contractor registration applicant issued in accordance with chapter 18.27 RCW to complete a preregistration contractor training class to better ensure that the applicant knows his, her, or its responsibilities when doing business as a contractor in Washington state by charging an additional contractor registration fee for any applicant that has not completed the preregistration training class. The legislature also directs the department of labor and industries to provide preregistration training in each of its service regions at least once each month.

Sec. 2   RCW 18.27.030 and 2008 c 120 s 1 are each amended to read as follows:
     (1) An applicant for registration as a contractor shall submit an application under oath upon a form to be prescribed by the director and which shall include the following information pertaining to the applicant:
     (a) Employer social security number.
     (b) Unified business identifier number.
     (c) Evidence of an established workers' compensation account for the coverage for the applicant's employees working in Washington, as follows:
     (i) The applicant's industrial insurance account number issued by the department, regardless of whether the applicant has employees or not at the time of registration;
     (ii) The applicant's self-insurer number issued by the department; or
     (iii) For applicants domiciled in a state or province of Canada subject to an agreement entered into under RCW 51.12.120(7), as permitted by the agreement, filing a certificate of coverage issued by the agency that administers the workers' compensation law in the applicant's state or province of domicile certifying that the applicant has secured the payment of compensation under the other state's or province's workers' compensation law.
     (d) Employment security department unemployment insurance account number, regardless of whether the applicant has employees or not at the time of registration.
     (e) Unified business identifier (UBI) account number may be substituted for the information required by (c) and (d) of this subsection if the applicant will not employ employees in Washington.
     (f) Type of contracting activity, whether a general or a specialty contractor and if the latter, the type of specialty.
     (g) The name and address of each partner if the applicant is a firm or partnership, or the name and address of the owner if the applicant is an individual proprietorship, or the name and address of the corporate officers and statutory agent, if any, if the applicant is a corporation or the name and address of all members of other business entities. The information contained in such application is a matter of public record and open to public inspection.
     (2) The department may verify the workers' compensation coverage information provided by the applicant under subsection (1)(c) of this section, including but not limited to information regarding the coverage of an individual employee of the applicant. If coverage is provided under the laws of another state, the department may notify the other state that the applicant is employing employees in Washington.
     (3)(a) The department shall deny an application for registration if: (i) The applicant has been previously performing work subject to this chapter as a sole proprietor, partnership, corporation, or other entity and the department has notice that the applicant has an unsatisfied final judgment against him or her in an action based on work performed subject to this chapter or the applicant owes the department money for penalties assessed or fees due under this chapter as a result of a final judgment; (ii) the applicant was an owner, principal, or officer of a partnership, corporation, or other entity that either has an unsatisfied final judgment against it in an action that was incurred for work performed subject to this chapter or owes the department money for penalties assessed or fees due under this chapter as a result of a final judgment; (iii) the applicant does not have a valid unified business identifier number; (iv) the department determines that the applicant has falsified information on the application, unless the error was inadvertent; or (v) the applicant does not have an active and valid certificate of registration with the department of revenue.
     (b) The department shall suspend an active registration if (i) the department has determined that the registrant has an unsatisfied final judgment against it for work within the scope of this chapter; (ii) the department has determined that the registrant is a sole proprietor or an owner, principal, or officer of a registered contractor that has an unsatisfied final judgment against it for work within the scope of this chapter; (iii) the registrant does not maintain a valid unified business identifier number; (iv) the department has determined that the registrant falsified information on the application, unless the error was inadvertent; or (v) the registrant does not have an active and valid certificate of registration with the department of revenue.
     (c) The department may suspend an active registration if the department has determined that an owner, principal, partner, or officer of the registrant was an owner, principal, or officer of a previous partnership, corporation, or other entity that has an unsatisfied final judgment against it.
     (4) The department shall not deny an application or suspend a registration because of an unsatisfied final judgment if the applicant's or registrant's unsatisfied final judgment was determined by the director to be the result of the fraud or negligence of another party.

Sec. 3   RCW 18.27.070 and 1997 c 314 s 7 are each amended to read as follows:
     (1) The department shall charge fees for issuance, renewal, and reinstatement of certificates of registration; and changes of name, address, or business structure. The department shall set the fees by rule.
     (2) The entire amount of the fees are to be used solely to cover the full cost of issuing certificates, filing papers and notices, and administering and enforcing this chapter. The costs shall include reproduction, travel, per diem, and administrative and legal support costs.
     (3) The department shall charge an additional fee of two hundred dollars for any applicant who does not complete a department-approved contractor preregistration training program. A contractor preregistration training program may not exceed six hours in duration and must be provided by the department or by entities approved by the department. For the purposes of this section, an applicant must be an owner, officer, or partner of the entity applying for registration under this chapter. The contractor preregistration training program must be available at a minimum of once a month in each of the department's service delivery regions and the department may not charge a fee for the contractor preregistration training program it provides using department staff. The department may also offer the contractor preregistration training program via the internet, so long as the department has proof that the applicant participated in the entire preregistration training program and also passed a test showing that the applicant reasonably retained the information presented in the training. The department may approve private entities to also present the contractor preregistration training program in accordance with criteria established by rule by the department. The department of revenue and the employment security department shall assist the department of labor and industries in presenting the contractor preregistration training program.