A report to the membership of NFIB Washington state
During this year’s 60-day session of the Washington State Legislature, NFIB secured passage of priority bills on workers’ compensation, health care, and legal reform to help small businesses.
Unfortunately, a switch in control of the state Senate last November helped change the fortunes of small business for the worse. A number of bills harmful to Main Street entrepreneurs finally passed this year, many with bipartisan support.
Small business suffered defeats on labor, tax, and health care fronts. Surprisingly, environmental initiatives, including a proposed carbon tax and low carbon fuel standard, failed to gain traction despite Democrat control of both chambers and the governor’s office. Consequently, a carbon tax initiative will likely qualify for the November ballot.
And, if national election trends lead to a “blue wave” in state legislative races this year, small business owners should brace themselves for a flood of new and higher taxes, and expect to be awash in new regulations come 2019.
Overview
- 60 days in session – first legislative session to end on time since 2014
- 73 bills tracked that received a committee hearing or other action; supported 29 (40%), opposed 32 (44%), and monitored 12 (16%) where amendments allowed us to be neutral
- 91% success rate killing bills harmful to small business
- Three NFIB priority bills signed into law by Gov. Jay Inslee: HB 1128, SB 6157, SB 6393
- The state director and NFIB members testified more than 40 times on bills and issues important to small business
- 18 NFIB members serve in the state legislature, including current and retired members
Victories
Workers’ Compensation Pension Discount Rate
The passage of NFIB-backed SB 6393 will allow the state Department of Labor & Industries to use separate calculations for (primarily small) State Fund and (large) self-insured employers when estimating investment returns that help fund the state-run workers’ compensation system. This agency requested legislation, driven at least in part by NFIB’s repeated inquiries over the past few years, will allow the department to bank windfall earnings and buy-down the State Fund pension discount rate, eliminating one source of potentially higher workers’ compensation taxes. The bill also spares large, self-insured employers from huge rate spikes that would have otherwise resulted due to their “pay as you go” annual tax assessments. NFIB worked closely with L&I, even securing five sponsors for the companion House and Senate bills, and with the state Labor Council and Washington Self-Insured Association, to win unanimous approval of the legislation. L&I invited NFIB to attend the governor’s bill signing ceremony.
Civil Arbitration
NFIB supported Rep. Matt Shea’s HB 1128, which will expand the use of civil arbitration by increasing the cap from $50,000 to $100,000 for various legal claims. This should allow small business owners to resolve contract, payment, trademark, and other disputes much more quickly and at lower cost than waiting months or years for a trial date. Counties with populations of at least 100,000 will be required to implement civil arbitration; superior court judges in the 30 or so smaller counties may vote to require arbitration in their jurisdiction. The bill requires expedited discovery and allows either party to seek a jury trial if they are not satisfied with the results of arbitration.
Health Care Prior Authorization
NFIB helped win a minor victory with SB 6157, which will limit insurance companies’ ability to require prior authorization for the first six visits to certain medical providers. We testified that workers are often able to see chiropractors, physical or occupational therapists, or East Asian medical practitioners on the same day or within a few days of a minor workplace injury. These treatments often provide immediate or rapid relief, typically without the need for prescription medication. This allows workers to stay on the job or return to work quickly with few or no side effects from the treatment.
Health Care Reinsurance
NFIB was the first to oppose Insurance Commissioner Mike Kreidler’s plan to create a state reinsurance program to subsidize insurers for high-cost medical claims. The scheme relied on a $200 million per year tax on someone. The inability to determine who exactly would pay the tax helped tank HB 2355 and SB 6062. When Big Labor and third-party health insurance claims administrators got wind that the tax may be applied to them, they joined in opposition, scuttling the bills before either received a vote.
Defeats
Ban the Box
Despite having singlehandedly held ban the box bills at bay for the last three years, NFIB finally lost the battle this session. Bill sponsor Rep. Lillian Ortiz-Self failed to uphold her agreement with NFIB to exempt firms with fewer than 15 employees from the law. Similarly, the legislature turned down several amendments NFIB offered that would have maintained small business owners’ ability to protect their workers, customers, and places of business, while providing justice-involved individuals greater opportunities to secure jobs, not just an interview. Eight Senate Republican defections, led by Sen. Michael Baumgartner, broke our three-year streak, ensuring Senate passage of HB 1298. The bill prohibits employers from inquiring about job applicants’ criminal history or performing background checks until determining applicants are “otherwise qualified” for the position. Employers are also barred from advertising job openings in a way that discourages those with criminal history from applying. “Felons need not apply” is now a no-no under the new law. The bill does provide some exemptions for positions that have unsupervised access to children, the aged or infirm. Law enforcement and federally regulated financial services firms are also exempt from the new law.
Using Union Scale to Set Prevailing Wages
L&I will now use union collective bargaining agreements as the primary means to establish the minimum cash amount for wages and benefits, called “prevailing wages,” for public works projects. As a result, wages paid by nonunion contractors for local commercial projects will no longer be considered when the department updates county prevailing wage scales, except in limited situations where no collective bargaining agreement exists for a particular trade in a particular county. The bill, SB 5493, is expected to drive up costs for public construction projects, particularly in rural areas of the state. NFIB opposed this legislation.
Health Benefit Exchange
Under the guise of removing inactive and outdated sections of the authorizing statute, and making other technical corrections, the state Health Benefit Exchange successfully embedded itself into state law even if the federal Affordable Care Act (also know as “Obamacare”) is eventually repealed or replaced by Congress. The legislature passed HB 2516 with surprisingly strong bipartisan support, despite NFIB’s objections. Not surprisingly, the governor signed the bill into law.
Continuity of Care
House Health Care & Wellness Committee Chairwoman Rep. Eileen Cody again foiled efforts to limit health insurers’ ability to increase patient’s costs for prescription medications during a plan year. Under current practice, when prescription drug prices increase, insurers are permitted to shift those costs to consumers through higher co-pays or co-insurance obligations. When costs go down during a plan year, insurers are not required to pass along those savings to policyholders. NFIB and several patient groups testified that high cost increases, long appeals processes, and restarting “fail first” requirements often lead to pill-splitting, dose-skipping, or patients simply stopping taking their medication. This, in turn, may lead to hospitalization, increased sick day use, or lower productivity on the job. Even with moving testimony from dozens of groups and individual patients, HB 2310 failed to receive a vote in Cody’s committee. The companion, SB 6147, passed the Senate with a strong bipartisan vote. Unfortunately, it was amended in the House committee to be little more than a notification requirement. The watered-down bill passed the House but died when the Senate wisely refused to agree to the House amendments.
Equal Pay
While it is somewhat difficult to object to new and higher penalties for violating existing state equal-pay and anti-discrimination laws, employers should be concerned that HB 1506 also greatly expands workers’ ability to file complaints and lawsuits against their employer – with no consequences if the allegations are proven false. The bill would have been even worse had NFIB not secured an amendment protecting employers from simultaneous or subsequent administrative and judicial sanctions for the same violation, which would have been allowed under earlier versions of the bill. This amendment helped align the new law with the state’s existing Law Against Discrimination and Wage Payment Act, both of which allow aggrieved workers to choose between filing a complaint with a state agency or filing a lawsuit.
For more information about our legislative, regulatory, and political efforts, contact NFIB/Washington State Director Patrick Connor at 360-786-8675.
NFIB/Washington | 711 Capitol Way South | Suite 505 | Olympia, WA 98501
P 360.786.8675 | F 360.943.2456 | www.nfib.com/washington | Twitter @NFIB_WA
