BILL REQ. #:  Z-0063.6 

Read first time 01/30/2007.   Referred to Committee on Labor, Commerce, Research & Development.

     AN ACT Relating to the regulation of construction contractors; amending RCW 18.27.010, 18.27.020, 18.27.030, 18.27.040, 18.27.080, 18.27.090, 18.27.104, 18.27.114, 18.27.200, 18.27.210, 18.27.230, 18.27.240, 18.27.250, 18.27.270, 18.27.290, and 18.27.310; adding a new section to chapter 18.27 RCW; 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 unless the context clearly requires otherwise.
     (1) "Contractor" ((means)) includes 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, develop, 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)), the installation or repair of roofing or siding, performing tree services, or cabinet or similar installation; 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)) in this chapter. "Contractor" includes any person, firm, or corporation who or which performs construction consulting activities. "Contractor" also includes any person, firm, corporation, or other entity covered by this subsection, whether or not registered as required under this chapter or who are otherwise required to be registered or licensed by law, who offer to sell their property without occupying or using the structures, projects, developments, or improvements for more than one year from the date the structure, project, development, or improvement was substantially completed or abandoned. The terms "contractor" and "registrant" are synonymous.
     (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) "Filing" means delivery of a document that is required to be filed with an agency to a place designated by the agency.
     (5) "General contractor" means a ((contractor)) person, firm, or other entity whose business operations require the use of more than ((two unrelated)) one 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)) trade or craft upon a single job or project or under a single building permit. A general contractor also includes one who superintends, in whole or in part, work falling within the definition of a contractor. The terms "general contractor," ((and)) "builder," and developer are synonymous.
     (((5))) (6) "Partnership" means a business formed under Title 25 RCW.
     (((6))) (7) "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))) (8) "Registration suspension" means either an automatic suspension as provided in this chapter, or 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))) (9) "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))) (10) "Service," except as otherwise provided in RCW 18.27.225 and 18.27.370, means posting in the United States mail, properly addressed, postage prepaid, or personal service. Service by mail is complete upon deposit in the United States mail to the last known address provided to the department.
     (11) "Specialty contractor" means a contractor whose operations do not fall within the definition of "general contractor". A specialty contractor may only subcontract work to others within its own specialty.
     (((10))) (12) "Substantial completion" means the state of completion reached when an improvement on real property may be used or occupied for its intended use.
     (13) "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))) (14) "Unsatisfied final judgment" means a judgment or administrative warrant that has not been satisfied either through payment, court approved settlement, discharge in bankruptcy, or assignment under RCW 19.72.070.
     (((12))) (15) "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 gross 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; or
     (e) Subcontract to or employ an unregistered contractor.
     (3) It is not unlawful for a ((general)) registered contractor to employ an unregistered contractor who was registered at the time he or she entered into a contract with the ((general)) registered contractor, unless the ((general)) registered 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 gross misdemeanor actions under this chapter shall be prosecuted in the county where the infraction occurs.
     (5) A person is guilty of a separate gross 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 gross 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 18.27.030 and 2001 c 159 s 2 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, if required by the department of revenue.
     (c) Evidence of workers' compensation coverage for the applicant's employees working in Washington, as follows:
     (i) The applicant's industrial insurance account number issued by the department;
     (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 number.
     (e) State excise tax registration number.
     (f) Unified business identifier (UBI) account number may be substituted for the information required by (c) of this subsection if the applicant will not employ employees in Washington, and by (d) and (e) of this subsection.
     (g) Type of contracting activity, whether a general or a specialty contractor and if the latter, the type of specialty.
     (h) 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 ((a)) 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; or (iii) the applicant does not have a valid unified business identifier number, if required by the department of revenue.
     (b) The department shall suspend an active registration if (i) the department has notice that the registrant has an unsatisfied final judgment against it for work within the scope of this chapter; (ii) the department has notice that the registrant is a sole proprietor or ((a)) 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; or (((ii))) (iii) the ((applicant)) registrant does not maintain a valid unified business identifier number, if required by the department of revenue.
     (c) The department may suspend an active registration if the department has notice 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. 4   RCW 18.27.040 and 2001 c 159 s 3 are each amended to read as follows:
     (1) Each applicant shall file with the department a surety bond issued by a surety insurer who meets the requirements of chapter 48.28 RCW in the sum of twelve thousand dollars if the applicant is a general contractor and six thousand dollars if the applicant is a specialty contractor. If no valid bond is already on file with the department at the time the application is filed, a bond must accompany the registration application. The bond shall have the state of Washington named as obligee with good and sufficient surety in a form to be approved by the department. The bond shall be continuous and may be canceled by the surety upon the surety giving written notice to the director. A cancellation or revocation of the bond or withdrawal of the surety from the bond automatically suspends the registration issued to the ((registrant)) contractor until a new bond or reinstatement notice has been filed and approved as provided in this section. The bond shall be conditioned that the applicant will pay all persons performing labor, including employee benefits, for the contractor, will pay all taxes and contributions due to the state of Washington, and will pay all persons furnishing ((labor or)) material or renting or supplying equipment to the contractor and will pay all amounts that may be adjudged against the contractor by reason of breach of contract including ((negligent or)) improper work in the conduct of the contracting business. A change in the name of a business or a change in the type of business entity shall not impair a bond for the purposes of this section so long as one of the original applicants for such bond maintains partial ownership in the business covered by the bond.
     (2) At the time of initial registration or renewal, the contractor shall provide a bond or other security deposit as required by this chapter and comply with all of the other provisions of this chapter before the department shall issue or renew the contractor's certificate of registration. Any contractor registered as of July 1, 2001, who maintains that registration in accordance with this chapter is in compliance with this chapter until the next renewal of the contractor's certificate of registration.
     (3) Any person, firm, or corporation having a claim against the contractor for any of the items referred to in this section may bring suit ((upon)) against the contractor and the bond or deposit in the superior court of the county in which the work was done or of any county in which jurisdiction of the contractor may be had. The surety issuing the bond shall be named as a party to any suit upon the bond. Action upon the bond or deposit brought by a residential homeowner for breach of contract by a party to the construction contract shall be commenced by filing the summons and complaint with the clerk of the appropriate superior court within two years from the date the claimed contract work was completed, substantially completed, or abandoned, whichever occurred first. Action upon the bond or deposit brought by any other authorized party shall be commenced by filing the summons and complaint with the clerk of the appropriate superior court within one year from the date the claimed labor was performed and benefits accrued, taxes and contributions owing the state of Washington became due, materials and equipment were furnished, or the claimed contract work was completed, substantially completed, or abandoned, whichever occurred first. Service of process in an action filed under this chapter against the contractor((,)) and the contractor's bond((,)) or the deposit shall be exclusively by service upon the department. Three copies of the summons and complaint and a fee adopted by rule of not less than ((twenty)) fifty dollars to cover the costs shall be served by registered or certified mail, or other delivery service requiring notice of receipt, upon the department at the time suit is started and the department shall maintain a record, available for public inspection, of all suits so commenced. Service is not complete until the department receives the fee and three copies of the summons and complaint. The service shall constitute service and confer personal jurisdiction on the ((registrant)) contractor and the surety for suit ((upon the)) on claimant's claim against the contractor and the bond or deposit and the department shall transmit the summons and complaint or a copy thereof to the ((registrant)) contractor at the address listed in the ((registrant's)) contractor's application and to the surety within two days after it shall have been received.
     (4) The surety upon the bond shall not be liable in an aggregate amount in excess of the amount named in the bond nor for any monetary penalty assessed pursuant to this chapter for an infraction. The liability of the surety shall not cumulate where the bond has been renewed, continued, reinstated, reissued or otherwise extended. The surety upon the bond may, upon notice to the department and the parties, tender to the clerk of the court having jurisdiction of the action an amount equal to the claims thereunder or the amount of the bond less the amount of judgments, if any, previously satisfied therefrom and to the extent of such tender the surety upon the bond shall be exonerated but if the actions commenced and pending and provided to the department as required in subsection (3) of this section, at any one time exceed the amount of the bond then unimpaired, claims shall be satisfied from the bond in the following order:
     (a) Employee labor and claims of laborers, including employee benefits;
     (b) Claims for breach of contract by a party to the construction contract;
     (c) Registered or licensed subcontractors, material, and equipment;
     (d) Taxes and contributions due the state of Washington;
     (e) Any court costs, interest, and ((attorney's [attorneys'])) attorneys' fees plaintiff may be entitled to recover. The surety is not liable for any amount in excess of the penal limit of its bond.
     Any person having filed and served a summons and complaint as required by subsection (3) of this section having an unsatisfied final judgment against a contractor with security other than a bond, and that security has not already been tendered to the court under this subsection (4), may execute upon the security by serving upon the department a certified copy of the unsatisfied final judgment by registered or certified mail within ten days following entry of the judgment. Upon the receipt of the certified copy of the final judgment, the department shall order paid from the security the amount of the unsatisfied judgment.
     A payment made by the surety in good faith exonerates the bond to the extent of any payment made by the surety.
     (5) The total amount paid from a bond or deposit required of a general contractor by this section to claimants other than residential homeowners must not exceed one-half of the bond amount. The total amount paid from a bond or deposit required of a specialty contractor by this section to claimants other than residential homeowners must not exceed one-half of the bond amount or four thousand dollars, whichever is greater. At the expiration of the time specified in subsection (3) of this section, if no residential homeowner has provided a copy of a summons and complaint to the department for an action under this chapter, the reserved amount may be used to pay any unsatisfied judgments to claimants other than residential homeowners. The priority of payment is the order of receipt of the request by the surety on the bond or the department for other security beginning after the expiration of the time specified in subsection (3) of this section, the presumed date for which must be specified in a declaration with any supporting documentation. Requests must be received within sixty days of the expiration of the time specified in subsection (3) of this section.
     (6) The prevailing party in an action filed under this section against the contractor and contractor's bond or deposit, for breach of contract by a party to ((a)) the construction contract involving a residential homeowner, is entitled to costs, interest, and reasonable attorneys' fees. The surety upon the bond or deposit is not liable in an aggregate amount in excess of the amount named in the bond or deposit nor for any monetary penalty assessed pursuant to this chapter for an infraction.
     (7) If a final judgment impairs the liability of the surety upon the bond or deposit so furnished that there is not in effect a bond or deposit in the full amount prescribed in this section, the registration of the contractor is automatically suspended until the bond or deposit liability in the required amount unimpaired by unsatisfied judgment claims is furnished.
     (8) In lieu of the surety bond required by this section the contractor may file with the department ((a deposit consisting of cash or other security acceptable to)) an assigned savings account, upon forms provided by the department.
     (9) Any person having filed and served a summons and complaint as required by this section having an unsatisfied final judgment against the registrant for any items referred to in this section may execute upon the security held by the department by serving a certified copy of the unsatisfied final judgment by registered or certified mail upon the department within one year of the date of entry of such judgment. Upon the receipt of service of such certified copy the department shall pay or order paid from the deposit, through the registry of the superior court which rendered judgment, towards the amount of the unsatisfied judgment. The priority of payment by the department shall be the order of receipt by the department, but the department shall have no liability for payment in excess of the amount of the deposit.
     (10) Within ten days after resolution of the case, a certified copy of the final judgment and order, or any settlement documents where a case is not disposed of by a court trial, a certified copy of the dispositive settlement documents must be provided to the department by the prevailing party. Failure to provide a copy of the final judgment and order or the dispositive settlement documents to the department within ten days of entry of such an order constitutes a violation of this chapter and a penalty adopted by rule of not less than two hundred fifty dollars must be assessed against the prevailing party.
     (11) The director may require an applicant applying to renew or reinstate a registration or applying for a new registration to file a bond of up to three times the normally required amount, if the director determines that an applicant, or a previous registration of a corporate officer, owner, or partner of a current applicant, has had in the past five years a total of six final judgments in actions under this chapter involving a residential single-family dwelling on two or more different structures.
     (((11))) (12) The director may adopt rules necessary for the proper administration of the security.

Sec. 5   RCW 18.27.080 and 1988 c 285 s 2 are each amended to read as follows:
     No person engaged in the business or acting in the capacity of a contractor may bring or maintain any action in any court of this state for the collection of compensation for the performance of any work or for breach of any contract for which registration is required under this chapter without alleging and proving that he was a duly registered contractor and held a current and valid certificate of registration at the time he contracted for the performance of such work or entered into such contract. For the purposes of this section, the court shall not find a contractor in substantial compliance with the registration requirements of this chapter unless: (1) The department has on file the information required by RCW 18.27.030; (2) the contractor has at all times had in force a current bond or other security as required by RCW 18.27.040; and (3) the contractor has at all times had in force current insurance as required by RCW 18.27.050. In determining under this section whether a contractor is in substantial compliance with the registration requirements of this chapter, the court shall take into consideration the length of time during which the contractor did not hold a valid certificate of registration.

Sec. 6   RCW 18.27.090 and 2003 c 399 s 401 are each amended to read as follows:
     The registration provisions of this chapter do not apply to:
     (1) An authorized representative of the United States government, the state of Washington, or any incorporated city, town, county, township, irrigation district, reclamation district, or other municipal or political corporation or subdivision of this state;
     (2) Officers of a court when they are acting within the scope of their office;
     (3) Public utilities operating under the regulations of the utilities and transportation commission in construction, maintenance, or development work incidental to their own business;
     (4) Any construction, repair, or operation incidental to the discovering or producing of petroleum or gas, or the drilling, testing, abandoning, or other operation of any petroleum or gas well or any surface or underground mine or mineral deposit when performed by an owner or lessee;
     (5) The sale ((or installation)) of any finished products, materials, or articles of merchandise that are not ((actually)) fabricated into and do not become a ((permanent fixed)) part of a structure under the common law of fixtures;
     (6) Any construction, alteration, improvement, or repair of personal property performed by the registered or legal owner, or by a mobile/manufactured home retail dealer or manufacturer licensed under chapter 46.70 RCW who shall warranty service and repairs under chapter 46.70 RCW;
     (7) Any construction, alteration, improvement, or repair carried on within the limits and boundaries of any site or reservation under the legal jurisdiction of the federal government. The exemption prescribed in this subsection does not apply when the department is requested to come onto the property by such site or reservation or householder thereon;
     (8) Any person who only furnished materials, supplies, or equipment without fabricating them into, or consuming them in the performance of, the work of the contractor;
     (9) Any work or operation on one undertaking or project by one or more contracts, the aggregate contract price of which for labor and materials and all other items is less than five hundred dollars, such work or operations being considered as of a casual, minor, or inconsequential nature. The exemption prescribed in this subsection does not apply in any instance wherein the work or construction is only a part of a larger or major operation, whether undertaken by the same or a different contractor, or in which a division of the operation is made into contracts of amounts less than five hundred dollars for the purpose of evasion of this chapter or otherwise. The exemption prescribed in this subsection does not apply to a person who advertises or puts out any sign or card or other device which might indicate to the public that he or she is a contractor, or that he or she is qualified to engage in the business of contractor;
     (10) Any construction or operation incidental to the construction and repair of irrigation and drainage ditches of regularly constituted irrigation districts or reclamation districts; or to farming, dairying, agriculture, viticulture, horticulture, or stock or poultry raising; or to clearing or other work upon land in rural districts for fire prevention purposes; except when any of the above work is performed by a registered contractor;
     (11) An owner who contracts for a project with a registered contractor, except that this exemption shall not deprive the owner of the protections of this chapter against registered and unregistered contractors. The exemption prescribed in this subsection does not apply to a person who performs the activities of a contractor for the purpose of leasing or selling the improved property;
     (12) Any person working on his or her own property, whether occupied by him or her or not, and any person working on his or her personal residence, whether owned by him or her or not but this exemption shall not apply to any person ((otherwise covered by this chapter who constructs an improvement)) who performs the activities of a contractor on his or her own property ((with the intention and)) for the purpose of selling, demolishing, or leasing the ((improved)) property;
     (13) Owners of commercial properties who use their own employees to do maintenance, repair, and alteration work in or upon their own properties;
     (14) A licensed architect or civil or professional engineer acting solely in his or her professional capacity, an electrician ((licensed)) certified under the laws of the state of Washington, or a plumber ((licensed)) certified under the laws of the state of Washington or licensed by a political subdivision of the state of Washington while operating within the boundaries of such political subdivision. The exemption provided in this subsection is applicable only when the ((licensee)) person certified is operating within the scope of his or her ((license)) certification;
     (15) Any person who engages in the activities herein regulated as an employee of a registered contractor with wages as his or her sole compensation or as an employee with wages as his or her sole compensation;
     (16) Contractors on highway projects who have been prequalified as required by RCW 47.28.070, with the department of transportation to perform highway construction, reconstruction, or maintenance work;
     (17) A mobile/manufactured home dealer or manufacturer who subcontracts the installation, set-up, or repair work to actively registered contractors. This exemption only applies to the installation, set-up, or repair of the mobile/manufactured homes that were manufactured or sold by the mobile/manufactured home dealer or manufacturer;
     (18) An entity who holds a valid electrical contractor's license under chapter 19.28 RCW that employs a certified journeyman electrician, a certified residential specialty electrician, or an electrical trainee meeting the requirements of chapter 19.28 RCW to perform plumbing work that is incidentally, directly, and immediately appropriate to the like-in-kind replacement of a household appliance or other small household utilization equipment that requires limited electric power and limited waste and/or water connections. An electrical trainee must be supervised by a certified electrician while performing plumbing work.

Sec. 7   RCW 18.27.104 and 1997 c 314 s 10 are each amended to read as follows:
     (1) If, upon investigation, the director or the director's designee has probable cause to believe that a person holding a registration, an applicant for registration, or a person acting in the capacity of a contractor who is not otherwise exempted from this chapter, has violated RCW 18.27.100 by unlawfully advertising for work covered by this chapter, the department may issue a citation containing an order of correction. Such order shall require the violator to cease the unlawful advertising.
     (2) If the person to whom a citation is issued under subsection (1) of this section notifies the department in writing that he or she contests the citation, the department shall afford an opportunity for an adjudicative proceeding under chapter 34.05 RCW ((within thirty days after receiving the notification)).

Sec. 8   RCW 18.27.114 and 2001 c 159 s 9 are each amended to read as follows:
     (1) Any contractor agreeing to perform any contracting project: (a) For the repair, alteration, or construction of four or fewer residential units or accessory structures on such residential property when the bid or contract price totals one thousand dollars or more; or (b) for the repair, alteration, or construction of a commercial building when the bid or contract price totals one thousand dollars or more but less than sixty thousand dollars, must provide the customer with the following disclosure statement in substantially the following form using lower case and upper case twelve-point and bold type where appropriate, prior to starting work on the project:

This contractor is registered with the state of Washington, registration no. . . ., and has posted with the state a bond or deposit of . . . . . for the purpose of satisfying claims against the contractor for breach of contract including negligent or improper work in the conduct of the contractor's business. The expiration date of this contractor's registration is . . . . ..

THIS BOND OR DEPOSIT MIGHT NOT BE SUFFICIENT TO COVER A CLAIM THAT MIGHT ARISE FROM THE WORK DONE UNDER YOUR CONTRACT.

This bond or deposit is not for your exclusive use because it covers all work performed by this contractor. The bond or deposit is intended to pay valid claims up to . . . . . that you and other customers, suppliers, subcontractors, or taxing authorities may have.

FOR GREATER PROTECTION YOU MAY WITHHOLD A PERCENTAGE OF YOUR CONTRACT.

You may withhold a contractually defined percentage of your construction contract as retainage for a stated period of time to provide protection to you and help insure that your project will be completed as required by your contract.

YOUR PROPERTY MAY BE LIENED.

If a supplier of materials used in your construction project or an employee or subcontractor of your contractor or subcontractors is not paid, your property may be liened to force payment and you could pay twice for the same work.

FOR ADDITIONAL PROTECTION, YOU MAY REQUEST THE CONTRACTOR TO PROVIDE YOU WITH ORIGINAL "LIEN RELEASE" DOCUMENTS FROM EACH SUPPLIER OR SUBCONTRACTOR ON YOUR PROJECT.

The contractor is required to provide you with further information about lien release documents if you request it. General information is also available from the state Department of Labor and Industries.

I have received a copy of this disclosure statement.

. . . . . . . . . . . . . . . . . .

(Signature of customer)

Sec. 9   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; or
     (e) Subcontract to, or hire, an unregistered contractor.
     (2) Each day that 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. 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. 10   RCW 18.27.210 and 1993 c 454 s 8 are each amended to read as follows:
     (1) The director shall appoint compliance inspectors to investigate alleged or apparent violations of this chapter.
     (a) The director, or authorized compliance inspector, upon presentation of appropriate credentials, may inspect and investigate job sites at which a contractor had bid or presently is working to determine whether the contractor is registered in accordance with this chapter or the rules adopted under this chapter or whether there is a violation of ((RCW 18.27.200)) this chapter.
     (b) Upon request of the compliance inspector of the department, a contractor or an employee of the contractor shall provide information identifying the contractor.
     (c) The director or the director's authorized representative may apply to a court of competent jurisdiction for a search warrant authorizing access to any job site at which a contractor had bid or presently is working. The court may, upon such an application, issue a search warrant for the purpose requested. The costs for obtaining the search warrant must be added to the penalty for a violation of this chapter if such a violation becomes final.
     (2) If the employee of an unregistered contractor is cited by a compliance inspector, that employee is cited as the agent of the employer-contractor, and issuance of the infraction to the employee is notice to the employer-contractor that the contractor is in violation of this chapter. An employee who is cited by a compliance inspector shall not be liable for any of the alleged violations contained in the citation unless the employee is also the contractor.

NEW SECTION.  Sec. 11   A new section is added to chapter 18.27 RCW to read as follows:
     The director and the director's authorized representatives may issue subpoenas to enforce the production and examination of any documents, including electronic documents, concerning business transactions between a contractor and the contractor's customers, between a contractor and the contractor's suppliers, or between a contractor and any subcontractors hired by the contractor. The superior court has the power to enforce such a subpoena by proper proceedings. This section applies to registered and unregistered contractors.

Sec. 12   RCW 18.27.230 and 1997 c 314 s 15 are each amended to read as follows:
     The department may issue a notice of infraction if the department reasonably believes that the contractor has committed an infraction under this chapter. A notice of infraction issued under this section shall be personally served on the contractor named in the notice by the department's compliance inspectors or service can be made by certified mail directed to the contractor named in the notice of infraction at the contractor's last known address of record. If the contractor named in the notice of infraction is a firm or corporation, the notice may be personally served on any employee of the firm or corporation. If a notice of infraction is personally served upon an employee of a firm or corporation, the department shall ((within four days of service)) send a copy of the notice by ((certified)) mail to the contractor if the department is able to obtain the contractor's address.

Sec. 13   RCW 18.27.240 and 2006 c 270 s 8 are each amended to read as follows:
     The form of the notice of infraction issued under this chapter shall include the following:
     (1) A statement that the notice represents a determination that the infraction has been committed by the contractor named in the notice and that the determination shall be final unless contested as provided in this chapter;
     (2) A statement that the infraction is a noncriminal offense for which imprisonment shall not be imposed as a sanction;
     (3) A statement of the ((specific)) violation which necessitated issuance of the infraction;
     (4) A statement of penalty involved if the infraction is established;
     (5) A statement of the options provided in this chapter for responding to the notice and the procedures necessary to exercise these options;
     (6) A statement that, at any hearing to contest the notice of infraction ((the state has the burden of proving, by a preponderance of the evidence, that the infraction was committed; and that)), the contractor may subpoena witnesses, including the compliance inspector of the department who issued and served the notice of infraction;
     (7) A statement that the contractor must respond to the notice of infraction in one of the ways provided in this chapter; and
     (8) A statement that a contractor's failure to timely select one of the options for responding to the notice of infraction after receiving a statement of the options provided in this chapter for responding to the notice of infraction and the procedures necessary to exercise these options is guilty of a gross misdemeanor and may be punished by a fine or imprisonment in jail.

Sec. 14   RCW 18.27.250 and 1986 c 197 s 5 are each amended to read as follows:
     A violation of RCW 18.27.040 (3) or (5) or a violation designated as an infraction under this chapter shall be heard and determined by an administrative law judge of the office of administrative hearings. If a party desires to contest the notice of infraction, the party shall file a notice of appeal with the department((,)) specifying the grounds of the appeal within twenty days ((of issuance of the infraction)) of service of the infraction in a manner provided by this chapter. The appeal must be accompanied by a certified check for two hundred dollars, which shall be returned to the assessed party if the decision of the department is not sustained following the final decision in the appeal. If the final decision sustains the decision of the department, the department must apply the two hundred dollars to the payment of the expenses of the appeal, including costs charged by the office of administrative hearings. The administrative law judge shall conduct hearings in these cases at locations in the county where the infraction occurred.

Sec. 15   RCW 18.27.270 and 2000 c 171 s 9 are each amended to read as follows:
     (1) A contractor who is issued a notice of infraction shall respond within twenty days of the date of issuance of the notice of infraction.
     (2) If the contractor named in the notice of infraction does not elect to contest the notice of infraction, then the contractor shall pay to the department, by check or money order, the amount of the penalty prescribed for the infraction. When a response which does not contest the notice of infraction is received by the department with the appropriate penalty, the department shall make the appropriate entry in its records.
     (3) If the contractor named in the notice of infraction elects to contest the notice of infraction, the contractor shall respond by filing an ((answer of protest with the department specifying the grounds of protest)) appeal to the department in the manner specified in RCW 18.27.250.
     (4) If any contractor issued a notice of infraction fails to respond within the prescribed response period, the contractor shall be guilty of a misdemeanor and prosecuted in the county where the infraction occurred.
     (5) After final determination by an administrative law judge that an infraction has been committed, a contractor who fails to pay a monetary penalty within thirty days, that is not waived pursuant to RCW 18.27.340(2), and who fails to file an appeal pursuant to RCW 18.27.310(4), shall be guilty of a misdemeanor and be prosecuted in the county where the infraction occurred.
     (6) A contractor who fails to pay a monetary penalty within thirty days after exhausting appellate remedies pursuant to RCW 18.27.310(4), shall be guilty of a misdemeanor and be prosecuted in the county where the infraction occurred.
     (7) If a contractor who is issued a notice of infraction is a contractor who has failed to register as a contractor under this chapter, the contractor is subject to a monetary penalty per infraction as provided in the schedule of penalties established by the department, and each day the person works without becoming registered is a separate infraction.

Sec. 16   RCW 18.27.290 and 1983 1st ex.s. c 2 s 11 are each amended to read as follows:
     It is a gross misdemeanor for a contractor who has been personally served with a notice of infraction to willfully ((violate the written promise)) fail to respond to a notice of infraction as provided in this chapter, regardless of the ultimate disposition of the infraction.

Sec. 17   RCW 18.27.310 and 2001 c 159 s 10 are each amended to read as follows:
     (1) The administrative law judge shall conduct contractors' notice of infraction cases pursuant to chapter 34.05 RCW.
     (2) ((The burden of proof is on the department to establish the commission of the infraction by a preponderance of the evidence.)) The notice of infraction shall be dismissed if the ((defendant)) appellant establishes that, at the time the advertising occurred, offer or bid was made, or work was performed, the ((defendant)) appellant was registered by the department, without suspension, or was exempt from registration.
     (3) After consideration of the evidence and argument, the administrative law judge shall determine whether the infraction was committed. If it has not been established that the infraction was committed, an order dismissing the notice shall be entered in the record of the proceedings. If it has been established that the infraction was committed, the administrative law judge shall issue findings of fact and conclusions of law in its decision and order determining whether the infraction was committed.
     (4) An appeal from the administrative law judge's determination or order shall be to the superior court. The decision of the superior court is subject only to discretionary review pursuant to Rule 2.3 of the Rules of Appellate Procedure.