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BIAW Bulletin: The Return of SB 5278, the Direct Contractor Liability Bill

February 2, 2021

Welcome to another tremendous episode of the Hammer with Himebaugh – or the BIAW bulletin.

Bad bills come back every year and this year, it’s in the form of SB 5278.  This is direct contractor liability­ which would make general contractors liable for ALL benefits, contributions and payroll for their subcontractors’ employees.

I talked to Tracy Doriot, BIAW president for 2020, about the impact this has on homebuilders.

Tracy, if you were liable for your subcontractors’ wages and benefits, how would that impact your business?

It would be difficult for the subcontractor because when the liability is shifted to me, I likely would not pay the subcontractor until I had proof, acceptable by the state of Washington, that would release me from that liability before I would write them a check. They would have to prove all of their liabilities were paid and then I would write them a check.

How many subcontractors do you have?

We likely have 30 different contractors at any given time on our jobs.

Would a bill like SB 5278 encourage you to do more work in house rather than hiring out to subcontractors?

We likely wouldn’t do more work in-house. We would just have to find subcontractors that were not start-up businesses. Generally the subcontractors rely on our payments. They do not have the cash flow pay their employees before we pay them. So I would think this would kill many start-up businesses and it would limit opportunity in the state of Washington.

What about new businesses without a long business history, would you be inclined to give them work?

I would love to give them work. The problem would be, could they do the work? If I require them to pay all of their employees before I pay them, basic economics dictates they are probably not going to be able to do that. I think their business would probably fail pretty quickly.

Anything else you’d like to add, Tracy?

Currently, in the state of Washington, it is already illegal not to pay your employees. We have a state agency, Dept. of Labor & Industries, that is charged with enforcement of that rule. Simply shifting the burden of a job already done by a state agency to an independent contractor is onerous and pretty much flies in the face of good public policy.

Tracy’s right. This is a bad bill for builders and we need you need you to testify against it in the Senate Labor and Commerce Committee on Wednesday, February 3 at 10:30 am.

This link is below for how to sign up to do that. You can testify from wherever (preferably not your toilet).

Tell the Senate Labor, Commerce and Tribal Affairs Committee home builders can’t afford SB 5278. 
Testify in committee OPPOSED to SB 5278
Can’t testify? We still need you to register your opposition: Sign-in opposed here

  • Tell the committee this bill is unnecessary.
  • It will add to housing costs.
  • It’s already against the law not to pay worker and it will delay payments to subcontractors.

And although, Tracy made a good case for this segment to be called,”Dumb Bills with Doriot,” I’m sticking with The Hammer with Himebaugh.

And with that, I’m out!

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