If you’re a contractor working on public works projects in Washington State, you’ve likely encountered references to “leased employees” and “Affidavit of Wages Paid” requirements. Understanding these terms is critical for compliance with Washington’s Prevailing Wage Law, as failure to properly document and pay leased workers can result in serious penalties, contract disputes, and legal complications.
This guide explains what leased affidavit employees are, how they’re used in Washington State construction, and what documentation contractors must file to remain compliant.
What Is a Leased Employee?
A leased employee in Washington State refers to a worker provided to your company by a third-party organization rather than hired directly. These arrangements are common in construction and public works where workforce flexibility is needed.
Common Leased Employee Arrangements:
Professional Employer Organizations (PEOs): Companies that handle HR, payroll, benefits, and compliance for workers who perform services for client companies. The PEO is the employer of record while workers perform tasks under the client company’s direction.
Staffing Agencies: Temporary employment agencies that recruit, hire, and assign workers to client companies. When a staffing agency handles employment logistics, workers remain employees of the agency while working at your job site.
Employee Leasing Companies: Organizations that lease employees to other businesses, managing employment functions while workers operate under the client’s operational control.
Labor Contractors: Entities that supply skilled or unskilled labor to contractors, particularly common in construction.
Key Distinction:
Direct Employees: Your company handles hiring, payroll, taxes, benefits, and all employment compliance.
Leased Employees: A third party handles employment functions, but workers perform services at your direction on your projects.
This shared responsibility is why Washington State requires special documentation for public works projects.
What Is an Affidavit of Wages Paid?
The Affidavit of Wages Paid is a legal document required by the Washington State Department of Labor & Industries (L&I) for all public works projects. This sworn statement certifies that all workers—including leased employees—were paid in accordance with prevailing wage requirements.
Purpose:
Worker Protection: Ensures all laborers on public projects receive fair wages as mandated by state law.
Compliance Verification: Provides L&I with documentation that contractors followed prevailing wage laws.
Legal Accountability: Creates a sworn record for enforcement actions if wage violations are discovered.
When Required:
The Affidavit must be filed after project completion for:
- All public works construction projects
- Projects subject to Washington’s Prevailing Wage Law (Chapter 39.12 RCW)
- Prime contractors and all subcontractors
- Any company using leased employees on the project
Even if the leasing company is the legal employer, your company as the contractor must ensure proper affidavits are filed.
Washington State Prevailing Wage Law
Washington’s Prevailing Wage Law (Chapter 39.12 RCW) requires workers on public works projects to receive wages and benefits at or above prevailing rates for their trade and locality.
What Constitutes Public Works?
- Construction, repair, or improvement of public buildings, highways, roads, bridges, or facilities
- Projects funded wholly or partially by state, county, city, or other public funds
- Projects exceeding specific dollar thresholds
Who Must Comply?
- Prime contractors
- All subcontractors at any tier
- Leasing companies (PEOs, staffing agencies, employee leasing firms)
- All workers, including leased employees, must receive prevailing wages
The law explicitly includes leased employees to prevent contractors from circumventing prevailing wage requirements through creative employment structures.
The Intent and Affidavit Process
Washington State requires a two-step documentation process:
Step 1: Statement of Intent to Pay Prevailing Wages
Before starting work, contractors, subcontractors, and leasing companies must file a Statement of Intent through the “My L&I” online portal declaring they will pay prevailing wages.
Requirements:
- Filed before work begins
- Includes project details, contract amount, contractor information
- Required from all entities providing workers
Step 2: Affidavit of Wages Paid
After project completion, each entity must file an Affidavit of Wages Paid certifying compliance.
Requirements:
- Filed through My L&I portal after completion
- Includes worker names, classifications, hours worked, wages paid
- Sworn statement confirming prevailing wage compliance
Responsibilities for Leased Employees
Contractor Responsibilities:
Verify Intent Filing: Ensure the leasing company filed a Statement of Intent before leased employees begin work.
Monitor Compliance: Confirm leased employees receive prevailing wages, even though the leasing company handles payroll.
Coordinate Affidavits: Work with the leasing company to ensure they file the required Affidavit after project completion.
Maintain Records: Keep documentation proving proper wages were paid.
Final Compliance: Cannot receive final payment until all Intents and Affidavits (including from leasing companies) are filed.
Leasing Company Responsibilities:
File Statement of Intent: File Intent for each public works project where they provide workers.
Pay Prevailing Wages: Ensure all leased employees receive wages meeting or exceeding prevailing rates.
File Affidavit: Submit sworn Affidavit certifying compliance after project completion.
Maintain Payroll Records: Keep detailed certified payroll records available for L&I inspection.
Cooperate with Prime Contractor: Provide documentation to the contractor proving compliance.
Common Scenarios
Construction Company Using PEO
A general contractor uses a PEO for HR and payroll. On a public school renovation:
- PEO files Statement of Intent before workers start
- PEO pays prevailing wages to all workers
- PEO files Affidavit after completion
- General contractor verifies filings before requesting final payment
Subcontractor Using Staffing Agency
An electrical subcontractor uses temporary electricians from a staffing agency:
- Both subcontractor and staffing agency file separate Intents
- Staffing agency pays prevailing electrician wages (not standard temp rates)
- Both file separate Affidavits after completion
- Prime contractor verifies both have filed proper documentation
Labor Contractor Providing Workers
A prime contractor uses a labor contractor for general laborers:
- Labor contractor files Intent as a subcontractor
- Labor contractor pays prevailing laborer wages
- Labor contractor maintains certified payroll and files Affidavit
- Prime contractor reviews compliance before project closeout
Documentation and Legal Requirements
Required Records:
- Certified weekly payroll records
- Copies of filed Statements of Intent
- Completed Affidavits of Wages Paid
- Contracts between contractors and leasing companies
- Prevailing wage determinations for each classification
Notarization Requirements:
While My L&I handles most electronic filing, certain related documents may require notarization:
PEO Service Agreements: Contracts establishing the legal employment relationship often require notarization.
Affidavits for Disputes: Affidavits submitted as legal evidence typically require notarization.
Subcontractor Agreements: Formal subcontracts for public works often include notarized signature pages.
Modern online notarization services like BlueNotary.us streamline execution of these legal documents, allowing parties in different locations to notarize agreements remotely—particularly valuable when coordinating between contractors, subcontractors, and leasing companies across Washington State.
Record Retention:
Washington State requires retaining prevailing wage records for at least three years after project completion.
Penalties for Non-Compliance
Administrative Penalties:
- Withholding of final payment until all filings are complete
- Contractor debarment from public works for up to three years
- Monetary fines per violation
- Interest on underpaid wages
Legal Consequences:
- Breach of contract claims
- False affidavit charges (sworn statement violations)
- Worker complaints and legal action
- Joint liability for subcontractor/leasing company violations
Reputation Damage:
- Public record of violations
- Restrictions on bidding future public works
- Increased bonding costs or bond refusal
Best Practices
For Contractors:
- Pre-qualify leasing companies for public works experience
- Include clear prevailing wage requirements in contracts
- Monitor compliance—don’t assume leasing companies are complying
- Establish procedures for Intent/Affidavit coordination
- Document everything thoroughly
For Leasing Companies:
- Understand Washington’s prevailing wage laws
- File Statements of Intent immediately when workers are assigned to public works
- Configure payroll systems to handle prevailing wage rates
- Track which projects are public works requiring special documentation
- Keep client contractors informed of compliance status
Use Technology:
- Project management software to track public works projects
- Payroll systems configured for prevailing wages
- Document management for Intent and Affidavit tracking
- Digital verification tools like QR codes generated through services like the QR code generator on worker badges, allowing supervisors to quickly verify proper classification and wage rates
Frequently Asked Questions
Q: Who pays prevailing wages to leased employees—the contractor or the leasing company?
A: The leasing company (legal employer) must pay prevailing wages, but the contractor ensures compliance and cannot receive final payment until proper documentation is filed.
Q: Can leased employees be paid less if the leasing company isn’t familiar with public works?
A: No. All workers on public works must receive prevailing wages regardless of employment arrangement or employer’s familiarity.
Q: What if a leasing company refuses to file an Affidavit?
A: The contractor cannot receive final payment and may need legal remedies against the leasing company.
Q: Do prevailing wages apply to leased office staff?
A: Prevailing wage laws apply to construction labor on public works. Office staff not performing hands-on construction work are generally exempt.
Final Thoughts
Understanding leased affidavit employees in Washington State is crucial for public works compliance. These workers—provided by PEOs, staffing agencies, or leasing companies—must receive the same prevailing wage protections as directly hired employees, with specific documentation required to prove compliance.
The Affidavit of Wages Paid serves as legal certification that all workers, including leased employees, received proper wages. Both contractors using leased workers and the companies providing them share responsibility for filing Statements of Intent before work begins and Affidavits after completion.
Failure to comply can result in withheld payments, penalties, debarment, and legal action. For contractors working with leasing companies, establish clear contractual requirements, monitor compliance, and maintain comprehensive documentation. For leasing companies, understand that public works requires modified procedures to meet prevailing wage requirements.
When documentation requires notarization—for PEO agreements, subcontracts, or legal affidavits—modern online notarization services streamline the process, allowing remote execution without traditional in-person delays.
By following Washington State’s prevailing wage requirements and properly documenting leased employee arrangements, contractors and leasing companies protect workers, maintain compliance, and avoid costly penalties.
Need online notarization for employment agreements, subcontracts, or legal affidavits? Visit BlueNotary.us for fast, secure remote notarization services available 24/7.
