The 2025 session of the Washington State Legislature is in full swing, and NFIB, as always, is on high alert not only for proposals to increase the cost of doing business but also to make it easier to sue small business owners.

A lawsuit is no small matter to small business. The law firm of Novian & Novian says, “On average, it costs employers around $75,000 to work with an employment lawyer to settle a claim before it reaches trial. However, if the case progresses to court, the expenses can skyrocket, with pre-trial defense costs easily exceeding $125,000.”

Dreaded Words

“Private Right of Action”

In combing through legislative bills, NFIB Washington looks for those four words in particular. A private right of action allows employees to sue employers directly instead of taking their grievances through the normal channels of state agencies and, depending on how the legislation is written, would allow other parties to sue on behalf employees.

Both California and Washington state have fallen into the Private Right of Action trap with the same bad consequences.

• California passed a Private Attorneys General Act (PAGA) 21 years ago as an attempt to speed up the process employees could get their complaints against employers heard and adjudicated quickly. It instead turned into cash cow for lawyers that left little for the workers. Last year in that state, an initiative headed for the November ballot sought to undo what lawyers had perverted upon the public. Seeing the writing on the wall, the legal industry agreed to some changes in the PAGA law in exchange for removing the ballot initiative.
• In 2022, Washington passed a pay-transparency law that included a private right of action enforcement mechanism. Since the law’s January 2023 start date, more than 215 class action lawsuits have been filed against employers, approximately 100 of them filed by the same named plaintiff with six to 20 cases filed by each of these people. The 215 employers are now at risk for $500 million in potential liability.

More information can be found here and here.

Because businesses must choose to settle these cases to avoid financial ruin, many settle these lawsuits at great cost to their liability insurance rates. Increased costs affect what consumers pay for goods and services.

How You Can Help

In NFIB’s latest Small Business Problems & Priorities report, which ranks the 75 issues of concern to Main Street enterprises, the Cost and Frequency of Lawsuits/Threatened Lawsuit came in at No. 72, a drop from 69 in 2020’s report.

That low standing, however, is a partially the result of the hard work NFIB members put in answering their calls to action on state and federal issues. So, keep up the good work.

Speaking of Lawsuits

The old adage that an ounce of prevention is worth a pound of cure is nowhere on better display than on the NFIB Small Business Legal Center webpage, where you’ll find a treasure trove of information on compliance and keeping yourself out of court. We highly recommend members and other small-business owners make it a habit to check it periodically.

As a sample, on the Center’s Legal Blog, you’ll find such recent stories as:

• Are You Classifying Your Employees Properly? NFIB’s New Guide to Independent Contractors Can Help.
• ADA Website Accessibility – How to Avoid Lawsuits
• Federal and State Labor Poster Obligations
• Tips for Finding a Reputable Attorney

Other posts provide insights on drug testing, protecting workers from heat, and maternity leave, just to name a few.

And in the Legal Support section, you’ll find such helpful information as, A Model Employee Handbook for Small Business.