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Prime Contractor Liability

You might have to pay someone else's workers' comp premiums

Did you know...
Under Washington State law*, you or your business could be liable for the unpaid workers' compensation (industrial insurance) premiums of any business you hire or contract with. More...
(*RCW 51.12.070)

In the construction industry, you can protect yourself from liability for your subcontractor's unpaid premiums by ensuring ALL of the following requirements are met:

  • You, the prime contractor, and your subcontractor(s) are registered as contractors under RCW 18.27 (www.leg.wa.gov) or licensed under RCW 19.28 (www.leg.wa.gov).
  • Your contracted work is the work of a contractor as described in RCW 18.27.010 (www.leg.wa.gov).
  • Your subcontractor maintains a set of books and records that reflect all of the business' income and expenses. (You need to review them for your protection.)
  • Your subcontractor works out of their own storefront location or home office that is used regularly and exclusively for the business and is eligible for an IRS business deduction. (You need to visit his or her place of business and make sure.)
  • You are not supervising your subcontractor or their employees. See A Guide to Hiring Independent Contractors in Washington State (F101 063 000).
  • Your subcontractor has an industrial insurance (workers' compensation) account with L&I in good standing, or is certified by L&I as self insured.*
    • You must verify this when you hire a subcontractor and each year by checking their Employer Liability Certificate at Verify Workers' Comp Premium Status. Print it and keep it on file, then remember to check it again a year later.
      -- OR --
    • You may fill out a Subcontractor Tracking Request form at Verify Workers' Comp Premium Status, and L&I will notify you if your subcontractor falls behind on workers' compensation requirements.

      *Note: If your subcontractor is a sole proprieter who meets all the above requirements but does not have employees, they're not required to have an industrial insurance account.

You must ensure that all of the above requirements are met to receive protection from liability for your sub's unpaid premiums. Please note that you will NOT receive protection from liability if you only meet the last requirement.

Note: You should also verify that an independent contractor or subcontractor you are hiring has an active Department of Revenue tax registration account (www.dor.wa.gov). You might be an employer and not know it.


We need your help
What is Fraud? Help lower your premium cost; make others pay their fair share and get workers back to work by reporting law breakers.

Fraud costs the Washington State workers' compensation system millions of dollars each year. Employers, employees, L&I and Washington consumers pay the cost of fraud in lost jobs and profit, lower wages and benefits, and higher costs for services and premiums.

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