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Independent Contractor Bill is Unnecessary and Convoluted

AGC is opposing legislation that will needlessly complicate the way general contractors hire subs exposing contractors to potential penalties if they hire in good faith legitimate one-person firms.

The bill EHSB 1701 purports to address the misclassification of construction workers as independent contractors in order to avoid paying workers’ compensation taxes.

According to the bill it would be a contractor registration violation for a contractor to engage more than two independent contractors to work on or in a single building who (1) are working on the same task involving a similar material (2) bring no workers to that job site covered by industrial insurance and (3) are not being treated as covered workers. The bill says a task is a risk classification for purposes of industrial insurance and exempts work on residential wood frame construction up to four stories.

Rick Slunaker AGC’s Director of Government Affairs says that there are several problems with the bill starting with the fact that it is unnecessary – there are already laws on the books – a seven part test – to make sure workers are not misclassified as independent contractors.

Supporters make the claim that the bill addresses the underground economy yet the Governor’s Underground Economy Task Force on which AGC sits with labor groups has not recommended this approach.

In addition some concepts in the bill are too vague. For example the bill says that contractors can’t use independent contractors working on “the same task”. But one finish carpenter could be working on one part of a building while another is working on another part of the job in another part – yet according to the bill they are doing “the same task” because both are within the carpentry classification.

Slunaker notes that instead of creating a convoluted law the preferred approach is to better enforce the current straightforward law. The state could easily do so by using funds that contractors already pay through contractor registration fees. Unfortunately the state has been diverting about $2.5 million annually from this revenue stream for other purposes. Quit raiding the registration fee money and the resources are there to enforce current law. “It just doesn’t make good sense to enact a convoluted law that penalizes law-abiding contractors simply because lawmakers are unwilling to adequately enforce current laws which could effectively get at those who are cheating the system” he concluded.

The measure was passed by the House (vote tally below) and by the Senate Committee on Labor and Commerce & Consumer Protection. It awaits further action by the Senate. For more information contact Rick Slunaker 360-352-5000.

House vote on ESHB 1701 — Yeas: 54 Nays: 43

Voting Yea: Representatives Appleton Billig Blake Carlyle Clibborn Cody Darneille Dickerson Dunshee Eddy Fitzgibbon Frockt Goodman Green Haigh Hasegawa Hudgins Hunt Hunter Hurst Jacks Jinkins Kagi Kelley Kenney Kirby Ladenburg Liias Lytton Maxwell McCoy Miloscia Moeller Moscoso Ormsby Orwall Pedersen Pettigrew Probst Reykdal Roberts Rolfes Ryu Santos Seaquist Sells Springer Stanford Sullivan Takko Tharinger Upthegrove Van De Wege and Speaker Chopp.

Voting Nay: Representatives Ahern Anderson Angel Armstrong Asay Bailey Buys Chandler Condotta Crouse Dahlquist Dammeier DeBolt Fagan Finn Haler Hargrove Harris Hinkle Hope Johnson Klippert Kretz Kristiansen McCune Morris Nealey Orcutt Overstreet Parker Pearson Rivers Rodne Ross Shea Schmick Short Smith Taylor Walsh Warnick Wilcox and Zeiger.

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