Read about changes to Washington State law from 2009 affecting retainage withheld on public works construction projects.

1. 1
2009 Retainage Law
Changes in Washington
State:
HB 1199 and SHB 1555
Mike Purdy
Michael E. Purdy Associates
(206) 295-1464
mpurdy@mpurdy.com
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 60.28.020 RCW 60.28.021 Retainage
RCW 60.28.050 RCW 60.28.051 Retainage
RCW 39.76.010 RCW 39.76.011 Prompt Payment

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Revisions to State Law
 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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Revisions to State Law
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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Revisions to State Law
 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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http://PublicContracting.blogspot.com
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Mike Purdy’s Public Contracting Blog

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Michael E. Purdy Associates
Mike Purdy
Principal
(206) 295-1464
mpurdy@mpurdy.com
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.