- Organized labor leaders and their counterparts from management took predictably different stances on Tuesday on a slate of bills intended to redefine the status of independent contractors and beef up penalties against Washington employers who take advantage of them in Washington’s so-called “underground economy.”
The bills, argued in the House Labor and Workforce Development Committee, included:
• HB-2331, which would require employers on public works projects to turn in certified payroll records to prove they adhered to prevailing wage requirements before being compensated;
• HB-2332, which would allow employees who had been underpaid by their employers to collect up to triple damages;
• HB-2333, which prevents employers from retaliating against employees who file complaints that they are being underpaid; and,
• HB-2334, which would offer further clarification for who is and isn’t an independent contractor and impose stiffer penalties on employers who misclassify employees in order to avoid paying benefits.
“I fundamentally believe the enemy of the honest businessperson is the dishonest businessperson,” said Rep. David Sawyer (D-Tacoma), sponsor of HB-2332. “This is pretty minimal, but I’d like to send a message that we take it pretty seriously when you steal money from your employees.”
Rep. Matt Manweller (R-Ellensburg) asked whether the law distinguished between clear intent to defraud employees and honest confusion about the regulations.
“When it says ‘intentional,’ I think that’s what you’re going to have to prove,” Sawyer said. “Did you intentionally misclassify the employee to steal his wages? If you can prove that, then it would be covered. But the burden of proof is going to be on the plaintiff.”
“While most employers do their best to pay their employees lawfully and, when they’re aware of it, remedy problems, there are certain bad actors out there who don’t,” said Rep. Cindy Ryu (D-Shoreline), who authored HB-2333.
“Even worse,” she said, “they will retaliate against workers seeking the wages they’ve earned by cutting hours, terminating employment or threatening immigration-related actions. This is immoral.”
“There are people who play by the rules and, unfortunately, there are folks who are gaming the system willfully and purposefully,” added Rep. Marcus Riccelli (D-Spokane), whose bill, HB-2334, would establish a three-part test to determine whether a worker is an employee or an independent contractor.
Riccelli assured committee members the language of the bill wold protect bona fide independent contractors, such as doctors, lawyers and other professionals. But when questioned by Manweller about where the line would be drawn for a real estate agent, who works as an independent contractor but does so under the director of a company’s broker, Riccelli couldn’t offer specifics.
“There’s a smell test involved,” he said. “I believe when this bill is moved forward, through the rules process there would be a better understanding of the (standard). If an employer is telling you to sing this paper and be an independent contractor, that’s not right and we have to end those practices.”
“The package of bills before you is a comprehensive approach to dealing with workplace fraud,” said Teresa Mosqueda, government affairs director with the Washington State Labor Council. “Our laws don’t currently look at how to appropriately classify workers. We don’t have enough teeth on the books to be sure we can prevent wage theft, and we have a problem with retaliation.”
“Right now, the system is broken — especially for low-wage workers,” said Andrea Schmitt, an attorney with Columbia Legal Services in Seattle. “The economy works when workers have proper channels to address when they don’t get paid. If we threaten to harm them in order to get out of meeting our obligations … if we keep them from using these channels to cover up our own fraud, the whole system breaks down.”
“These bills purport to target scofflaws, but in fact they affect all employers in this state,” countered Tim O’Connell, representing the Association of Washington Business. “These bill increase the cost of doing business because they make even meritless claims more difficult to fight.”
“These bills won’t work for small businesses, to be quite frank with you,” added Gary Smith, executive director of the Independent Business Association. “The complexity of these laws is overwhelming. Small businesses just don’t have the legal resources to figure out what these laws really say and how to implement them.
“The legislation is overly broad,” he said. “The proponents brought us this legislation, and we said, we have some problems with this in terms of the scope you’ve described. We offered to work with them on it but we never heard back from them. And it work work at all for small business as it’s currently drafted.”
