New Retainage Release Form Announced by Department of Labor and Industries

In response to legislation (SHB 1555), approved by the State of Washington Legislature in the spring of 2009, the Department of Labor and Industries announced a new Request for Contract Release form and procedures to implement a portion of the new law.

Notify L&I and Obtain Release. Among other things, SHB 1555 requires that public agencies notify the Department of Labor and Industries upon final acceptance of a public works project, and that they obtain a release from L&I that the contractor and all subcontractors are current and have paid workers compensation premiums.

L&I Claims Against Retainage. In the event of non-payment of premiums, the new law gives L&I the right to require public agencies to pay the unpaid premiums from the 5% retainage withheld by the public agency from the contractor.

Priority of Claims Against Retainage. The chart above describes the priority of various claimants for the retainage funds, comparing the law in effect prior to July 26, 2009 and the current law. The priority order is important in the event there are claims against the retainage in an amount that exceeds the funds available in the retainage.

New Procedures and Form Effective September 30, 2009. On September 22, 2009, L&I provided the Request for Contract Release form for public agencies to use in requesting L&I's review of premiums paid. In an announcement accompanying the new form, L&I stated that the new procedure will be effective for all public works projects over $35,000 that are completed after September 30, 2009.

Other Releases Also Required. In reading L&I's announcement and Request for Contract Release form, it is important to remember that L&I's release is not the only release that public agencies must obtain prior to release of retainage to the contractor.

Upcoming Class on Contract Close-out. I will be teaching a class on the public works contract close-out process, addressing the new requirements of SHB 1555, the purpose of bonding and retainage, how claims against the bonds and retainage should be handled by public agencies, when public agencies should pay claimants, and when public agencies may release the retainage.

The class is tentatively scheduled for November 4, 2009 in Federal Way, WA.

Questions. If you are interested in attending this four hour training workshop, or have questions about it, please contact me by e-mail or call me at (206) 295-1464. Cost will be $100 per attendee. Attendance will be limited to 25 students. I will be sending out additional details on the class later next week.