S-0951.1

SENATE BILL 5513

BySenators Keiser, Conway, Wellman, Frockt, and Saldaña

AN ACT Relating to simplifying, clarifying, and making consistent employee status under industrial insurance laws, prevailing wage laws, wage deduction laws, wage payment laws, minimum wage laws, and unemployment compensation laws, and creating the employee fair classification act; amending RCW 39.12.010, 49.46.010, 49.46.010, 50.04.100, 50.04.298, 50.12.070, 51.08.070, 51.08.180, and 51.12.020; reenacting and amending RCW 49.48.082; adding a new section to chapter 39.12 RCW; adding new sections to chapter 49.52 RCW; adding a new section to chapter 49.48 RCW; adding a new section to chapter 49.46 RCW; adding a new section to chapter 50.04 RCW; adding a new section to chapter 51.12 RCW; adding a new chapter to Title 49 RCW; creating new sections; repealing RCW 39.12.100, 50.04.140, 50.04.145, 51.08.181, and 51.08.195; prescribing penalties; providing effective dates; and providing expiration dates.

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

(1) "Department" means the department of labor and industries.

(2) "Director" means the director of the department of labor and industries or the director's authorized representative.

(3) "Employ" means to suffer or permit to work.

(4)(a) "Employee" means a person, including a helper, who performs labor or services for an employer, and includes workers, laborers, and mechanics under RCW 39.12.010. A person may be an employee of two or more employers at the same time.

(b) "Employee" does not include an independent contractor as defined by subsection (8) of this section.

(c) "Employee" also does not include, for purposes of sections 5, 6, 7, and 8 of this act only:

(i) Any individual employed in casual labor in or about a private home, unless performed in the course of the employer's trade, business, or profession;

(ii) Any individual employed in the capacity of an outside salesperson paid solely by way of commission, as defined and delimited by the director.

(iii) Any individual engaged in the activities of an educational, charitable, religious, state or local governmental body or agency, or nonprofit organization where the employer-employee relationship does not in fact exist or where the services are rendered to such organizations gratuitously. If the individual receives reimbursement in lieu of compensation for normally incurred out-of-pocket expenses or receives a nominal amount of compensation per unit of voluntary service rendered, an employer-employee relationship is deemed not to exist for the purpose of this section or for purposes of membership or qualification in any state, local government, or publicly supported retirement system other than that provided under chapter 41.24 RCW;

(iv) Any individual employed full time by any state or local governmental body or agency who provides voluntary services but only with regard to the provision of the voluntary services. The voluntary services and any compensation therefor shall not affect or add to qualification, entitlement, or benefit rights under any state, local government, or publicly supported retirement system other than that provided under chapter 41.24 RCW;

(v) Any newspaper vendor, carrier, or delivery person selling or distributing newspapers on the street, to offices, to businesses, or from house to house and any freelance news correspondent or "stringer" who, using his or her own equipment, chooses to submit material for publication for free or a fee when such material is published;

(vi) Any carrier subject to regulation by part 1 of the interstate commerce act;

(vii) Any individual engaged in forest protection and fire prevention activities;

(viii) Any individual employed by any charitable institution charged with child care responsibilities engaged primarily in the development of character or citizenship or promoting health or physical fitness or providing or sponsoring recreational opportunities or facilities for young people or members of the armed forces of the United States;

(ix) Any resident, inmate, or patient of a state, county, or municipal correctional, detention, treatment, or rehabilitative institution;

(x) Any individual who holds a public elective or appointive office of the state, any county, city, town, municipal corporation or quasi-municipal corporation, political subdivision, or any instrumentality thereof, or any employee of the state legislature;

(xi) All vessel operating crews of the Washington state ferries operated by the department of transportation;

(xii) Any individual employed as a seaman on a vessel other than an American vessel; or

(xiii) Any farm intern providing his or her services to a small farm that has a special certificate issued under RCW 49.12.470.

(5)(a) "Employer" means any of the following that employ a person: (i) An individual; (ii) any form of business entity, or the receiver, trustee, or successor of a business entity; (iii) an administrator or executor of an estate; or (iv) the state or any agency, instrumentality, or political subdivision of the state. "Employer" includes an individual or entity that acts directly or indirectly in the interest of an employer in relation to employing a person. More than one entity may be the "employer," including in circumstances where one entity controls, is controlled by, or is under common control with another employer, or where one entity exerts control over the operations of another employer.

(b) "Employer" does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the commonwealth of Puerto Rico, or the District of Columbia.

(6) "Front pay" means the compensation the employee would earn if reinstated to his or her former position.

(7) "Helper" means an individual engaged by an employee to perform work in the employer's usual course of business. The employer of the employee is the employer of the "helper."

(8)(a) "Independent contractor" means an individual who performs labor or services for a party when all of the following elements are established:

(i) The individual is and will continue to be free from control or direction over the performance of the labor or services by the party for whom the labor or services are performed, both under the contract of labor or service and in fact. Control or direction includes the right to control or direct as well as general control or direction over the individual's physical activities; and

(ii) The labor or service is outside the usual course of business for which the labor or service is performed; and

(iii) The individual is customarily engaged in an independently established trade, occupation, business, or profession of the same nature as that involved in the contract of labor or service, for which the individual independently establishes the price of the individual's labor or service; and

(iv) On the effective date of service, the individual is responsible for filing at the next applicable filing period, both under the contract of service and in fact, a schedule of expenses with the internal revenue service for the type of business the individual is conducting; and

(v) On the effective date of service, or within a reasonable period after the effective date of service, the individual has an active and valid account with the department of revenue and other state agencies as required by the particular case, for the business the individual is conducting, for the payment of all state taxes normally paid by employers and businesses and has registered for and received a unified business identifier number from the state of Washington; and

(vi) On the effective date of service, the individual is maintaining a separate set of books or records that reflect all items of income and expenses of the business that the individual is conducting; and

(vii) If the individual is performing services that require registration under chapter 18.27 RCW or licensing under chapter 19.28 RCW for remuneration under an independent contract, on the effective date of the contract for services the individual has a valid contractor registration under chapter 18.27 RCW or an electrical contractor license under chapter 19.28 RCW.

(b) In determining whether an individual is an independent contractor, acts taken by an employer to comply with local, state, or federal laws or regulations may not be considered as proof of independent contractor status.

(9) "Misclassification" means designating an employee as a nonemployee of the employer.

(10)(a) "Pattern or practice" means that, in addition to the current violation, within the previous ten years the employer was:

(i) Convicted of a criminal violation of a state or local law concerning nonpayment of wages;

(ii) Subject to a court order entering final judgment for a violation of this chapter or chapter 39.12, 49.46, 49.48, or 49.52 RCW, and the judgment was not satisfied or current within thirty days of the later of: (A) The expiration of the time for appealing the order; or (B) if a timely appeal was made, the date of the final resolution of the appeal; or

(iii) Due to a previous violation, subject to a final and binding citation and notice of assessment from the department for a violation of this chapter or chapter 39.12 or 49.48 RCW, or a final determination of violation of chapter 39.12 RCW, and the citation, determination, and penalty was not satisfied or current within thirty days of the date the citation or determination became final and binding.

(b) For purposes of this subsection (10), an employer includes a successor employer, as defined in RCW 49.48.082.

(11) "Person" means a natural person, firm, partnership, corporation, association, or organization.

(12) "Willful" means a knowing and intentional action that is neither accidental nor the result of a bona fide dispute.

(2) A general contractor is not responsible for violations of an independent contractor or subcontractor under this chapter unless the general contractor exerts substantial control over the day-to-day work of the independent contractor or subcontractor. For purposes of this subsection:

(a) "General contractor" means the contractor required to be registered under chapter 18.27 RCW or licensed under chapter 19.28 RCW whose business operations for a project require the use of more than one building trade or craft upon a single job or project, under a single building permit, and who has responsibility to superintend the project as a whole.

(b) "Subcontractor" means a contractor who engages in a business that is required to be registered under chapter 18.27 RCW or licensed under chapter 19.28 RCW and who is not a general contractor.

(2) A person may not charge an employee who has been misclassified as an independent contractor a fee, or make any deductions from compensation for any purpose, including for goods, materials, space rental, services, government licenses, repair, equipment maintenance, or fines arising from the employment where any of the acts would have violated the law if the individual had not been misclassified.

(3) A person may not require or request an employee to enter into an agreement or sign a document that results in the misclassification of the employee as an independent contractor or otherwise does not accurately reflect the employee's relationship with the employer.

(4) A person may not perform the following acts for the purpose of facilitating or evading detection of a violation of this chapter:

(a) Form, assist in, or induce the formation of a corporation, partnership, limited liability company, or other business entity; or

(b) Pay or collect a fee for use of a foreign or domestic corporation, partnership, limited liability company, or other business entity.

(5) A person may not, for remuneration, conspire with, aid and abet, assist, or advise an employer with the intent of violating this chapter.

(2) If the department determines that a person violated this chapter, it may:

(a) For a violation of section 9 of this act, order the employer to pay a civil penalty of not less than one thousand dollars and not more than ten thousand dollars;

(b) For a violation of section 5 of this act, order the person to pay a civil penalty of: (i) Not less than one thousand dollars and not more than ten thousand dollars per employee; or (ii) if the person has engaged in a pattern or practice of violations, not less than ten thousand dollars and not more than twenty-five thousand dollars per employee;

(c) For a violation of section 5 of this act, order persons, including employers, to jointly and severally pay the following: (i) Three times the amount of wages, salary, and employment benefits denied or withheld, except benefits under Title 50 or 51 RCW; and (ii) reimbursement for payroll taxes under Title 50 or 51 RCW and the value of any other state payroll taxes paid or state benefits lost by the employee;

(d) In addition, for a violation of section 5 of this act, order the employer to reinstate and properly classify the employee. The director may award front pay in lieu of reinstatement; and

(e) Determine whether to initiate collection procedures pursuant to RCW 51.16.150 through 51.16.190 to enforce its orders under (c) and (d) of this subsection, and send a copy of its determination, including any supporting documentation, to the employment security department.

(3) The department must consider referrals based on a court finding of a violation of section 5 of this act to determine whether to initiate collection procedures.

(4)(a) The department must adjust the penalty amounts in subsection (2) of this section beginning January 1, 2021, and on each January 1st thereafter, to reflect the percentage change in the consumer price index, calculated as follows: The index for the calendar year preceding the year in which the January 1st calculation is made, to be known as "calendar year A," is divided by the index for the calendar year preceding calendar year A, and the resulting ratio is multiplied by the penalty amount in effect on December 31st immediately preceding the January 1st on which the respective calculation is made.

(b) For the purposes of this subsection, "index" means the same as the definition in RCW 2.12.037(1).

(5) An employer may appeal the department's determination pursuant to RCW 49.48.084.

(6) The department must deposit civil penalties collected under this chapter into the employee fair classification act account created in section 10 of this act.

(7) This section expires January 2, 2021.

(2) If the department determines that a person violated this chapter, it must:

(a) For a violation of section 9 of this act, order the employer to pay a civil penalty of not less than one thousand dollars and not more than ten thousand dollars;

(b) For a violation of section 5 of this act, order the person to pay a civil penalty of: (i) Not less than one thousand dollars and not more than ten thousand dollars per employee; or (ii) if the person has engaged in a pattern or practice of violations, not less than ten thousand dollars and not more than twenty-five thousand dollars per employee;

(c) For a violation of section 5 of this act, order persons, including employers, to jointly and severally pay the following: (i) Three times the amount of wages, salary, and employment benefits denied or withheld, except benefits under Title 50 or 51 RCW; and (ii) reimbursement for payroll taxes under Title 50 or 51 RCW and the value of any payroll taxes paid or benefits lost by the employee;

(d) In addition, for a violation of section 5 of this act, order the employer to reinstate and properly classify the employee. The director may award front pay in lieu of reinstatement;

(e) Determine whether to initiate collection procedures pursuant to RCW 51.16.150 through 51.16.190 to enforce its orders under (c) and (d) of this subsection, and send a copy of its determination, including any supporting documentation, to the employment security department; and

(f) Consider referrals based on a court finding of a violation of section 5 of this act to determine whether to initiate collection procedures.

(3)(a) The department must adjust the penalty amounts in subsection (2) of this section beginning January 1, 2021, and on each January 1st thereafter, to reflect the percentage change in the consumer price index, calculated as follows: The index for the calendar year preceding the year in which the January 1st calculation is made, to be known as "calendar year A," is divided by the index for the calendar year preceding calendar year A, and the resulting ratio is multiplied by the penalty amount in effect on December 31st immediately preceding the January 1st on which the respective calculation is made.

(b) For the purposes of this subsection, "index" means the same as the definition in RCW 2.12.037(1).

(4) An employer may appeal the department's determination pursuant to RCW 49.48.084.

(5) The department must deposit civil penalties collected under this chapter into the employee fair classification act account created in section 10 of this act.

(2) If a court determines that a person or persons, including employers, violated section 5 of this act, it:

(a) Shall order persons, including employers, to jointly and severally pay the greater of:

(i) Three times the amount of any wages including overtime, salary, and employment benefits unlawfully denied or withheld except benefits under Titles 50 and 51 RCW; or

(ii) Statutory damages for each employee aggrieved by the violation. Statutory damages must not be less than one thousand dollars and not more than ten thousand dollars per employee, unless the person engaged in a pattern or practice of violations, in which case the statutory damages must be not less than ten thousand dollars and not more than twenty-five thousand dollars per employee;

(b) May order persons, including employers, to jointly and severally pay the employee reimbursement for any taxes and the value of any benefits paid by the employee; and

(c) Shall order persons, including employers, to jointly and severally pay attorneys' fees and costs.

(3) If a court determines that an employer violated section 5 of this act, it may order the employer to pay any taxes owed and award injunctive or other equitable relief, including reinstatement and reclassification of the employee with terms and conditions at least as favorable as those that applied when the employee was misclassified, including rate of compensation, value of any benefits, and hours of work. The court may award front pay in lieu of reinstatement.

(4) A civil action under this section must be brought no later than three years after the violation occurred. For the purposes of this section, a violation occurs from the initial date of misclassification and for as long as the employee continues to be misclassified. The three-year period is tolled during any period of time that an employer, any of its agents, or any person acting on behalf of the employer deters an individual from bringing an action under this section.

"Every worker has the right to be properly classified as an employee rather than an independent contractor if the individual does not meet the requirements of an independent contractor under the law known as the employee fair classification act.

If you believe you or someone else has been improperly classified as an independent contractor under the employee fair classification act, you have the right to challenge this classification by filing a complaint with the department of labor and industries or by bringing an action in state court."

(2) The notice required by this section must be in English, Spanish, and any other language or languages primarily spoken by the majority of the workforce. The notice must also be posted in a conspicuous place in each of the employer's offices in the state and at each job site where a worker classified as an independent contractor performs labor or services.

Sec. 12. RCW 39.12.010 and 1989 c 12 s 6 are each amended to read as follows:

(1) The "prevailing rate of wage," for the intents and purposes of this chapter, shall be the rate of hourly wage, usual benefits, and overtime paid in the locality, as hereinafter defined, to the majority of workers, laborers, or mechanics, in the same trade or occupation. In the event that there is not a majority in the same trade or occupation paid at the same rate, then the average rate of hourly wage and overtime paid to such laborers, workers, or mechanics in the same trade or occupation shall be the prevailing rate. If the wage paid by any contractor or subcontractor to laborers, workers, or mechanics on any public work is based on some period of time other than an hour, the hourly wage for the purposes of this chapter shall be mathematically determined by the number of hours worked in such period of time.

(2) The "locality" for the purposes of this chapter shall be the largest city in the county wherein the physical work is being performed.

(3) The "usual benefits" for the purposes of this chapter shall include the amount of:

(a) The rate of contribution irrevocably made by a contractor or subcontractor to a trustee or to a third person pursuant to a fund, plan, or program; and

(b) The rate of costs to the contractor or subcontractor which may be reasonably anticipated in providing benefits to workers, laborers, and mechanics pursuant to an enforceable commitment to carry out a financially responsible plan or program which was communicated in writing to the workers, laborers, and mechanics affected, for medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, for unemployment benefits, life insurance, disability and sickness insurance, or accident insurance, for vacation and holiday pay, for defraying costs of apprenticeship or other similar programs, or for other bona fide fringe benefits, but only where the contractor or subcontractor is not required by other federal, state, or local law to provide any of such benefits.

(4) "Employee" has the same meaning as "laborers, workers, and mechanics."

(6) An "interested party" for the purposes of this chapter shall include a contractor, subcontractor, an employee of a contractor or subcontractor, an organization whose members' wages, benefits, and conditions of employment are affected by this chapter, and the director of labor and industries or the director's designee.

NEW SECTION.  Sec. 13. A new section is added to chapter 39.12 RCW to read as follows:

An employer-employee relationship exists when a laborer, worker, or mechanic performs labor for another individual or entity. The party asserting that an individual is not an employee must establish by a preponderance of the evidence that the individual is an independent contractor.

NEW SECTION.  Sec. 14. A new section is added to chapter 49.52 RCW to read as follows:

(1) "Employ," "employer," and "independent contractor" have the same meanings as in section 3 of this act.

(2) "Employee" has the same meaning as in section 3(4) (a) and (b) of this act.

NEW SECTION.  Sec. 15. A new section is added to chapter 49.52 RCW to read as follows:

(1) An employer-employee relationship exists when an individual performs labor or services for another individual or entity. The party asserting that an individual is not an employee must establish by a preponderance of the evidence that the individual is an independent contractor.

(2) A general contractor is not responsible for violations of an independent contractor or subcontractor under this chapter unless the general contractor exerts substantial control over the day-to-day work of the independent contractor or subcontractor. For purposes of this section, "general contractor" and "subcontractor" have the same meanings as in section 4(2) (a) and (b) of this act.

Sec. 16. RCW 49.48.082 and 2010 c 42 s 1 are each reenacted and 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)) section 3(4) (a) and (b) of this act for purposes of a wage payment requirement set forth in RCW 49.48.010, 49.52.050, or 49.52.060.

(6) "Employ" has the same meaning as in section 3 of this act.

(7) "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)) and "independent contractor" have the same meanings as in section 3 of this act.

(((7)))(8) "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)))(9) "Repeat willful violator" means any employer that has been the subject of a final and binding citation and notice of assessment for a willful violation of a wage payment requirement within three years of the date of issue of the most recent citation and notice of assessment for a willful violation of a wage payment requirement.

(((9)))(10) "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, more than fifty percent of the property, whether real or personal, tangible or intangible, of the employer's business.

(((10)))(11) "Wage" has the meaning provided in RCW 49.46.010.

(((11)))(12) "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.

(((12)))(13) "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.

(((13)))(14) "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).

NEW SECTION.  Sec. 17. A new section is added to chapter 49.48 RCW to read as follows:

(1) An employer-employee relationship exists when an individual performs labor or services for another individual or entity. The party asserting that an individual is not an employee must establish by a preponderance of the evidence that the individual is an independent contractor or is otherwise not an employee under this chapter.

(2) A general contractor is not responsible for violations of a bona fide independent contractor or subcontractor under this chapter unless the general contractor exerts substantial control over the day-to-day work of the independent contractor or subcontractor. For purposes of this section, "general contractor" and "subcontractor" have the same meaning as in section 4(2) (a) and (b) of this act.

Sec. 18. RCW 49.46.010 and 2015 c 299 s 3 are each amended to read as follows:

As used in this chapter:

(1) "Director" means the director of labor and industries;

(2) (("Employ" includes to permit to work))"Department," "employ," and "employer" have the same meanings as in section 3 of this act;

(3) "Employee" ((includes any individual employed by an employer but))has the same meaning as in section 3(4) (a) and (b) of this act and shall not include:

(a) Any individual (i) employed as a hand harvest laborer and paid on a piece rate basis in an operation which has been, and is generally and customarily recognized as having been, paid on a piece rate basis in the region of employment; (ii) who commutes daily from his or her permanent residence to the farm on which he or she is employed; and (iii) who has been employed in agriculture less than thirteen weeks during the preceding calendar year;

(b) Any individual employed in casual labor in or about a private home, unless performed in the course of the employer's trade, business, or profession;

(c) Any individual employed in a bona fide executive, administrative, or professional capacity or in the capacity of outside salesperson as those terms are defined and delimited by rules of the director. However, those terms shall be defined and delimited by the human resources director pursuant to chapter 41.06 RCW for employees employed under the director of personnel's jurisdiction;

(d) Any individual engaged in the activities of an educational, charitable, religious, state or local governmental body or agency, or nonprofit organization where the employer-employee relationship does not in fact exist or where the services are rendered to such organizations gratuitously. If the individual receives reimbursement in lieu of compensation for normally incurred out-of-pocket expenses or receives a nominal amount of compensation per unit of voluntary service rendered, an employer-employee relationship is deemed not to exist for the purpose of this section or for purposes of membership or qualification in any state, local government, or publicly supported retirement system other than that provided under chapter 41.24 RCW;

(e) Any individual employed full time by any state or local governmental body or agency who provides voluntary services but only with regard to the provision of the voluntary services. The voluntary services and any compensation therefor shall not affect or add to qualification, entitlement, or benefit rights under any state, local government, or publicly supported retirement system other than that provided under chapter 41.24 RCW;

(f) Any newspaper vendor, carrier, or delivery person selling or distributing newspapers on the street, to offices, to businesses, or from house to house and any freelance news correspondent or "stringer" who, using his or her own equipment, chooses to submit material for publication for free or a fee when such material is published;

(g) Any carrier subject to regulation by part 1 of the interstate commerce act;

(h) Any individual engaged in forest protection and fire prevention activities;

(i) Any individual employed by any charitable institution charged with child care responsibilities engaged primarily in the development of character or citizenship or promoting health or physical fitness or providing or sponsoring recreational opportunities or facilities for young people or members of the armed forces of the United States;

(j) Any individual whose duties require that he or she reside or sleep at the place of his or her employment or who otherwise spends a substantial portion of his or her work time subject to call, and not engaged in the performance of active duties;

(k) Any resident, inmate, or patient of a state, county, or municipal correctional, detention, treatment or rehabilitative institution;

(l) Any individual who holds a public elective or appointive office of the state, any county, city, town, municipal corporation or quasi municipal corporation, political subdivision, or any instrumentality thereof, or any employee of the state legislature;

(m) All vessel operating crews of the Washington state ferries operated by the department of transportation;

(n) Any individual employed as a seaman on a vessel other than an American vessel;

(o) Any farm intern providing his or her services to a small farm which has a special certificate issued under RCW 49.12.470;

(p) An individual who is at least sixteen years old but under twenty-one years old, in his or her capacity as a player for a junior ice hockey team that is a member of a regional, national, or international league and that contracts with an arena owned, operated, or managed by a public facilities district created under chapter 36.100 RCW;

(4) (("Employer" includes any individual, partnership, association, corporation, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee;

(5))) "Occupation" means any occupation, service, trade, business, industry, or branch or group of industries or employment or class of employment in which employees are gainfully employed;

(((6)))(5) "Retail or service establishment" means an establishment seventy-five percent of whose annual dollar volume of sales of goods or services, or both, is not for resale and is recognized as retail sales or services in the particular industry;

(((7)))(6) "Wage" means compensation due to an employee by reason of employment, payable in legal tender of the United States or checks on banks convertible into cash on demand at full face value, subject to such deductions, charges, or allowances as may be permitted by rules of the director.

Sec. 19. RCW 49.46.010 and 2015 c 299 s 3 are each amended to read as follows:

As used in this chapter:

(1) "Director" means the director of labor and industries;

(2) (("Employ" includes to permit to work))"Department," "employ," and "employer" have the same meanings as in section 3 of this act;

(3) "Employee" ((includes any individual employed by an employer but))has the same meaning as in section 3(4) (a) and (b) of this act and shall not include:

(a) Any individual (i) employed as a hand harvest laborer and paid on a piece rate basis in an operation which has been, and is generally and customarily recognized as having been, paid on a piece rate basis in the region of employment; (ii) who commutes daily from his or her permanent residence to the farm on which he or she is employed; and (iii) who has been employed in agriculture less than thirteen weeks during the preceding calendar year;

(b) Any individual employed in casual labor in or about a private home, unless performed in the course of the employer's trade, business, or profession;

(c) Any individual employed in a bona fide executive, administrative, or professional capacity or in the capacity of outside salesperson as those terms are defined and delimited by rules of the director. However, those terms shall be defined and delimited by the human resources director pursuant to chapter 41.06 RCW for employees employed under the director of personnel's jurisdiction;

(d) Any individual engaged in the activities of an educational, charitable, religious, state or local governmental body or agency, or nonprofit organization where the employer-employee relationship does not in fact exist or where the services are rendered to such organizations gratuitously. If the individual receives reimbursement in lieu of compensation for normally incurred out-of-pocket expenses or receives a nominal amount of compensation per unit of voluntary service rendered, an employer-employee relationship is deemed not to exist for the purpose of this section or for purposes of membership or qualification in any state, local government, or publicly supported retirement system other than that provided under chapter 41.24 RCW;

(e) Any individual employed full time by any state or local governmental body or agency who provides voluntary services but only with regard to the provision of the voluntary services. The voluntary services and any compensation therefor shall not affect or add to qualification, entitlement, or benefit rights under any state, local government, or publicly supported retirement system other than that provided under chapter 41.24 RCW;

(f) Any newspaper vendor, carrier, or delivery person selling or distributing newspapers on the street, to offices, to businesses, or from house to house and any freelance news correspondent or "stringer" who, using his or her own equipment, chooses to submit material for publication for free or a fee when such material is published;

(g) Any carrier subject to regulation by part 1 of the interstate commerce act;

(h) Any individual engaged in forest protection and fire prevention activities;

(i) Any individual employed by any charitable institution charged with child care responsibilities engaged primarily in the development of character or citizenship or promoting health or physical fitness or providing or sponsoring recreational opportunities or facilities for young people or members of the armed forces of the United States;

(j) Any individual whose duties require that he or she reside or sleep at the place of his or her employment or who otherwise spends a substantial portion of his or her work time subject to call, and not engaged in the performance of active duties;

(k) Any resident, inmate, or patient of a state, county, or municipal correctional, detention, treatment or rehabilitative institution;

(l) Any individual who holds a public elective or appointive office of the state, any county, city, town, municipal corporation or quasi municipal corporation, political subdivision, or any instrumentality thereof, or any employee of the state legislature;

(m) All vessel operating crews of the Washington state ferries operated by the department of transportation;

(n) Any individual employed as a seaman on a vessel other than an American vessel;

(o) An individual who is at least sixteen years old but under twenty-one years old, in his or her capacity as a player for a junior ice hockey team that is a member of a regional, national, or international league and that contracts with an arena owned, operated, or managed by a public facilities district created under chapter 36.100 RCW;

(4) (("Employer" includes any individual, partnership, association, corporation, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee;

(5))) "Occupation" means any occupation, service, trade, business, industry, or branch or group of industries or employment or class of employment in which employees are gainfully employed;

(((6)))(5) "Retail or service establishment" means an establishment seventy-five percent of whose annual dollar volume of sales of goods or services, or both, is not for resale and is recognized as retail sales or services in the particular industry;

(((7)))(6) "Wage" means compensation due to an employee by reason of employment, payable in legal tender of the United States or checks on banks convertible into cash on demand at full face value, subject to such deductions, charges, or allowances as may be permitted by rules of the director.

NEW SECTION.  Sec. 20. A new section is added to chapter 49.46 RCW to read as follows:

(1) An employer-employee relationship exists when an individual performs labor or services for another individual or entity. The party asserting that an individual is not an employee must establish by a preponderance of the evidence that the individual is an independent contractor or is otherwise not an employee under this chapter.

(2) A general contractor is not responsible for violations of an independent contractor or subcontractor under this chapter unless the general contractor exerts substantial control over the day-to-day work of the independent contractor or subcontractor. For purposes of this section, "general contractor" and "subcontractor" have the same meaning as in section 4(2) (a) and (b) of this act.

NEW SECTION.  Sec. 21. A new section is added to chapter 50.04 RCW to read as follows:

The services of an independent contractor, as defined in section 3 of this act, are not services in employment under this title.

Sec. 22. RCW 50.04.100 and 1982 1st ex.s. c 18 s 14 are each amended to read as follows:

"Employment," subject only to the other provisions of this title, means personal service, of whatever nature, unlimited by the relationship of master and servant as known to the common law or any other legal relationship, including service in interstate commerce, performed for wages or under any contract calling for the performance of personal services, written or oral, express or implied. The party asserting that services performed are not services in employment must establish by a preponderance of the evidence that an individual is an independent contractor or that the services are otherwise not in employment under this title.

((Except as provided by RCW 50.04.145,)) Personal services performed for an employing unit by one or more contractors or subcontractors acting individually or as a partnership, which do not meet the provisions of ((RCW 50.04.140)) section 21 of this act, shall be considered employment of the employing unit: PROVIDED, HOWEVER, That such contractor or subcontractor shall be an employer under the provisions of this title in respect to personal services performed by individuals for such contractor or subcontractor.

Sec. 23. RCW 50.04.298 and 2007 c 146 s 8 are each amended to read as follows:

For the purposes of this title:

(1) "Professional employer organization" means a person or entity that enters into an agreement with one or more client employers to provide professional employer services. "Professional employer organization" includes entities that use the term "staff leasing company," "permanent leasing company," "registered staff leasing company," "employee leasing company," "administrative employer," or any other name, when they provide professional employer services to client employers. The following are not classified as professional employer organizations: Independent contractors in ((RCW 50.04.140)) section 21 of this act; temporary staffing services companies and services referral agencies as defined in RCW 50.04.245; third-party payers as defined in RCW 50.04.248; or labor organizations.

(2) "Client employer" means any employer who enters into a professional employer agreement with a professional employer organization.

(3) "Coemployer" means either a professional employer organization or a client employer that has entered into a professional employer agreement.

(4) "Covered employee" means an individual performing services for a client employer that constitutes employment under this title.

(5) "Professional employer services" means services provided by the professional employer organization to the client employer, which include, but are not limited to, human resource functions, risk management, or payroll administration services, in a coemployment relationship.

(6) "Coemployment relationship" means a relationship that is intended to be ongoing rather than temporary or project-specific, where the rights, duties, and obligations of an employer in an employment relationship are allocated between coemployers pursuant to a professional employer agreement and state law. A coemployment relationship exists only if a majority of the employees performing services to a client employer, or to a division or work unit of a client employer, are covered employees. In determining the allocation of rights and obligations in a coemployment relationship:

(a) The professional employer organization has only those employer rights and is subject only to those obligations specifically allocated to it by the professional employer agreement or state law;

(b) The client employer has those rights and obligations allocated to it by the professional employer agreement or state law, as well as any other right or obligation of an employer that is not specifically allocated by the professional employer agreement or state law.

(7) "Professional employer agreement" means a written contract between a client employer and a professional employer organization that provides for: (a) The coemployment of covered employees; and (b) the allocation of employer rights and obligations between the client and the professional employer organization with respect to the covered employees.

Sec. 24. RCW 50.12.070 and 2013 c 250 s 1 are each amended to read as follows:

(1)(a) Each employing unit shall keep true and accurate work records, containing such information as the commissioner may prescribe. Such records shall be open to inspection and be subject to being copied by the commissioner or his or her authorized representatives at any reasonable time and as often as may be necessary. The commissioner may require from any employing unit any sworn or unsworn reports with respect to persons employed by it, which he or she deems necessary for the effective administration of this title.

(b) An employer who contracts with another person or entity for work subject to chapter 18.27 or 19.28 RCW shall obtain and preserve a record of the unified business identifier account number for and compensation paid to the person or entity performing the work. In addition to the penalty in subsection (3) of this section, failure to obtain or maintain the record is subject to RCW 39.06.010.

(2)(a) Each employer shall register with the department and obtain an employment security account number. Each employer shall make periodic reports at such intervals as the commissioner may by regulation prescribe, setting forth the remuneration paid for employment to workers in its employ, the full names and social security numbers of all such workers, and the total hours worked by each worker and such other information as the commissioner may by regulation prescribe.

(b) If the employing unit fails or has failed to report the number of hours in a reporting period for which a worker worked, such number will be computed by the commissioner and given the same force and effect as if it had been reported by the employing unit. In computing the number of such hours worked, the total wages for the reporting period, as reported by the employing unit, shall be divided by the dollar amount of the state's minimum wage in effect for such reporting period and the quotient, disregarding any remainder, shall be credited to the worker: PROVIDED, That although the computation so made will not be subject to appeal by the employing unit, monetary entitlement may be redetermined upon request if the department is provided with credible evidence of the actual hours worked. Benefits paid using computed hours are not considered an overpayment and are not subject to collections when the correction of computed hours results in an invalid or reduced claim; however:

(i) A contribution paying employer who fails to report the number of hours worked will have its experience rating account charged for all benefits paid that are based on hours computed under this subsection; and

(ii) An employer who reimburses the trust fund for benefits paid to workers and fails to report the number of hours worked shall reimburse the trust fund for all benefits paid that are based on hours computed under this subsection.

(3) Any employer who fails to keep and preserve records required by this section shall be subject to a penalty determined by the commissioner but not to exceed two hundred fifty dollars or two hundred percent of the quarterly tax for each offense, whichever is greater.

Sec. 25. RCW 51.08.070 and 2008 c 102 s 2 are each amended to read as follows:

"Employer" means any person, body of persons, corporate or otherwise, and the legal representatives of a deceased employer, all while engaged in this state in any work covered by the provisions of this title, by way of trade or business, or who contracts with one or more workers((, the essence of which is the personal labor of such worker or workers)). Or as an exception to the definition of employer, persons or entities are not employers when they contract or agree to remunerate the services performed by an ((individual who meets the tests set forth in subsections (1) through (6) of RCW 51.08.195 or the separate tests set forth in RCW 51.08.181 for work performed that requires registration under chapter 18.27 RCW or licensing under chapter 19.28 RCW)) independent contractor as defined in section 3 of this act.

Sec. 26. RCW 51.08.180 and 2008 c 102 s 3 are each amended to read as follows:

"Worker" means every person in this state who is engaged in the employment of an employer under this title, whether by way of manual labor or otherwise in the course of his or her employment; also every person in this state who is engaged in the employment of or who is working under an independent contract, ((the essence of which is his or her personal labor for an employer under this title,)) whether by way of manual labor or otherwise, in the course of his or her employment, ((or as an exception to the definition of worker, a person is not a worker if))unless he or she ((meets the tests set forth in subsections (1) through (6) of RCW 51.08.195 or the separate tests set forth in RCW 51.08.181 for work performed that requires registration under chapter 18.27 RCW or licensing under chapter 19.28 RCW)) meets the definition of independent contractor as defined in section 3(8) of this act: PROVIDED, That a person is not a worker for the purpose of this title, with respect to his or her activities attendant to operating a truck which he or she owns, and which is leased to a common or contract carrier.

NEW SECTION.  Sec. 27. A new section is added to chapter 51.12 RCW to read as follows:

An employer-employee relationship exists when an individual performs labor or services for another individual or entity. The party asserting that an individual is not an employee must establish by a preponderance of the evidence that the individual is an independent contractor, or otherwise not an employee or worker under this chapter. This presumption also applies at the board of industrial insurance appeals and may be rebutted by a preponderance of the evidence.

Sec. 28. RCW 51.12.020 and 2015 c 236 s 4 are each amended to read as follows:

The following are the only employments which shall not be included within the mandatory coverage of this title:

(1) Any person employed as a domestic ((servant))worker in a private home by an employer who has less than two employees regularly employed forty or more hours a week in such employment.

(2) Any person employed to do gardening, maintenance, or repair, in or about the private home of the employer. For the purposes of this subsection, "maintenance" means the work of keeping in proper condition, "repair" means to restore to sound condition after damage, and "private home" means a person's place of residence.

(3) A person whose employment is not in the course of the trade, business, or profession of his or her employer and is not in or about the private home of the employer.

(4) Any person performing services in return for aid or sustenance only, received from any religious or charitable organization.

(5) Sole proprietors or partners.

(6) Any child under eighteen years of age employed by his or her parent or parents in agricultural activities on the family farm.

(7) Jockeys while participating in or preparing horses for race meets licensed by the Washington horse racing commission pursuant to chapter 67.16 RCW.

(8)(a) Except as otherwise provided in (b) of this subsection, any bona fide officer of a corporation voluntarily elected or voluntarily appointed in accordance with the articles of incorporation or bylaws of the corporation, who at all times during the period involved is also a bona fide director, and who is also a shareholder of the corporation. Only such officers who exercise substantial control in the daily management of the corporation and whose primary responsibilities do not include the performance of manual labor are included within this subsection.

(b) Alternatively, a corporation that is not a "public company" as defined in RCW 23B.01.400 may exempt eight or fewer bona fide officers, who are voluntarily elected or voluntarily appointed in accordance with the articles of incorporation or bylaws of the corporation and who exercise substantial control in the daily management of the corporation, from coverage under this title without regard to the officers' performance of manual labor if the exempted officer is a shareholder of the corporation, or may exempt any number of officers if all the exempted officers are related by blood within the third degree or marriage. If a corporation that is not a "public company" elects to be covered under subsection (8)(a) of this section, the corporation's election must be made on a form prescribed by the department and under such reasonable rules as the department may adopt.

(c) Determinations respecting the status of persons performing services for a corporation shall be made, in part, by reference to Title 23B RCW and to compliance by the corporation with its own articles of incorporation and bylaws. For the purpose of determining coverage under this title, substance shall control over form, and mandatory coverage under this title shall extend to all workers of this state, regardless of honorary titles conferred upon those actually serving as workers.

(d) A corporation may elect to cover officers who are exempted by this subsection in the manner provided by RCW 51.12.110.

(9) Services rendered by a musician or entertainer under a contract with a purchaser of the services, for a specific engagement or engagements when such musician or entertainer performs no other duties for the purchaser and is not regularly and continuously employed by the purchaser. A purchaser does not include the leader of a group or recognized entity who employs other than on a casual basis musicians or entertainers.

(10) Services performed by a newspaper vendor, carrier, or delivery person selling or distributing newspapers on the street, to offices, to businesses, or from house to house and any freelance news correspondent or "stringer" who, using his or her own equipment, chooses to submit material for publication for free or a fee when such material is published.

(11) Services performed by an insurance producer, as defined in RCW 48.17.010, or a surplus line broker licensed under chapter 48.15 RCW.

(12) Services performed by a booth renter. However, a person exempted under this subsection may elect coverage under RCW 51.32.030.

(13) Members of a limited liability company, if either:

(a) Management of the company is vested in its members, and the members for whom exemption is sought would qualify for exemption under subsection (5) of this section were the company a sole proprietorship or partnership; or

(b) Management of the company is vested in one or more managers, and the members for whom the exemption is sought are managers who would qualify for exemption under subsection (8) of this section were the company a corporation.

(((14) A driver providing commercial transportation services as defined in RCW 48.177.005. The driver may elect coverage in the manner provided by RCW 51.32.030.

(15) For hire vehicle operators under chapter 46.72 RCW who own or lease the for hire vehicle, chauffeurs under chapter 46.72A RCW who own or lease the limousine, and operators of taxicabs under chapter 81.72 RCW who own or lease the taxicab. An owner or lessee may elect coverage in the manner provided by RCW 51.32.030.))

(1) RCW 39.12.100 (Independent contractors—Criteria) and 2009 c 63 s 1;

(2) RCW 50.04.140 (Employment—Exception tests) and 1991 c 246 s 6 & 1945 c 35 s 15;

(3) RCW 50.04.145 (Employment—Exclusions) and 2008 c 102 s 1, 1983 1st ex.s. c 23 s 25, & 1982 1st ex.s. c 18 s 13;

(4) RCW 51.08.181 ("Worker"—Registered contractor and electrician exclusions) and 2008 c 102 s 5; and

(5) RCW 51.08.195 ("Employer" and "worker"—Additional exception) and 2008 c 102 s 4 & 1991 c 246 s 1.

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