Senate Bill No. 464
(By Senator Chafin)
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[Introduced February 20, 1995; referred to the Committee
on the Judiciary.]
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A BILL to amend and reenact section one-d, article two, chapter
twenty-three of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to workers'
compensation; and primary contractor liability.
Be it enacted by the Legislature of West Virginia:
That section one-d, article two, chapter twenty-three of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 2.
EMPLOYERS AND EMPLOYEES SUBJECT TO CHAPTER;
EXTRATERRITORIAL COVERAGE.
§23-2-1d.
Primary contractor liability; definitions;
applications and exceptions; certificates of good
standing; reimbursement and indemnification; termination of contracts; effective date;
collections efforts.
(a) For the exclusive purposes of this section, the term
"employer" as defined in section one of this article shall
include any primary contractor who regularly subcontracts with
other employers for the performance of any work arising from or
as a result of the primary contractor's own contract. Provided,
That a subcontractor shall not include one providing goods rather
than services In the event that such a subcontracting employer
defaults on its obligations to make payments to the commissioner,
then such primary contractor shall be liable for such payments.
Notwithstanding the foregoing, nothing contained in this section
shall extend or except to such primary contractor or
subcontractors the provisions of sections six, six-a or eight of
this article. This section is applicable only with regards to
subcontractors with whom the primary contractor has a contract.
It is not applicable to the primary contractor with regard to
sub-subcontractors However, a subcontractor for the purposes of
a contract with the primary contractor can itself become a
primary contractor with regard to other employers with whom it
subcontracts.
(b) A primary contractor may avoid initial liability under
subsection (a) of this section if it obtains from the
commissioner, prior to the initial performance of any work by the
subcontractor's employees, a certificate that the subcontractor
is in good standing with the workers' compensation fund.
(1) Failure to obtain the certificate of good standing prior
to the initial performance of any work by the subcontractor shall
result in the primary contractor being equally liable with the
subcontractor for all delinquent and defaulted premiums, premium
deposits, interest and other penalties arising during the life of
the contract or due to work performed in furtherance of the
contract: Provided, That the commissioner shall be entitled to
collect only once for the amount of premiums, premium deposits
and interest due to the default, but the commissioner may impose
other penalties on the primary contractor or on the
subcontractor, or both.
(2) In order to continue avoiding liability under this
section, the primary contractor shall request that the
commissioner of the bureau of employment programs inform the
primary contractor of any subsequent default by the
subcontractor. In the event that the subcontractor does default, the commissioner shall then notify the primary contractor of the
default by placing a notice in the first class United States
mail, postage prepaid, and addressed to the primary contractor at
the address furnished to the commissioner by the primary
contractor. Such mailing shall be good and sufficient notice to
the primary contractor of the subcontractor's default. However,
the primary contractor shall not become liable under this section
until the first day of the calendar quarter following the
calendar quarter in which the notice is given and then such
liability shall only be for that following calendar quarter and
thereafter and only if the subcontract has not been terminated:
Provided, That the commissioner shall be entitled to collect only
once for the amount of premiums, premium deposits and interest
due to the default, but the commissioner may impose other
penalties on the primary contractor or on the subcontractor, or
both.
(c) In any situation where a subcontractor defaults with
regard to its payment obligations under this chapter or fails to
provide a certificate of good standing as provided for in this
section, such default or failure shall be good and sufficient
cause for a primary contractor to hold the subcontractor responsible and to seek reimbursement or indemnification for any
amounts paid on behalf of the subcontractor to avoid or cure a
workers' compensation default, plus related costs including
reasonable attorneys' fees, and to terminate its subcontract with
the subcontractor notwithstanding any provision to the contrary
in the contract.
(d) The provisions of this section are applicable only to
those contracts entered into or extended on or after the first
day of January, one thousand nine hundred ninety-four.
(e) The commissioner may take any action authorized by
section five-a of this article in furtherance of his or her
efforts to collect amounts due from the primary contractor under
this section.
NOTE: The purpose of this bill is to tighten up the
liability provision for primary contractors under the workers'
compensation laws.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.