Washington Contractor and Subcontractor Rules

Washington State imposes a structured regulatory framework on both contractors and their subcontractors, governing registration, bonding, insurance, and liability at every tier of a construction project. These rules apply across residential, commercial, and public works sectors and are enforced primarily by the Washington State Department of Labor & Industries (L&I). Understanding how prime contractor and subcontractor obligations interact — and where each party bears independent legal responsibility — is essential for anyone operating within or procuring services from Washington's construction sector.

Definition and scope

Under RCW 18.27, a contractor is any person, firm, corporation, or other entity that performs construction, alteration, repair, improvement, or demolition work on real property for compensation. A subcontractor is any contractor hired by a prime (general) contractor — rather than directly by the property owner — to perform a defined portion of that work.

Washington's contractor registration law requires that both general contractors and subcontractors maintain current registration with L&I before offering or performing construction services. Registration is not voluntary: RCW 18.27.020 makes it unlawful to act as a contractor without a valid registration. This obligation applies equally to subcontractors operating at the second tier or below on a project.

Scope and coverage limitations: The rules described on this page are specific to Washington State law and L&I jurisdiction. Federal contractors operating exclusively under federal procurement regulations, tribal enterprises operating within sovereign tribal jurisdictions, and out-of-state contractors who perform no physical work within Washington's borders are not covered by RCW 18.27. Additionally, property owners who perform construction on their own residence without compensation fall outside the registration requirement. This page does not address contractor licensing in other states or federal contractor qualification standards.

For a full overview of the contractor services landscape in Washington, the Washington Contractor Authority index provides the broader regulatory and service structure.

How it works

Washington's contractor-subcontractor relationship is governed by layered obligations: both tiers must independently satisfy registration, bonding, and insurance requirements.

Registration requirements at each tier:

1. Prime (General) Contractor — Must register with L&I, maintain a minimum surety bond of $12,000 (RCW 18.27.040), and carry public liability and property damage insurance. Full registration details are covered under Washington Contractor Registration Process.
2. Subcontractor — Must independently register with L&I, carry its own bond and insurance at the same minimums. A subcontractor cannot rely on the prime contractor's bond to satisfy its own registration obligation.
3. Specialty Subcontractors — Trades including electrical, plumbing, and HVAC require additional state licensing beyond base contractor registration. A registered subcontractor performing electrical work must also hold a valid electrical contractor license issued under RCW 19.28. Comparable requirements apply to Washington Plumbing Contractor Services and Washington HVAC Contractor Services.

Prime contractor liability for subcontractors:

Under RCW 18.27.114, a prime contractor who subcontracts work is jointly and severally liable with that subcontractor for unpaid wages owed to the subcontractor's workers, effective January 1, 2019. This liability attaches regardless of whether the prime contractor had direct knowledge of the wage violation. The provision is limited to the construction industry and does not extend to staffing agencies supplying workers to the subcontractor.

Workers' compensation and industrial insurance must be reported by whichever employer — prime or sub — directly employs the workers performing the work. Misclassification of subcontractors as independent contractors to avoid industrial insurance premiums is a violation audited by L&I. Details on employer obligations are addressed under Washington Contractor Workers' Compensation.

Common scenarios

Scenario 1: General contractor hiring an unregistered subcontractor
If a prime contractor awards a subcontract to a firm that is not registered with L&I, the prime contractor may face penalties under RCW 18.27.100. License verification before award is a standard compliance step; see Washington Contractor Verify License for the L&I lookup tool.

Scenario 2: Subcontractor on a public works project
Public works projects introduce additional obligations. Subcontractors on public works must comply with prevailing wage requirements under RCW 39.12, independent of the prime contractor's compliance. Failure by a subcontractor to pay prevailing wages triggers liability for both the subcontractor and, in some circumstances, the awarding agency. The full framework is described under Washington Prevailing Wage Requirements and Washington Public Works Contractor Requirements.

Scenario 3: Specialty trade subcontracted within a residential project
A general contractor building a single-family home in Washington who subcontracts roofing work must verify that the roofing subcontractor holds both a current L&I contractor registration and any required specialty endorsements. Washington Roofing Contractor Services outlines the specific registration and insurance profile applicable to that trade.

Decision boundaries

Prime contractor vs. subcontractor distinction:
The defining boundary is the contracting party. A prime contractor has a direct agreement with the property owner or public agency. A subcontractor's agreement is with the prime contractor, not the owner. This distinction determines lien rights under RCW 60.04 — subcontractors must file a Notice to Customer and comply with lien deadlines independently from the prime. Washington Contractor Lien Laws covers these mechanics in detail.

Independent contractor vs. employee:
L&I applies an economic reality test to determine whether a subcontractor is a true independent contractor or a de facto employee for industrial insurance purposes. A subcontractor operating under the prime's direct supervision, using the prime's tools, and lacking other clients is likely to be reclassified as an employee — triggering retroactive premium liability for the prime.

Violations and enforcement:
L&I can issue stop-work orders, assess civil penalties, and suspend registrations. Washington Contractor Violations and Penalties details the penalty schedule. Complaints against contractors or subcontractors can be initiated through the process described at Washington Contractor Complaint Process.

For compliance planning across bond, insurance, and tax dimensions, see also Washington Contractor Bond Requirements, Washington Contractor Insurance Requirements, and Washington Contractor Tax Obligations.

References

• Washington State Department of Labor & Industries — Contractor Registration
• RCW 18.27 — Contractors (Washington State Legislature)
• RCW 39.12 — Prevailing Wages on Public Works (Washington State Legislature)
• RCW 60.04 — Mechanics' and Materialmen's Liens (Washington State Legislature)
• RCW 19.28 — Electricians and Electrical Installations (Washington State Legislature)
• Washington State Department of Labor & Industries — Prevailing Wage
• Washington State Department of Labor & Industries — Industrial Insurance