WSR 97-16-090

PROPOSED RULES

DEPARTMENT OF

LABOR AND INDUSTRIES

[Filed August 5, 1997, 9:22 a.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 97-03-081.

Title of Rule: Contractor certificate of registration--Renewals--Security--Insurance.

Purpose: Chapter 296-200 WAC, Contractor certificate of registration renewals--Security--Insurance, state-initiated proposed revisions to chapter 296-200 WAC, Contractor certificate of registration renewals--Security--Insurance, are made to comply with the Administrative Procedure Act, (see RCW 34.05.220(5).) Consequently, clear rule writing techniques have been used to rewrite the entire chapter. Following the recommendation of the Office of Code Reviser, chapter 296-200 WAC has been repealed in its entirety and replaced with chapter 296-200A WAC. The following sections of chapter 296-200 WAC have been repealed:

WAC 296-200-005 Purpose of chapter.

WAC 296-200-015 Definitions.

WAC 296-200-025 Initial application for registration and renewal of registration.

WAC 296-200-035 Length of registration period.

WAC 296-200-040 Suspension of contractor's registration.

WAC 296-200-050 Change in business, name, or address.

WAC 296-200-060 Cancelling surety bonds and insurance policies.

WAC 296-200-070 Refund of security deposited with the section.

WAC 296-200-080 Filing suit against a contractor.

WAC 296-200-090 Collection of judgments.

WAC 296-200-100 Priority for payment of judgments.

WAC 296-200-110 Verification of registration number by a city, town, or county.

WAC 296-200-111 Verification of nonoriginal registration card by city, town, or county.

WAC 296-200-112 Liability to cities, towns, and counties for failure to verify contractor registration.

WAC 296-200-300 Procedures for issuance of notices of infraction.

WAC 296-200-310 Service on an employee of a contractor.

WAC 296-200-320 Mailing copy of notice of infraction to contractor.

WAC 296-200-330 Issuance of notices of infraction under RCW 18.27.100 or 18.27.200.

WAC 296-200-340 Right to contested hearing--Place to file.

WAC 296-200-350 Administrative law judge shall preside in contested hearings.

WAC 296-200-360 Representation by counsel.

WAC 296-200-370 Contested cases--Notice--Hearing--Summary orders--Informal disposition--Record--Findings of fact.

WAC 296-200-380 Contested cases--Evidence.

WAC 296-200-390 Administration of appeals.

WAC 296-200-400 Fines.

WAC 296-200-410 Infraction--Dismissal, when.

WAC 296-200-900 Fees.

The contents of WAC 296-200-100 Priority for payments of judgments and WAC 296-200-410 Infraction--Dismissal, when, have not been carried forward to chapter 296-200A WAC because the department finds them redundant with chapter 18.27 RCW.

Chapter 296-200A WAC, Contractor certificate of registration renewals--Security--Insurance, state-initiated proposed clear rule writing amendments to chapter 296-200A WAC, Contractor certificate of registration renewals--Security--Insurance, are made to:

Move existing chapter 296-200 WAC requirements into new sections in chapter 296-200A WAC.

Rewrite the rules in a clear rule writing style.

Remove outdated and redundant language to make the rules easier to read.

Remove gender specific language.

Use questions for section titles to better describe the information contained in each rule section and to better engage the reader.

Use a less formal voice in the rules and eliminated the passive voice when possible.

Reorganize some rule sections to make them easier to use.

The following sections of chapter 296-200A WAC, Contractor certificate of registration renewals--Security--Insurance, have been rewritten in a clear rule writing style without any substantive change to their content:

WAC 296-200A-005 What is the goal of this chapter?

WAC 296-200A-025 How does a contractor register or renew its registration?

WAC 296-200A-050 What requirements must be met if a contractor changes its business structure, name or address?

WAC 296-200A-060 What procedures should be followed when surety bonds and insurance policies are canceled?

WAC 296-200A-070 When will the department refund a security deposit?

WAC 296-200A-080 How is a suit filed against a contractor?

WAC 296-200A-090 How are judgments against contractors paid?

WAC 296-200A-110 Is a city, town, or county required to verify a contractor registration number?

WAC 296-200A-112 Who is liable when a city, town, or county fails to verify a contractor's registration?

WAC 296-200A-310 What information must be included in a notice of infraction?

WAC 296-200A-320 Who can be issued a notice of infraction?

WAC 296-200A-330 If a notice of infraction is served on an employee, how is the contractor notified?

WAC 296-200A-350 Who presides over an appeal hearing and where is it held?

WAC 296-200A-360 Who will represent the contractor and the department at the hearing?

WAC 296-200A-370 How is the appeal hearing conducted?

WAC 296-200A-380 What evidence is admissible in an appeal hearing?

WAC 296-200A-390 What does the department do with the appeal notices that they receive?

The following sections of chapter 296-200A WAC, Contractor certificate of registration renewals--Security--Insurance, have been rewritten in a clear rule writing style with legislative-initiated substantive changes to their content. These legislative-initiated substantive amendments implement SHB 2498 (1996) and SHB 1903 (1997).

WAC 296-200A-015 What terms do I need to know to understand this chapter? Proposed amendments are made to add the SHB 2498 definition of "final judgment" and the SHB 1903 definition of an unregistered contractor.

WAC 296-200A-035 How long is a contractor's registration period? Proposed amendments are made to implement the "continuous bond" provisions of SHB 1903 by repealing references to "expired bonds" and "short-term bonds."

WAC 296-200A-040 How does a contractor's registration become suspended? Proposed amendments are made to implement SHB 1903 by adding the sentence "The department must mail a notice of suspension to the contractor's address on the certificate of registration by certified mail and first class mail within forty-eight hours after suspension."

WAC 296-200A-111 How does a city, town, or county verify a contractor's registration? Proposed amendments are made to implement SHB 1903 by adding subsection (1) explaining how an original contractor registration card can be verified.

WAC 296-200A-300 What violations of chapter 18.27 RCW can result in the issuance of a notice of infraction? Proposed amendments are made to implement SHB 1903 by specifying that a contractor who continues to work while unregistered, or while their registration is suspended or revoked, or under a registration issued to another contractor is guilty of a separate misdemeanor for each day worked and for each job site on which a violation occurs.

WAC 296-200A-305 How does the department notify registered contractors regarding any unregistered subcontractors they may employ? Proposed amendments are made to implement SHB 1903 by:

Acknowledging the department's responsibility to notify contractors regarding subcontractors who have become unregistered.

Implementing a "Notice of Unregistered Subcontractors" form in order to serve written notice to general contractors who employ unregistered subcontractors.

Establishing procedures for issuing the "Notice of Unregistered Subcontractors."

Clarifying that a "Notice of Unregistered Subcontractors" is not a notice of infraction.

WAC 296-200A-400 What monetary penalties will be assessed for an infraction issued for violations of RCW 18.27.100, 18.27.114 or 18.27.200? Proposed amendments are made to implement SHB 1903 by:

Increasing the maximum amount of fine for a violation from three thousand dollars to five thousand dollars in the tables located in subsections (2) and (3).

Adding the exception language to the table located in subsection (3)(b).

Adding the language in subsection (3)(c) giving the director the authority to waive a contractor's assessed penalty under certain conditions.

WAC 296-200A-500 Is the department required to monitor unregistered contractors who become registered? Proposed amendments are made to implement SHB 1903 by requiring the department to:

Monitor unregistered contractors who become registered; and

Share the results of that monitoring with the Department of Revenue and the Department of Employment Security to determine whether any taxes, fees or penalties are owed the state.

WAC 296-200A-510 Is the department required to report contractor compliance activities to the legislature? Proposed amendments are made to implement SHB 1903 by describing the contractor compliance reporting requirements placed upon the department by the legislature.

The following sections of chapter 296-200A WAC, Contractor certificate of registration renewals--Security--Insurance, have been rewritten in a clear rule writing style with state-initiated substantive changes to their content. Basically, the state-initiated substantive changes clarify current department policies and practices and bring the chapter into compliance with chapter 18.27 RCW.

WAC 296-200A-015 What terms do I need to know to understand this chapter? Proposed amendments are made to:

Add a definition for "compliance inspector" to enhance the clarity and application of the chapter.

Include a reference to RCW 18.27.114 in the definitions for "administrative law judge" and "infraction" because violations of that section will result in an infraction.

Delete the definition for "bonded contractor" by combining it with the definition of "secured contractor."

Redefine "secured contractor" to be one who either assigns, to the department, a savings account in a Washington state bank, deposits cash with the department or obtains a surety bond.

Redefine "security" to be either a savings account in a Washington state bank assigned to the department, cash deposited with the department or a surety bond.

Replace the definition of "contested case" with the definition of "appeal hearing" because it is more consistent with the content of chapter 296-200A WAC.

Replace the definition of "chief construction compliance inspector" with "contractor compliance chief" to reflect the current organizational structure of the department.

WAC 296-200A-330 If the notice of infraction is served on an employee, how is the contractor notified? Proposed amendments are made to:

Add descriptive statutory language clarifying chapter 18.27 RCW violations which result in the issuance of a notice of infraction.

Add a paragraph referencing the violations in this section to the monetary penalties described in WAC 296-200A-400.

WAC 296-200A-340 How does a contractor appeal a notice of infraction? Proposed amendments are made to repeal the requirement that a contractor must file a two hundred dollar appeal bond with a notice of appeal because the department does not statutory authority for such a bond.

WAC 296-200A-400 What monetary penalties will be assessed for an infraction issued for violations of RCW 18.27.100, 18.27.114 or 18.27.200? Proposed amendments are made to:

Clarify department policy and practice regarding the amount of monetary penalties applicable to RCW 18.27.100, 18.27.114 and 18.27.200 violations.

Present current monetary penalties in a tabular format for ease of understanding.

WAC 296-200A-405 When must a contractor pay assessed monetary penalties? Proposed amendments are made to clarify when a contractor must pay an assessed monetary penalty.

WAC 296-200A-900 What fees does the department charge contractors for issuance, renewal and reinstatement of certificates of registration? Proposed amendments are made to include a $20.00 fee for each requested certified letter prepared by the department to cover the cost of the service.

Statutory Authority for Adoption: RCW 18.27.125.

Statute Being Implemented: SHB 2498 (1996) and SHB 1903 (1997).

Summary: See Purpose above.

Reasons Supporting Proposal: See Purpose above.

Name of Agency Personnel Responsible for Drafting: Kevin Morris, 7273 Linderson Way, Tumwater, WA, (360) 902-5578; Implementation and Enforcement: Ernie LaPalm, 7273 Linderson Way, Tumwater, WA, (360) 902-5329.

Name of Proponent: Department of Labor and Industries, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: See Purpose above.

Proposal Changes the Following Existing Rules: See Purpose above.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The department does not consider the economic impact of the proposed rules to be a more than minor economic impact on business. Therefore, the preparation of a comprehensive small business economic impact statement is not required.

Section 201, chapter 403, Laws of 1995, applies to this rule adoption. The proposed rules do meet the test of a "significant legislative rule" because they will:

1. Adopt substantive provisions of the law through delegated legislative authority.

2. Subject a violator to a penalty or a sanction.

3. Change the requirements for issuing or suspending or revoking a license or permit.

4. Adopt new policy and amend significant existing policy.

5. Have a financial impact on the public they regulate.

In addition, the rule is being rewritten in a clear rule writing style and gender specific references are being removed and an appeal bond requirement is being repealed.

Hearing Location: Department of Labor and Industries Building, Auditorium, 7273 Linderson Way, Tumwater, WA, on September 9, 1997, at 1:30 p.m.; and at Cavanaugh's, West Ballroom, 607 East Yakima Avenue, Yakima, WA, on September 11, 1997, at 1:30 p.m.

Assistance for Persons with Disabilities: Contact George Huffman by August 29, 1997, (360) 902-6411.

Submit Written Comments to: Department of Labor and Industries, Attention: Kevin Morris, Chief Compliance Construction Plumbing Specialist, P.O. Box 44470, Olympia, WA 98504-4470, by no later that 5:00 p.m., September 18, 1997.

In addition to written comments, the department will accept comments submitted to FAX (360) 902-5292. Comments submitted by FAX must be ten pages or less.

Date of Intended Adoption: December 2, 1997.

July 30, 1997

Gary Moore

Director

REPEALER

The following chapter of the Washington Administrative Code is repealed:

WAC 296-200-005 Purpose of chapter.

WAC 296-200-015 Definitions.

WAC 296-200-025 Initial application for registration and renewal of registration.

WAC 296-200-035 Length of registration period.

WAC 296-200-040 Suspension of contractor's registration.

WAC 296-200-050 Change in business structure, name, or address.

WAC 296-200-060 Cancelling surety bonds and insurance policies.

WAC 296-200-070 Refund of security deposited with the section.

WAC 296-200-080 Filing suit against a contractor.

WAC 296-200-090 Collection of judgments.

WAC 296-200-100 Priority for payment of judgments.

WAC 296-200-110 Verification of registration number by a city, town, or county.

WAC 296-200-111 Verification of nonoriginal registration card by city, town, or county.

WAC 296-200-112 Liability to cities, towns, and counties for failure to verify contractor registration.

WAC 296-200-300 Procedures for issuance of notices of infraction.

WAC 296-200-310 Service on employee of a contractor.

WAC 296-200-320 Mailing copy of notice of infraction to contractor.

WAC 296-200-330 Issuance of notices of infraction under RCW 18.27.100 or 18.27.200.

WAC 296-200-340 Right to contested hearing--Place to file.

WAC 296-200-350 Administrative law judge shall preside in contested hearings.

WAC 296-200-360 Representation by counsel.

WAC 296-200-370 Contested cases--Notice--Hearing--Summary orders--Informal disposition--Record--Findings of fact.

WAC 296-200-380 Contested cases--Evidence.

WAC 296-200-390 Administration of appeals.

WAC 296-200-400 Fines.

WAC 296-200-410 Infraction--Dismissal, when.

WAC 296-200-900 What fees does the department charge contractors for issuance, renewal and reinstatement of certificates of registration?

CONTRACTOR CERTIFICATE OF REGISTRATION RENEWALS--SECURITY--INSURANCE

NEW SECTION

WAC 296-200A-005 What is the goal of this chapter? The goal of this chapter is to:

(1) Reduce the paperwork required for contractor registrations.

(2) Clarify issues related to suits against contractors and the collection of court judgments.

(3) Ensure that the contractors registration law (chapter 18.27 RCW) is efficiently and properly administered.

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NEW SECTION

WAC 296-200A-015 What terms do I need to know to understand this chapter? For the purposes of this chapter, the following terms and definitions are important:

"Administrative law judge" is any person appointed by the chief administrative law judge (as defined in RCW 34.12.020(2)) to preside at a notice of infraction appeal hearing convened under RCW 18.27.100, 18.27.114 or 18.27.200.

"Appeal hearing" is any proceeding in which an administrative law judge is empowered to determine legal rights, duties or privileges of specific parties on behalf of the director.

"Compliance inspector" refers to the departmental staff responsible for investigating potential violations of chapter 18.27 RCW.

"Contractor compliance chief" refers to the person designated by the director to address all policy and technical issues related to chapter 18.27 RCW and chapter 296-200A WAC.

"Department" refers to the department of labor and industries.

"Director" refers to the director of the department of labor and industries or the director's designee acting in the place of the director.

"Final judgment" means any money that is owed to a claimant as a result of court action against a contractor's bond or assigned savings account with the department or any money that is owed the department as a result of a contractor's unsuccessful appeal of an infraction. Final judgment also includes any penalties owed the department as a result of an unappealed infraction or any outstanding fees due under this chapter.

"Infraction" means a violation of RCW 18.27.100, 18.27.114 or 18.27.200 as cited by the chief contractor compliance inspector or the department's construction compliance inspectors.

"Secured contractor" is a contractor who has complied with RCW 18.27.040 by assigning, to the department, a savings account held in a Washington state bank, depositing cash with the department or obtaining a surety bond.

"Security" is a savings account held in a Washington state bank and assigned to the department, cash deposited with the department or a surety bond.

"Unregistered contractor" means a person, firm, or corporation working as a contractor without being registered in compliance with chapter 18.27 RCW and chapter 296-200A WAC.

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NEW SECTION

WAC 296-200A-025 How does a contractor register or renew its registration? (1) A contractor may register if it:

(a) Completes an application for contractor registration and submits it to the department as required by RCW 18.27.030;

(b) Satisfies one of the following:

(i) Obtains a surety bond and submits the original bond to the department (see RCW 18.27.040); or

(ii) Assigns, to the department, a savings account held in Washington state; or

(iii) Deposits cash with the department;

(c) Obtains public liability and property damage insurance and submits the original insurance certificate to the department (see RCW 18.27.050); and

(d) Pays the issuance/renewal/reregistration fee shown in WAC 296-200A-900.

(2) A contractor may renew its registration if it submits, to the department, a completed contractor registration renewal notice and the material required in subsection (1)(b) and (c) of this section and pays the renewal fee shown in WAC 296-200A-900. At least forty-five days before the contractor's registration expires, the department must send a renewal notice to the contractor's last recorded address. It is the responsibility of the contractor to notify the department in writing of a change in address.

(3) The contractor must:

(a) Submit all required materials to the department in one package.

(b) Include, on each material, its name exactly as it appears on the contractor registration application or renewal notice.

(c) Include, if renewing a registration, the contractor's registration number on each of the materials.

(4) The department will not register or renew the registration of a contractor if:

(a) Any of the required materials are missing;

(b) The materials do not properly name the contractor;

(c) The materials, in the case of a renewal, do not include the registration number; or

(d) The applicant has been previously registered as a contractor and has an unsatisfied final judgment based on chapter 18.27 RCW.

(5) The contractor may request, in a letter filed with the application or renewal materials, that the registration period end on a particular day. However, the registration period cannot exceed one year.

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NEW SECTION

WAC 296-200A-035 How long is a contractor's registration period? (1) A registration period cannot exceed one year.

(2) If a contractor's insurance policy will expire in less than one year after the day the registration begins, the registration period ends on the day the insurance expires.

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NEW SECTION

WAC 296-200A-040 How does a contractor's registration become suspended? (1) A contractor's registration will be suspended if it does not comply with WAC 296-200A-025, specifically, if:

(a) A surety bond or other security is impaired.

(b) A surety bond is canceled.

(c) An insurance policy is canceled.

(2) The contractor's registration will be automatically suspended on the effective date of the impairment or cancellation. The department must mail a notice of the suspension to the contractor's address on the certificate of registration by certified mail and first class mail within forty-eight hours after suspension.

(3) A contractor must not advertise, offer to do work, submit a bid, or perform any work as a contractor while its registration is suspended. To continue to operate as a contractor while its registration is suspended is a violation of chapter 18.27 RCW and subject to infractions.

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NEW SECTION

WAC 296-200A-050 What requirements must be met if a contractor changes its business structure, name or address? (1) If a contractor changes its business structure (for example, from a partnership to a corporation or if the partners in a partnership change), the contractor must:

(a) Apply for a new registration as required in WAC 296-200A-025; and

(b) Pay the registration fee shown in WAC 296-200A-900.

(2) Failure to reregister after a change in business structure may invalidate the contractor's registration. See RCW 18.27.040.

(3) If a registered contractor changes its name, it must:

(a) Notify the department, in writing, of the change; and

(b) Pay the registration fee shown in WAC 296-200A-900; and

(c) Submit to the department a name change rider or a new bond in the new name and a certificate of insurance in the new name.

(4) If a registered contractor changes its address, it must notify the department in writing.

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NEW SECTION

WAC 296-200A-060 What procedures should be followed when surety bonds and insurance policies are canceled? (1) Insurance and bonding companies should send cancellation notices to the department by certified or registered mail.

(2) Cancellation notices must contain the following information in the order shown:

(a) The name of the contractor exactly as it appears in the contractor's registration file;

(b) The contractor's registration number;

(c) The contractor's business address;

(d) The names of the owners, partners, or officers of the contractor;

(e) The bond or insurance policy number; and

(f) The effective date of the bond or insurance policy.

(3) The cancellation of a surety bond or insurance policy shall be effective thirty days after the department receives a cancellation notice.

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NEW SECTION

WAC 296-200A-070 When will the department refund a security deposit? (1) The department will release a security deposit one year after the contractor's last registration has expired unless there is an unsatisfied final court judgment or claim against the contractor.

(2) The department will release a security deposit in less than one year after the contractor's last registration has expired if the contractor provides a surety bond covering both the previous and current registration periods.

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NEW SECTION

WAC 296-200A-080 How is a suit filed against a contractor? (1) A civil suit against a contractor must be filed in superior court. Unless the suit is filed in a superior court, the department will not be able to pay an unsatisfied final judgment against a secured contractor.

(2) Notice that a suit has been filed (a summons and complaint) against a contractor, the contractor's bond, or the contractor's deposit must be exclusively delivered to the department by registered or certified mail. The department does not accept personal service of a summons and complaint. The notice must be addressed to the department and must include three copies of the summons and complaint filed against the contractor, the contractor's bond or the contractor's deposit. The person filing the suit must pay a ten-dollar service fee to the department. See RCW 18.27.040(3).

(3) The summons and complaint against a contractor should include the following information:

(a) The name of the contractor exactly as it appears in the contractor's registration file;

(b) The contractor's business address;

(c) The names of the owners, partners or officers of the contractor; and

(d) The contractor's registration number.

(4) If the suit joins a bonding company, the summons and complaint should also include:

(a) The name of the bonding company that issued the contractor's bond;

(b) The bond number; and

(c) The effective date of the bond.

(5) Service is not complete until the department receives the ten-dollar fee and three copies of the summons and complaint.

(6) Within forty-eight hours of receiving a summons and complaint, the department must transmit a copy of the summons and complaint to the registrant at their last known address and to the registrant's surety.

(7) The department will return a summons and complaint without it being served, if the department cannot identify either the contractor or bonding company being sued.

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NEW SECTION

WAC 296-200A-090 How are judgments against contractors paid? (1) The department can only pay a superior court final judgment. It cannot pay a district court judgment.

(2) A contractor's security held by the department can be used to pay a superior court final judgment against a secured contractor.

(3) The department must pay a superior court final judgment against a secured contractor if the claimant supplies the department with three certified copies of the unpaid final court judgment. The three certified copies must be delivered by registered or certified mail within one year of the date the final judgment was officially entered into the court record.

(4) For the department to pay a superior court final judgment, the claimant must include the following information with the copies of the judgment:

(a) The name of the contractor exactly as it appears on the contractor's registration file;

(b) The contractor's business address;

(c) The names of the owners, partners, or officers of the contractor;

(d) The contractor's registration number; and

(e) The exact amount of the judgment, including court costs, attorneys' fees and interest.

If the department does not receive enough information to pay the judgment, it must inform the claimant.

(5) If a contractor is bonded, the department can neither pay a final court judgment against a contractor nor force the contractor or its bonding company to pay. Only the claimant can pursue payment from the contractor or its bonding company.

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NEW SECTION

WAC 296-200A-110 Is a city, town, or county required to verify a contractor registration number? Before issuing a building permit, a city, county or town must verify the registration of the general or specialty contractor applying for the permit.

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NEW SECTION

WAC 296-200A-111 How does a city, town, or county verify a contractor's registration? A city, town, or county may verify:

(1) An original contractor registration by receiving and duplicating a current contractor registration card, by checking the department's contractor registration data base or by calling the department to confirm that the contractor is registered.

(2) A nonoriginal contractor registration by either accepting a notarized copy of the original contractor registration card if that copy has been attested to by the person who applied for that original card or by accepting a facsimile verification from the department.

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NEW SECTION

WAC 296-200A-112 Who is liable when a city, town, or county fails to verify a contractor's registration? The city, county, or town that issues a building permit without verifying the contractor's registration may be liable for a maximum penalty amount of five thousand dollars. See RCW 18.27.100 (7)(a).

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NEW SECTION

WAC 296-200A-300 What violations of chapter 18.27 RCW can result in the issuance of a notice of infraction? (1) Under RCW 18.27.100, the department can issue a notice of infraction to a contractor for:

(a) Using an unregistered name while acting as a contractor;

(b) Using an unregistered name and address in advertising, correspondence, signs, documents, etc.;

(c) Using a false or expired registration number in advertisements where a contractor's registration number is required;

(d) Using the bond and insurance requirements of chapter 18.27 RCW to advertise as a bonded and insured contractor;

(e) Using a false registration number to either solicit business or pose as a contractor;

(f) Failing to include the contractor's current registration number in all advertising that shows the contractor's name or address. This registration number may be omitted in an alphabetized listing of registered contractors stating only the name, address, and telephone number. See RCW 18.27.100(3).

(2) Under RCW 18.27.114, the department can issue a notice of infraction to a contractor for failing to provide a residential or commercial customer with a proper disclosure statement before beginning a repair, alterations or construction project. See RCW 18.27.114(1) for both the project dollar cost limits affecting this requirement and a sample disclosure statement.

This requirement does not apply to either contracts authorized under chapter 39.04 RCW or to contractors contracting with other contractors.

(3) Under RCW 18.27.200, the department must issue a notice of infraction to a contractor for:

(a) Advertising, offering to work, submitting a bid, or performing any contractor work without being registered or when it's registration is suspended or revoked; or

(b) Transferring a valid contractor registration to an unregistered contractor; or

(c) Allowing an unregistered contractor to work under a registration issued to another contractor.

Each day that a contractor works without being registered, works while the registration is suspended or revoked, or works under a registration issued to another contractor is a separate infraction. A cited contractor who continues to work while unregistered, or while their registration is suspended or revoked, or under a registration issued to another contractor is guilty of a separate misdemeanor for each day worked.

Each worksite at which a contractor works without being registered, works while the registration is suspended or revoked, or works under a registration issued to another contractor is a separate infraction. A cited contractor who continues to work while unregistered, or while their registration is suspended or revoked, or under a registration issued to another contractor is guilty of a separate misdemeanor for each worksite on which a violation occurs.

(4) See WAC 296-200A-400 for the specific monetary penalties associated with each of the violations discussed in this section.

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NEW SECTION

WAC 296-200A-305 How does the department notify registered contractors regarding any unregistered subcontractors they may employ? (1) Unless a general contractor or its representative has been given written notification by the department that a subcontractor they have employed, who was registered when employed, has subsequently become unregistered, it is not illegal for the general contractor to employ that subcontractor. (See RCW 18.27.020(3).)

(2) To comply with RCW 18.27.020(3), the department, when appropriate, will issue a written "notice of unregistered subcontractors" to a general contractor or its representative.

(3) A notice of unregistered subcontractor issued under this section must be personally served on the general contractor named in the notice by the department's compliance inspectors or must be served by certified mail directed to the general contractor named in the notice.

(4) If the general contractor named in the notice is a firm or corporation, the notice may be personally served on any employee of the firm or corporation. If the notice is personally served upon an employee and the department is able to obtain the general contractor's address, the department must send a copy of the notice by certified mail to the general contractor within four days of service.

(5) A "notice of unregistered subcontractor" is not a notice of infraction.

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NEW SECTION

WAC 296-200A-310 What information must be included in a notice of infraction? When a contractor violates RCW 18.27.100, 18.27.114 or 18.27.200, the department may issue a notice of infraction which must contain the following:

(1) Notification that an infraction has been committed and shall be final unless contested;

(2) Notification that an infraction is a noncriminal offense and is not punishable by imprisonment;

(3) The specific violation(s) leading to the issuance of the infraction;

(4) The amount of penalty owed if the infraction is established;

(5) Notification of a right to a hearing (chapter 34.05 RCW) if requested within twenty days of receipt of the infraction;

(6) A reminder that the burden of proof in a hearing rests upon the state;

(7) Notification of a right to subpoena witnesses, including the inspector that issued the infraction;

(8) A reminder that a contractor is legally required to sign a notice of infraction and, by doing so, promises to respond to it;

(9) A reminder that a refusal to sign a notice of infraction is a misdemeanor and may be punishable by fine or imprisonment; and

(10) A reminder that a failure to respond to a notice of infraction is a misdemeanor and may be punishable by a fine or imprisonment.

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WAC 296-200A-320 Who can be issued a notice of infraction? (1) A notice of infraction can be issued personally to the contractor named in the notice by the compliance inspector issuing it or the notice can be delivered to the contractor by certified mail.

(2) Any employee of a contractor can be issued a notice of infraction at a job site. When the notice is signed by the employee, it is binding upon the contractor. To avoid confusion, the department must have the employee sign the "name of the contractor, by name of the employee." The signature will appear as:

Jane Doe Construction Co.

(by) Richard Roe, Employee.

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WAC 296-200A-330 If a notice of infraction is served on an employee, how is the contractor notified? (1) When the department issues a notice of infraction to a contractor's employee and it knows the contractor's name and address, the department has four days to deliver a copy of the notice to the contractor by certified mail. To ensure that the contractor receives this notice, the department must mail a second copy of the infraction by first class mail.

(2) If the department does not know the contractor's name and address, it does not need to mail a copy of the infraction to the contractor, however, the notice remains in force.

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WAC 296-200A-340 How does a contractor appeal a notice of infraction? The contractor must:

(1) File two copies of an appeal notice, specifying the reasons for the appeal, at the office designated on the notice of infraction; and

(2) File the appeal notice within twenty days of the issuance of the infraction.

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WAC 296-200A-350 Who presides over an appeal hearing and where is it held? An administrative law judge from the office of administrative hearings will preside over the hearing and give a decision. The hearing shall be conducted in the county where the infraction occurred. However, both the contractor and the department have a right to ask the administrative law judge to change the hearing's location.

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WAC 296-200A-360 Who will represent the contractor and the department at the appeal hearing? Contractors may either represent themselves or be represented by an attorney. The department shall be represented by the office of attorney general.

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WAC 296-200A-370 How is the appeal hearing conducted? The hearing process shall be conducted according to chapter 34.05 RCW, Administrative Procedure Act and chapter 10-08 WAC. All appeals of the hearing decision shall be to the superior court according to chapter 34.05 RCW.

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NEW SECTION

WAC 296-200A-380 What evidence is admissible in an appeal hearing? All relevant evidence must be admitted in appeals hearings convened according to RCW 18.27.100, 18.27.114 and 18.27.200. The admission of evidence is further subject to chapter 34.05 RCW, Administrative Procedure Act.

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WAC 296-200A-390 What does the department do with the appeal notices that they receive? The department must record and forward all appeal notices to the office of administrative hearings.

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NEW SECTION

WAC 296-200A-400 What monetary penalties will be assessed for an infraction issued for violations of RCW 18.27.100, 18.27.114 or 18.27.200? (1) Monetary penalties that may be assessed for a violation of RCW 18.27.100 are:

RCW 18.27.100 Monetary Penalties Dollar Amount

First Final Violation $ 100.00*

Second Final Violation $ 200.00

Third Final Violation $ 400.00

Fourth Final Violation $ 800.00

Fifth Final Violation $1,600.00

Sixth Final Violation $3,200.00

Each Additional Final Violation $5,000.00

* Minimum penalty per violation. Once a violation of RCW 18.27.100 becomes a final judgment, any additional violation is subject to an increased penalty as set forth in the above table.

(2) Monetary penalties that may be assessed for a violation of RCW 18.27.114 are:

RCW 18.27.114 Monetary Penalties Dollar Amount

First Final Violation $ 200.00*

Second Final Violation $ 400.00

Third Final Violation $ 800.00

Fourth Final Violation $1,600.00

Fifth Final Violation $3,200.00

Each Additional Final Violation $5,000.00

* Minimum penalty per violation. Once a violation of RCW 18.27.114 becomes a final judgment, any additional violation is subject to an increased penalty as set forth in the above table.

(3) Monetary penalties that may be assessed for a violation of RCW 18.27.200 according to RCW 18.27.340 (1) and (3) are:

(a)

RCW 18.27.340(1) Monetary Penalties Dollar Amount

First Final Violation $ 200.00*

Second Final Violation $ 400.00

Third Final Violation $ 800.00

Fourth Final Violation $1,600.00

Fifth Final Violation $3,200.00

Each Additional Final Violation $5,000.00

* Minimum penalty per violation. Once a violation of RCW 18.27.340(1) becomes a final judgment, any additional violation is subject to an increased penalty as set forth in the above table.

(b)

RCW 18.27.340(3) Monetary Penalties Dollar Amount

First Final Violation $1,000.00*

Second Final Violation $2,000.00

Third Final Violation $4,000.00

Each Additional Final Violation $5,000.00

* Minimum penalty per violation. Once a violation of RCW 18.27.340(3) becomes a final judgment, any additional violation is subject to an increased penalty as set forth in the above table. However, if the unregistered contractor becomes registered within ten days of receiving the notice of infraction and the notice is the contractor's first offense, the director may reduce the penalty. In no case can the director reduce the penalty below five hundred dollars.

(c) The director may waive a penalty collection from a contractor in exchange for a payment of restitution to a damaged consumer equal to the amount of the assessed penalty.

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NEW SECTION

WAC 296-200A-405 When must a contractor pay assessed monetary penalties? (1) If a contractor named in a notice of infraction does not choose to appeal the notice, then the contractor must pay the department the amount of the penalty prescribed for the infraction. Payment must be by check or money order.

(2) After an administrative law judge decides that an infraction has been committed, a contractor who does not appeal the decision to a superior court, has thirty days to pay any outstanding monetary penalties. Failure to do so is a misdemeanor and shall be prosecuted in the county where the infraction occurred.

(3) A contractor who has exhausted all appeal opportunities and fails to pay an assessed monetary penalty within thirty days after exhausting those opportunities shall be guilty of a misdemeanor and be prosecuted in the county where the infraction occurred.

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NEW SECTION

WAC 296-200A-500 Is the department required to monitor unregistered contractors who become registered? Beginning January 1, 1998, the department must monitor, for two years, unregistered contractors who become registered after receiving an infraction or conviction. Information gathered as a result of this monitoring will be shared with the department of revenue and the department of employment security. This information will be shared every other month to determine whether any taxes, fees or penalties are owed to the state.

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WAC 296-200A-510 Is the department required to report contractor compliance activities to the legislature? (1) Beginning December 1, 1997, the department must provide an annual written report regarding contractor compliance to the following legislative committees:

(a) The senate commerce and labor committee.

(b) The house of representatives commerce and labor committee.

(c) The senate ways and means committee.

(d) The house of representatives appropriations committee.

(2) The report will cover a three year period and will include the following information:

(a) The number of contractors found in violation of chapter 18.27 RCW and chapter 296-200A WAC;

(b) The number of contractors who were assessed a monetary penalty and the amount of the penalty assessed;

(c) The amount of assessed monetary penalties collected; and

(d) The amount of assessed monetary penalties waived.

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NEW SECTION

WAC 296-200A-900 What fees does the department charge contractors for issuance, renewal and reinstatement of certificates of registration? (1) For the purposes of this chapter:

(a) A contractor renews its registration before it expires.

(b) A contractor reinstates its registration after it has been suspended because its bond or insurance has been canceled or after it has expired.

(c) A contractor reregisters when it changes its business structure.

(2) The department charges the following fees:

(a) $41.75 for each issuance, renewal or reregistration of a certificate of registration.

(b) $50.00 for the reinstatement of a certificate of registration.

(c) $10.25 for providing a duplicate certificate of registration.

(d) $20.00 for each requested certified letter prepared by the department.

(e) $2.00 per copy for documents copied from a contractor's file. The maximum copy charge for copies from one contractor's file will be $25.00.