Proposed Changes to WA Independent Contractor Law

Independent Contractor LawIn my blog post dated January 24, 2013, “Contractors Vs. Employees: A Matter of Context”, I pointed out there are different definitions of an independent contractor in multiple Washington statutes. A new bill has been submitted in the Washington State House of Representatives (HB 1440) which standardizes the independent contractor test and makes many other significant changes.

HB 1440 would create a uniform definition of independent contractor which would apply across the prevailing wage, unemployment insurance and industrial insurance statutes. The new test is significantly shorter and only uses the free from control, outside the usual course of business, and customarily engaged in an independently established trade elements of current definitions. This shortened test would have the benefit of eliminating requirements such as that of a current active Department of Revenue account, confusing references to the IRS code, the requirement to maintain a separate set of books, and other requirements which are common stumbling blocks for businesses and their independent contractors. The current presumption is that anyone who provides “personal services” is an employee. The bill broadens this presumption to include as an employee, anyone who provides “services” for pay.

The bill creates a new law named the Employee Fair Classification Act. The bill expressly prohibits employers from misclassifying employees as independent contractors and creates new enforcement powers in the Department of Labor and Industries to impose fines for violations. It also creates a cause of action for employees and others to bring a lawsuit for treble damages or for an award of between $10,000 to $25,000 whichever is higher in addition to attorney’s fees. There is also an anti-retaliation provision and an employee many not waive the protections of the new law.

HB 1440 would also add a specific anti-retaliation provision to Washington’s wage statutes and expand exemplary damages from double the lost wages to triple the lost wages. The bill establishes a presumption of retaliation for any adverse action which occurs within ninety (90) days of protected conduct. In order to overcome the presumption of retaliation, the employer must demonstrate with “clear and convincing” evidence that it had legitimate reasons to act.

This is only a general overview and there are many more significant details in the bill. If you are interested, I would encourage you to read the official bill analysis or the text of the bill itself. A committee hearing was held on January 31.  I will try to follow the bill and keep you posted.

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