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Substitute SB 63-02 would prompt L&I investigations of potential independent-contractor misclassification on public works

Washington State Senate Labor and Workplace Standards Committee · February 18, 2026

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Summary

Substitute SB 63-02 directs L&I to investigate referrals alleging misclassification of independent contractors on public-works finishing trades; the substitute creates an enforcement trigger (three or more contractors doing the same work) and was supported by labor and many contractor associations after negotiation.

The committee considered Engrossed Substitute Senate Bill 63-02 on Feb. 18, which addresses worker misclassification on public-works projects. Under current law, independent contractors generally are not covered by prevailing-wage requirements; the bill requires the Department of Labor and Industries to investigate referrals alleging misclassification for certain finishing trades (drywall, flooring, tiling, painting, glass work) and to impose prevailing-wage obligations and penalties if misclassification is found.

Neil Hartman (Government Affairs Director, Washington State Association of Plumbers & Pipefitters) said the substitute reflects recommendations from the underground-economy task force and represents a step toward front-end identification of misclassification instead of retroactive audits. Several contractor groups — including the Associated Builders and Contractors and the AGC — said they support the amended version because it creates a trigger for review (for example, three or more independent contractors performing the same trade) rather than a strict prohibition on legitimate independent-contractor use.

Proponents argued the bill protects responsible contractors and workers by creating a clear enforcement mechanism; if misclassification is found, contractors would face existing penalties and L&I would make referrals for possible workers’ compensation and unemployment-insurance violations. The committee closed the hearing after generally supportive testimony from labor and many contractor stakeholders.