Retainage Law Changes In Washington State

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2009 Retainage Law Changes in Washington

State: HB 1199 and SHB 1555

Mike PurdyMichael E. Purdy Associates

(206) [email protected]

www.mpurdy.com

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Revisions to State Law

House Bill 1199:– Repeals various laws that relate to public works

contracts entered into prior to September 1, 1992– Approved by Legislature

Old Law Current Law Subject

RCW 60.28.010 RCW 60.28.011 Retainage



RCW 39.76.010 RCW 39.76.011 Prompt Payment

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Substitute House Bill 1555:– Underground Economy bill– Purpose of Retainage: Trust fund purpose

expanded to add: Employment Security Department

– Unemployment Compensation Premiums Department of Labor & Industries

– Workers Compensation Premiums– Certificates of Release:

Required before release of retainage. Added Employment Security and Labor & Industries

L&I doesn’t issue certificates; may obtain online

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SHB 1555: Revised Priority of Claim Order

# Current law New law

1 Workers not paid prevailing wages Workers not paid prevailing wages

2 Dept. of Revenue – taxes due on public works project

Dept. of Revenue – taxes due on public works project

3 Subcontractors and suppliers Dept. of Revenue – taxes due on other projects

4 Other taxes due ESD and L&I for taxes due on public works project

5 The Owner Subcontractors and suppliers

6 Other taxes due (ESD, L&I for taxes due on other projects; other taxes)

7 The Owner

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Substitute House Bill 1555:– Issues:

L&I doesn’t issue a release certificate, but new law requires it Conflict between $35,000 vs. $20,000

– SHB 1555 requires public agencies to only notify Revenue, ESD, and L&I of projects over $35,000 (RCW 60.28.051)

– RCW 60.28.040 (priority of claims) was amended by HB 1199 to change $20,000 to $35,000 for Dept. of Revenue release (clean-up legislation not fixed in 2007).

– SHB 1555 amends RCW 60.28.040 establishing $20,000 as the threshold for Revenue for a public works project in establishing priority of claims. One reference will be fixed by HB 1199 but not the other new references.

– SHB 1555 uses $20,000 for Employment Security and L&I releases when current practice is $35,000 for ESD.

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Michael E. Purdy Associates

Mike Purdy Principal

(206) [email protected]

www.mpurdy.com

Mike Purdy’s Public Contracting Blog: http://PublicContracting.blogspot.com

The opinions and interpretations expressed in this presentation do not represent legal advice and the reader is encouraged to consult with an attorney to obtain legal advice.

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Michael E. Purdy Associates: Mike Purdy has more than 29 years of experience as a manager in public contracting and procurement. He is the principal of Michael E. Purdy Associates (www.mpurdy.com), a consultant firm established in 2005 to help public agencies and businesses develop and implement effective contracting strategies, solve contracting problems, and learn more about contracting and procurement through tailored training. He maintains the popular Public Contracting Blog at http://PublicContracting.blogspot.com.

Experience: Mike is also the Contracts Manager for the University of Washington’s Capital Projects Office and is responsible for managing design and construction contracts for more than $1 billion worth of projects at the University. Before joining the UW in 2005, he spent five years at the Seattle Housing Authority where he served as Contracting and Procurement Manager, overseeing all of the contracting and purchasing (construction, design consultants, other consultants, goods, supplies, and services) for the largest residential landlord in the state. Prior to that he worked for the City of Seattle for more than 21 years, where he administered the City’s construction and consultant contracts as the City’s Contracting Manager.

Education: He has a bachelor’s degree in business and public administration and an MBA, both from the University of Puget Sound, and a master of divinity degree from Fuller Theological Seminary.

Retainage Law Changes In Washington State

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