SB 5035 — Enhancing the prevailing wage laws to ensure contractor and owner accountability and worker protection.

S-1025.5SUBSTITUTEZ-0205.2SENATE SENATE BILL 5035State of Washington66th Legislature2019 Regular SessionBySenateSessionBySenators LaborSaldaña, & Commerce (originally sponsored by Senators Saldaña, Hasegawa, Conway, Keiser, Wellman, and Kuderer;

by request of Attorney General)READGeneralPrefiled FIRST12/21/18.Read TIMEfirst 02/14/19.ANtime 01/14/19.Referred to Committee on Labor & Commerce.AN ACT Relating to enhancing the prevailing wage laws to ensure contractor and owner accountability and worker protection;

and providing an effective date.BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:NEW SECTION.  Sec.SECTION.  Sec.

The legislature finds:(1) That from the shift in the 1980s from criminal to civil penalties for prevailing wage violations that the law needs some enhancements to effectively provide the department of labor and industries with the ability to utilize its civil remedies to both discourage and penalize repeat and willful violations of the law.(2) RevisionsThe todoctrine chapterof 39.12substantial RCWcompliance areshall longnot overduebe andused areby necessarythe todepartment appropriatelyof addresslabor filing and reportingindustries proceduresin andthe penalties,application which are necessary to strengthen enforcement of and deterrenceconstruction from repeat and/or willful violations of thechapter chapter.Sec.39.12 RCW.

Anyone engaged in public works construction is presumed to know the requirements of chapter 39.12 RCW.(3) Revisions to chapter 39.12 RCW are long overdue and are necessary to appropriately address filing and reporting procedures and penalties, which are necessary to strengthen enforcement of and deterrence from repeat and/or willful violations of the chapter.Sec.

and(b)((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)benefits; An "interested party" ((for the purposes of this chapter shall)) includes 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.(5) An "inadvertent filing or reporting error" is a mistake and is made notwithstanding the use of due care by the contractor, subcontractor, or employer.(6) "Unpaid prevailing wages" or "unpaid wages" means the employer fails to pay all of the prevailing rate of wages owed for any workweek by the regularly established pay day for the period in which the workweek ends.

Everyand(c) employerThe musteffective payannual rate of contributions for all wages,hours, otherpublic thanand usualprivate, benefits,worked owingduring the year by an employee, commonly referred to itsas employeesannualization notof lessbenefits.(4) thanAn once"interested party" ((for the purposes of this chapter shall)) includes a month.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.(5) An "inadvertent filing or reporting error" is a mistake that occurs only once and is made notwithstanding the use of due care by the contractor or employer.(6) "Unpaid prevailing wages" or "unpaid wages" means the employer fails to pay all compensation owed for any workweek by the regularly established pay day for the period in which the workweek ends.

Every employer must pay all usualwages, benefitsother than fringe benefits, owing to its employees bynot theless regularlythan establishedtwice deadlinea formonth.Sec. those benefits.(7) "Rate of contribution" means the effective annual rate of usual benefit contributions for all hours, public and private, worked during the year by an employee (commonly referred to as "annualization" of benefits).

The only exemption to the annualization requirements is for defined contribution pension plans that have immediate participation and vesting.Sec.

RCW 39.12.050 and 2009 c 219 s 3 are each amended to read as follows:(1) Any contractor or subcontractor who files a false statement or fails to file any statement or record required to be filed or fails to post a document required to be posted under this chapter and the rules adopted under this chapter, shall, after a determination to that effect has been issued by the director after hearing under chapter 34.05 RCW, forfeit as a civil penalty the sum of five hundred dollars for each false filing or failure to filefile, or post, and shall not be permitted to bid, or have a bid considered, on any public works contract until the penalty has been paid in full to the director.

The burdendirector ofshall proving,consider bywhether aor preponderancenot ofthe contractor or employer has attended the evidence,required thattraining anunder errorRCW is39.04.350 inadvertentboth restsfor withdetermining if the contractorviolation ormay subcontractorbe chargedapplied withand for enhancing the error.curriculum of the required training provided by the department.

The burden of proving that an error is inadvertent rests with the contractor or employer charged with the error.

When an appeal is taken from the director's determination, the one year period ((shall)) commences from the date ((ofof the final determination of the appeal))theappeal.The notice of violation becomes final.The director shall issue his or her findings that a contractor or subcontractor has violated the provisions of this subsection after a hearing held subject to the provisions of chapter 34.05 RCW,RCW.Sec. unless a notice of violation is not timely appealed.

A notice of violation not timely appealed is final and binding, and not subject to further appeal.Sec.

RCW 39.12.065 and 2009 c 219 s 4 are each amended to read as follows:(1) Upon complaint by an interested party, the director of labor and industries shall cause an investigation to be made to determine whether there has been compliance with this chapter and the rules adopted hereunder, and if the investigation indicates that a violation may have occurred, the department of labor and industries may issue a noticehearing ofshall violationbe forheld unpaidin wages,accordance penalties,with andchapter interest34.05 onRCW. all wages owed at one percent per month.

AThe hearingdirector shall beissue held following a timelywritten appealdetermination ofincluding thehis noticeor ofher violationfindings inafter accordancethe withhearing. chapter 34.05 RCW.

TheA directorjudicial shallappeal issuefrom athe writtendirector's determination includingmay hisbe ortaken herin findingsaccordance afterwith chapter 34.05 RCW, with the hearingprevailing unlessparty aentitled noticeto recover interest on the wages at the highest rate allowed under RCW 19.52.025, and reasonable costs and attorneys' fees.A complaint concerning nonpayment of violationthe isprevailing notrate timelyof appealed.wage shall be filed with the department of labor and industries no later than ((thirty))one hundred twenty days from the acceptance date of the public works project.

AThe noticefailure ofto violationtimely file such a complaint ((shall))does not timelyprohibit appealedthe isdepartment finalfrom andinvestigating binding,the andmatter notin subjectpursuit toof furtherthe appeal.recovery of unpaid wages for the worker(s).

AHowever, judicial appeal from the director'sdepartment determination may beonly taken in accordance with chapter 34.05 RCW, with the prevailing party entitled to recover reasonableowed costswages and attorneys'may fees.Anot complaintcharge concerninga nonpaymentcontractor ofor thesubcontractor prevailing rate of wage shall be filed with thea departmentviolation of laborthis andsection industriesif nothe latercomplaint thanis ((thirty))sixtyfiled daysafter from the acceptanceone datehundred oftwenty theday publiclimit. works project.

The department may not charge a contractor or subcontractor with a violation of this section when responding to a complaint filed after the sixty-day limit.

The failure to timely file such a complaint ((shall))does not prohibit the department from investigating the matter and recovering unpaid wages for the worker(s) within two years from the acceptance of the public works contract.

The department may not investigate or recover unpaid wages if the complaint is filed after two years from the acceptance of a public works contract.

Under no circumstances shall((shall))does any portion of the progress payments be withheld that are properly allocable to a contractor, subcontractor, or supplier, that is not found to be in violation of this chapter.The amount withheld shall be released to the director to distribute in accordance with the director's determination.(3) A contractor or subcontractor that is found, in accordance with subsection (1) of this section, to have violated the requirement to pay the prevailing rate of wage ((shall be))is subject to a civil penalty of not less than ((one))five thousand dollars or an amount equal to ((twenty))fifty percent of the total prevailing wage violation found on the contract, whichever is greater, interest on all wages owed at one percent per month, and ((shall))is not ((be)) permitted to bid, or have a bid considered, on any public works contract until such civil penalty has been paid in full to the director.

The two-year period runs from the date of notice by the director of the determination of noncompliance.

When an appeal is taken from the director's determination, the two-year period commences from the date of the notice of violation becomes final.

To the extent that a contractor or subcontractor has not paid the prevailing wage rate under a determination issued as provided in subsection (1) of this section, the unpaid wages ((shall)) constitute a lien against the bonds and retainage as provided herein and in RCW 18.27.040, 19.28.041, 39.08.010, and 60.28.011.(4) TheIf, directorafter maya waivecomplaint has been filed, the contractor or reducesubcontractor aelects penaltyto pay the unpaid wages that precipitated the complaint, interest on the wages at the highest rate allowed under RCW 19.52.025, and penalties in the amount of one thousand dollars or additionaltwenty sanctionpercent of the total prevailing wage violation determined by the department of labor and industries, whichever is greater, is considered resolved without further penalty under subsection (3) of this sectionsection.(5) including,If buta notcontractor limitedor to,subcontractor whenutilizes the directorprocess determinesoutlined in subsection (4) of this section for a second time within a five-year period, the contractor or subcontractor paidis allsubject wagesto andthe interestsanctions orprescribed therein wassubsection (3) of this section and as an inadvertentadditional filingsanction, ormay reportingnot error.be allowed to bid on any public works contract for two years.NEW SECTION.  Sec.

The director may not waive or reduce interest.

The department of labor and industries shall regularly submit a report of the waivers made under this section, including a justification for any waiver made, upon request of an interested party.(5) If, after the department of labor and industries initiates an investigation and before a notice of violation of unpaid wages, the contractor or subcontractor pays the unpaid wages identified in the investigation, interest on all wages owed at one percent per month, and penalties in the amount of one thousand dollars or twenty percent of the total prevailing wage violation determined by the department of labor and industries, whichever is greater, then the violation is considered resolved without further penalty under subsection (3) of this section.(6) A contractor or subcontractor may only utilize the process outlined in subsection (5) of this section if the department of labor and industries has not issued a notice of violation that resulted in final judgment under this section against that contractor or subcontractor in the last five-year period.

If a contractor or subcontractor utilizes the process outlined in subsection (5) of this section for a second time within a five-year period, the contractor or subcontractor is subject to the sanctions prescribed in subsection (3) of this section and may not be allowed to bid on any public works contract for two years.NEW SECTION.  Sec.

A new section is added to chapter 39.12 RCW to read as follows:(1) Each contractor,contractor subcontractor, or employer shall keep accurate payroll records for three years from the date of acceptance of the public works project by the contract awarding agency, showing the employee's full name, address, social security number, trade or occupation, classification, straight and overtime rates, hourly rate of usual benefits, and hours worked each day and week, including any employee authorizations executed pursuant to RCW 49.28.065, and the actual gross wages, itemized deductions, withholdings, and net wages paid, for each laborer, worker, and mechanic employed by the contractor for work performed on a public works project.(2) A contractor,contractor subcontractor,shall, orat employerleast shallbiweekly file a copy of its certified payroll records using the department of labor and industries' online system atand/or leastdirectly oncewith perthe month.awarding agency in a format approved by the department.(3) A contractor's noncompliance with this section constitutes a violation of RCW 39.12.050.NEW SECTION.  Sec.

If the department of labor and industries' online system is not used, a contractor, subcontractor, or employer shall file a copy of its certified payroll records directly with the department of labor and industries and the awarding agency in a format approved by the department of labor and industries at least once per month.(3) A contractor, subcontractor, or employer's noncompliance with this section constitutes a violation of RCW 39.12.050.NEW SECTION.  Sec.