Washington State

House of Representatives

Office of Program Research



Labor & Workforce Development Committee

HB 2147

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Description: Concerning voluntary independent contractor certification.

Sponsors: Representatives Condotta and Buys.

Brief Summary of Bill

  • Allows persons who meet certain requirements to obtain an independent contractor exemption certificate from the Department of Labor and Industries.

  • Provides that persons working under a certificate are exempt from industrial insurance, minimum wage and overtime, prevailing wage, and unemployment insurance.

Hearing Date: 1/21/14

Staff: Joan Elgee (786-7106).


Employment standards and benefits generally apply only if an employer-employee relationship exists rather than an independent contractor relationship. Various multi-part tests are used to determine whether an individual is an independent contractor. For purposes of prevailing wage, industrial insurance, and unemployment insurance, a six-part statutory independent contractor test is applied. This test requires that:

In the construction industry, a seventh required element is that the individual be registered as a contractor or licensed as an electrical contractor. (For industrial insurance, a threshold question is whether a person under contract brings more than their personal labor to the job and for unemployment insurance, persons may also be independent contractors under an alternative three part test.) For purposes of minimum wage and overtime, a common law test, known as the economic dependence test, applies. The inquiry under this test is whether the worker is economically dependent on the alleged employer or is instead in business for himself or herself.

The Department of Labor and Industries and the Employment Security Department apply the tests to determine if a worker is eligible for the benefits of the particular employment law and whether the employer is responsible for the payment of wages or taxes as appropriate for the particular law.

Summary of Bill:

Independent contractor exemption certificate. A person who regularly and customarily performs services at a location other than a fixed business location may apply to the Department of Labor and Industries (Department) for an independent contractor exemption certificate (ICEC). A person working under an ICEC is conclusively presumed to be an exempt independent contractor for purposes of industrial insurance. "Working under" an ICEC means the person is performing work on the type listed on the ICEC and there is no agreement that the person is covered by industrial insurance. In addition, a person working under an ICEC certificate is also exempt from minimum wage and overtime, prevailing wage, and unemployment insurance.

Obtaining an ICEC. An ICEC application must be under oath and contain specified items, including:

Suspension/revocation of an ICEC. The Department may suspend an ICEC for a specific business relationship if the Department determines the holder is not free from direction or control. The Department may revoke an ICEC if the holder:

Suspension or revocation of an ICEC takes effect upon the Department's decision, subject to appeal, and does not invalidate the holder's ineligibility for benefits for the period before suspension or revocation.

Penalties. It is a violation for a person to transfer an ICEC to another person, alter an ICEC, misrepresent the person's status as an ICEC holder, or commit other acts. For an employer, it is a violation to require a person through coercion, misrepresentation, or fraudulent means to apply for an ICEC to avoid industrial insurance obligations or to exert direction and control such that the person no longer meets requirements to obtain an ICEC. Violators are subject to a fine of up to $1,000 for each violation.

Appeals of denials of ICEC applications, suspensions, revocations, and penalties are heard by the Board of Industrial Insurance Appeals.

Fee/revenue. The application and renewal fee must be not more than $125. Fees and fines are deposited into a newly created ICEC account, which is subject to appropriation. Expenditures may be used only for purposes of the ICEC program.

Other. A person working under an ICEC is an independent contractor for business and occupation tax purposes. The Department has rule-making authority. Persons may begin applying for an ICEC on September 1, 2014.

Appropriation: None.

Fiscal Note: Requested on January 15, 2014.

Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.