AGC-Backed Law Levels Workers' Comp Playing Field

The Governor signed AGC-supported legislation passed by the Legislature that would address the double workers comp premium payments that Washington State contractors often make when sending employees to work on out-of-state construction projects. The Department of Labor and Industries has developed a fact sheet that provides additional detail as to employer out-of-state premium obligations and how L&I will manage premium collection before and after rules are put in place in Oct. 2008.

For the rulemaking time-line and employer requirements from the effective date of the legislation (June 12) and the establishment of final rules in October please click document link below to see L&Is Extra-Territorial Rules for Workers Compensation Coverage.

Passage of this law which helps level the playing field for Washington contractors when they are bidding for out-of-state work was a top legislative priority for AGC this year. AGC helped lead the effort to resolve the double payment issue and last year convinced L&I to craft legislation for consideration in 2008. The result was a collaborative process among the Department AGC and other business groups and labor that led to the idea of a credit.

Generally employees of Washington employers injured while working in another state are entitled to workers compensation if the injured worker would have been entitled to compensation had the injury occurred here in Washington state. However in some cases the other state may require Washington employers to pay workers compensation premiums for the work done in the other state.

Employers are unclear as to the requirements of providing coverage and this lack of clarity leads to situations where employers are paying twice for the same exposure said AGCs Rick Slunaker in testimony to the House Commerce and Labor Committee. This bill helps clarify the issue lowers costs and simplifies regulations for Washington contractors with out-of-state projects.

Washington State has reciprocal agreements with certain states that theoretically should prevent the double payment of premiums. For example Washingtons agreement with Oregon says Employers shall be required to secure the payment of workers compensation benefits under the workers compensation law of the state the contract of employment arose in and pay premiums or be self-insured in that state for the work performed while in the other state; and workers compensation benefits for injuries and occupational diseases arising out of the temporary employment in the other state shall be payable under the workers compensation law of the state the contract of employment arose in and that states law provides the exclusive remedy available to the injured worker.

Washington has similar agreements with Idaho Montana Nevada Wyoming North Dakota and South Dakota.

However the confusion arises over the definition of temporary employment so even in those states with which Washington has an agreement contractors end up paying twice. The legislation defines temporary making it easier for contractors to eliminate the double premiums.

The legislation (Senate Bill 6839) says that Washington employers who are not self-insured must obtain workers compensation coverage from the Washington State Fund for temporary and incidental work performed by their employees on jobs in another state. Temporary and incidental means work performed in another state for 30 days or less per calendar year. The 30 day limit is aggregated for the company. It can be one worker for 30 days 30 workers for one day each or any other combination totaling 30 days in each state other than Washington. The practical application of this is that Washington contractors receive a credit for redundant premiums paid beyond 30 days.

For questions or comments regarding this legislation contact Rick Slunaker at 360-352-5000 or rslunaker@agcwa.com.