Direct Contractor Liability

February 22, 2019

BIAW President Rick Hjelm has been busy testifying before House and Senate committees in opposition to House Bill 1395 and Senate Bill 5565, a pair misguided bills that would allow the Department of Labor & Industries (L&I) to enforce against a “direct contractor” for wages and benefits owed to employees of subcontractors.

Hjelm pointed out to legislators that he often employs dozens, some times hundreds, of subcontractors on his projects and each of those subcontractors could have several employees working on the project.

Under the bill, contractors like Hjelm would be required to review all of the payrolls and benefit records for every employee that sets foot on a job site and determine if the worker was paid properly and benefit contributions were made to health insurance companies, retirement funds, etc.

Mr. Hjelm and other direct contractors would have no choice but to hire a full-time staff person (or persons) in order to comply with this incredibly onerous new requirement which could cost upward of $150,000 per year.

All the while, subcontractors who fail to make appropriate wage and benefit payments would have no responsibility in the eyes of L&I – all responsibility for proper wage and benefits would fall on the “direct contractor.”