HOUSE BILL REPORT

HB 2578

BYRepresentatives Jones, Winsley, Vekich, Leonard, Crane, Cole, Prentice, R. King, Day, Wineberry, Wang, Fraser and Rector; by request of Department of Labor and Industries

Changing provisions relating to prevailing wage law.

House Committe on Commerce & Labor

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (9)

      Signed by Representatives Vekich, Chair; Cole, Vice Chair; Forner, Jones, R. King, Leonard, Prentice, Walker and Wolfe.

House Staff:Chris Cordes (786-7117)

Rereferred House Committee on Appropriations

Majority Report:  The substitute bill by Committee on Commerce & Labor be substituted therefor and the substitute bill do pass.  (19)

      Signed by Representatives Locke, Chair; Grant, Vice Chair; H. Sommers, Vice Chair; Appelwick, Belcher, Braddock, Brekke, Dorn, Ebersole, Ferguson, Hine, Inslee, Peery, Rust, Sayan, Spanel, Sprenkle, Wang and Wineberry.

Minority Report:  Do not pass.  (7)

      Signed by Representatives Silver, Ranking Republican Member; Youngsman, Assistant Ranking Republican Member; Bowman, Doty, McLean, Nealey and Padden.

House Staff:      Michelle Hauth (786-7384)

AS REPORTED BY COMMITTEE ON APPROPRIATIONS FEBRUARY 2, 1990

BACKGROUND:

Contractors and subcontractors are required to file prevailing wage statements if the construction project is a public works project subject to the state prevailing wage law.  If the contractor or subcontractor files a false statement or does not file a required statement, the contractor or subcontractor is subject to a $500 civil penalty.

Contractors and subcontractors must also pay the prevailing wage to their employees working on public works projects subject to the state prevailing wage law.  If a contractor or subcontractor fails to pay the required prevailing wage, the contractor or subcontractor is subject to a civil penalty.  The affected employee also has a private right of action against the contractor or subcontractor for the unpaid wages and the Department of Labor and Industries is authorized to bring an action to collect unpaid prevailing wages in certain circumstances.

The Department of Labor and Industries is authorized to charge fees for approving prevailing wage statements, certifying affidavits of wages paid, and conducting prevailing wage arbitration proceedings.  The fees must be set at a level that covers the cost of these activities.  There is no requirement that the fees cover the costs of other activities that the department is required to perform to enforce the prevailing wage act.

SUMMARY:

SUBSTITUTE BILL:  The civil penalty for filing a false prevailing wage statement or failing to file a required statement is changed from $500 to $1,000 or 20 percent of the total prevailing wage violation found in connection with each filing or failure to file, whichever is greater.

In addition to a civil penalty, if a contractor or subcontractor fails to pay the required prevailing wage rate to his or her employees, the contractor or subcontractor is liable for both the wages due and interest on the back wages up to 1.5 percent per month on the wages owed.

The contractor or subcontractor is not eligible to bid on public works projects until the back wages and interest, and any civil penalty, have been paid.

The Department of Labor and Industries must set the fees charged for approving prevailing wage statements, certifying affidavits of wages paid, and conducting prevailing wage arbitrations at levels that, as near as practicable, generate sufficient revenue to carry out the activities required under the prevailing wage law.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The interest on back wages owed to employees is set at the rate of up to 1.5 percent per month on the wages owed, and the authority is deleted that would have allowed the Department of Labor and Industries to set the interest rate by rule.  Technical corrections are made to conform the bill with the current code.

CHANGES PROPOSED BY COMMITTEE ON APPROPRIATIONS:  None.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Available.

House Committee ‑ Testified For:    (Commerce & Labor)  Mark McDermott, Department of Labor and Industries; Bob Dilger, Washington State Building and Construction Trades Council; Jeff Johnson, Washington State Labor Council; Mike Redman, Washington Association of Prosecuting Attorneys; and Cindy Zehnder, Joint Council of Teamsters.

(Appropriations)  Representative Evan Jones, prime sponsor.

House Committee - Testified Against:      (Commerce & Labor)  Gary Smith, Independent Business Association; Paul W. Locke; and Clif Finch, Association of Washington Business.

(Appropriations)  No one.

House Committee - Testimony For:    (Commerce & Labor)  The employee who is owed wages on a prevailing wage job often does not get the full amount owed or may not get a settlement for a long period of time.  Under these circumstances, the employer benefits from the equivalent of an interest free loan.  If the prevailing wage law is not enforceable under the current penalty system, it will hurt both the workers and the honest contractors.  The Department of Labor and Industries needs more flexibility in using the fees collected for prevailing wage activities to cover the full range of enforcement and administrative responsibilities.

(Appropriations)  This is an issue of fairness.  Currently, the prevailing wage system is inequitable.  Contractors can bid on public works contracts but not pay prevailing wage.  The workers and other contractors are cheated out of fair competition.

House Committee - Testimony Against:      (Commerce & Labor)  The prevailing wage system needs substantial reform to reflect current local wage rates and to provide effective use of tax dollars. More needs to be done than just revising the penalty structure. Issues such as the wage surveying methods and the application of the law to off-site construction must be resolved as part of any revisions.

(Appropriations)  None.