Bill Radically Changes Definitions of 'Employer' and 'Employee'

AGC is strongly opposed to a bill that has been sold as rooting out fraud and abuse associated with the “underground economy” and leveling the playing field for honest employers, yet actually creates major new risks and liabilities for honest employers and independent contractors alike.

The bill, 2SHB 1440, is a comprehensive overhaul of several Washington employment laws. It has passed out of House Labor & Workforce Development and Finance on a strict partisan vote and awaits additional action in the House Rules Committee.

"Most of the focus of this bill has been on the expansion of what constitutes an employee," testified AGC Legislative Counsel Van Collins before the House Committee. "However, the definition of what constitutes an 'employer' is also radically changed by this bill, which could bring corporate officers, human resources personnel, and possibly even stockholders within the definition of 'employer'. This is especially significant when one considers the severe enforcement provisions contained in the bill."

Among the bill’s many other problematic provisions are:

• The bill creates a legal presumption that there is an employment relationship any time an individual is retained to perform services.

• The bill scraps existing and settled definitions of “independent contractor” in favor of a new, vague standard which must be used to prove an individual is an independent contractor.

• The bill imposes a new criminal sanction against retaliation in every major Washington employment statute. This new gross misdemeanor can be based on conduct the employee alone subjectively believes violates the law.

• The bill provides circumstances where an employer is presumed to have committed the crime of retaliation, a presumption the employer would have to rebut by “clear and convincing” evidence, entirely subverting the criminal law’s presumption of innocence.

• The bill creates a new administrative enforcement action by Labor & Industries across every major employment statute and imposes extremely high penalty and remedial measures available to the agency.

• The bill creates a new civil cause of action against an employer across several major employment statutes, authorized as a class action, and allowing punitive damages, injunctive/equitable relief, and attorney’s fees.

• The bill authorizes new punitive damages awards in existing wage payment lawsuits.

• The bill imposes burdensome new posting requirements, inviting individuals to make complaints or bring lawsuits.

• The bill broadens legal standing to bring lawsuits, including class actions, to “interested parties,” defined broadly to include Labor & Industries and labor unions, not merely on behalf of their own members but on behalf of anybody.

For more information contact Van Collins, 360-352-5000.

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