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BIAW Opposes SB 5565 Direct Contractor Liability
January 17, 2020

BIAW opposes SB 5565, the so-called direct contractor liability bill which was killed last session. This legislation would make general contractors liable for all benefits, contributions, and payroll for employees of subcontractors on their projects. BIAW staff, lobbyists, and members testified in opposition to the bill at a hearing before the Senate Labor & Commerce Committee Jan. 16.

“This bill would be severely detrimental to companies like mine. I pay all of my subs for their work, expecting them to pay their employees,” testified Owner of A.C.T. Builders LLC. and Building Industry Association of Clark County Member Aaron Marvin. “Regulations like this drive the underground economy, to be unregistered. It is already illegal to not pay your employees.”

The bill would also increase the cost of doing business, which in turn increases the cost of housing. Contractors will have to hire additional or contract out for accounting services to ensure that all payroll records and benefit contributions have been made on behalf of someone else’s employees.

“This bill would crush me. I have a fulltime staff now and I don’t know how I’d handle this,” said Owner of John Erwin Remodeling Inc. and Olympia Master Builder Member John Erwin. “I’m not a big contractor, it’s not fair. I follow all of the laws and rules.”

SB 5565 will cause subcontractor payment delays. General contractors will not pay subcontractors until a complete audit of payroll and benefits has been made or they risk potentially massive wage/benefit obligations for someone else’s employees.

Judson Willis and David Danton representing Lexar Homes explained to legislators, “It takes 23 contractors to build a house, from general to subs. We already have a system in place to pay our bills. Where does the buck stop?” They added, “If we have to pay twice for work, it will be the actual homeowner who will end up paying for this. The homebuyer will bear the risk.”

Reminding the committee that he testified in person on this legislation last year and made an offer to work with proponents of the legislation which was rejected, 2019 BIAW President, Owner of Phase II Construction, Inc. and Pierce County Master Builders Member Rick Hjelm stated, “This essentially holds the entire class after school for the actions of one person. I’m tired of running laps for the guy who is too lazy. The residential builders are the good guys.”

We will keep you posted on any developments with this legislation. In the meantime, you can help by contacting your legislator and tell them you oppose SB 5565.

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