Home > Field Audits, Industry Issues, L&I Penalties, Prime Contractor Liability, Workmens Compensation > Retaining Premiums Back From a Subcontractor –Can it be done legally?

Retaining Premiums Back From a Subcontractor –Can it be done legally?

OR,  how to use Washington States statute RCW 51.12.070 to protect yourself during an audit.

This statue says if you hire a subcontractor by (written contract) you are responsible for their premiums (not any penalties and/or interest) during or after they leave the job site. Since this was passed in 2004, it has been interpreted that you are responsible to use the “6-part Test” from RCW 51.08.181 for compliance.

Here is my suggestion: before final payment, you can lawfully ask the subcontractor for the actual Labor and Industries (and Employment Security if he has an account) that he would owe on the contract. Then, you write a check to the Department of Labor and Industries for this premium amount indicating the subcontractor,  his L&I account, and what quarter these premiums should be applied.

Now, you are legally protected from paying his Premiums (and taxes to Employment Security).

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