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Legislation aims to strengthen workers comp laws governing subcontractors

Affinity Global Solutions is the impetus for legislation to crack down on rogue contractors not carrying workers compensation coverage required by state law. Photo by Tom Stromme / Bismarck Tribune

BISMARCK—Bismarck software company Affinity Global Solutions is at the center of legislation to crack down on subcontractors not paying their share of workers' compensation costs in the state.

When Affinity owners Trish and Brent Levinson decided to switch from renting to building and owning their office building, it was the height of the oil boom and general contractors were hard to find.

After hiring a local general contractor, they were making great progress on the building, but they hit a snag. They got into a conflict with the general contractor over some billing issues, Brent Levinson told the House Industry, Business and Labor Committee this week. It was five weeks before they were supposed to move into their new space and they were being pushed out of their former location, which they had been leasing month-to-month.

With the building about 90 percent complete, some interior finishing work remaining and left in a desperate situation, Brent Levinson applied with the Secretary of State to act as his own general contractor.

During that time, the Levinsons were informed by Workforce Safety and Insurance that one of the subcontractors, an outfit out of Las Vegas that had been brought in by the original general contractor, did not have workers' compensation coverage, taking them out of compliance with state law. The subcontractors told the Levinsons they would remedy the situation but never did.

Under North Dakota law, if subcontractors fail to purchase workers' compensation, the general contractor becomes responsible — something the Levinsons weren't aware of as first-time contractors.

When the Las Vegas subcontractor left the state without paying for coverage, the Levinsons were left holding the bill for as much as $80,000 in unpaid premiums, as well as $35,000 in legal fees spent fighting their case.

The Levinsons' plight led Rep. George Keiser, R-Bismarck, to introduce HB 1137 to add to WSI's investigative and enforcement abilities in these cases, giving the agency more "authority to shut down bad operators."

The legislation gives WSI the ability to issue cease-and-desist orders to stop uncovered companies from doing business.

Anne Jorgenson Green, director of legal services at WSI, said the agency can only seek injunctive relief from the court system, which is a year- to two year-process.

When companies don't pay workers compensation premiums, coverage of claims falls to a statewide fund into which all employers pay, essentially leaving the rest of the employers in the state to pick up the tab.

"It's really important to protect others out there," Keiser said.

While no claims were filed in the Levinson case, they were still responsible for the unpaid insurance plans.

"The general contractors want us to get this right," Keiser said, and Russ Hanson, executive vice president of the Associated General Contractors of North Dakota, was there to voice his organization's support of the bill.

A judge ruled the Levinsons are responsible for the portion of the coverage on their own project, not the full $80,000, but, with lack of cooperation from the subcontractor to supply payroll records, it's hard to know what the Levinsons' portion would be. The legislation also contains caveats to help WSI obtain this type of detailed information, such as payroll information broken down by contract or job.

Brent Levinson said he is not certain the legislation addresses everything that happened in his case but the fact that the issue is being discussed is a good first step.