Anti-Independent-Contractor, Cap-and-Trade Bills on tap Next Week

Date: January 31, 2020

State Director Patrick Connor reports from Olympia on the small-business agenda for the legislative week ending January 31

Legislative committees added more executive sessions during Week 3 of the 2020 session of the Washington State Legislature, amending and voting on legislation in advance of next Friday’s deadline for bills to pass policy committees.

Small Business Day 2020

Limited space is still available for NFIB’s Washington Small Business Day at the Capitol 2020. If you haven’t yet registered, please do so now.

The event will be held Tuesday, February 4, at the Hilton Garden Inn Olympia. NFIB’s block is closed, but rooms may still be available. Contact the hotel directly at (360) 236-9934, or online, for reservations.

At least two bills of interest to NFIB members will be heard in legislative committees that day. NFIB will provide shuttle service to the Capitol Campus for Small Business Day participants interested in testifying or signing-in a position on the bills. NFIB is opposed to both.

  • At  8 a.m., the Senate Labor & Commerce Committee will hear SB 6276, making freelancers employees of their clients. NFIB’s bill analysis is available online.
  • SB 5981, cap and trade, is scheduled for public hearing at 10 a.m. in the Senate Energy, Environment  & Technology Committee.

In addition to committee hearings, participants will receive briefings from Senate Republican Leader Sen. Mark Schoesler, House Republican Leader Rep. JT Wilcox, Tax Structure Work Group Co-chairwoman Rep. Noel Frame, WPC’s Small Business Center Director Mark Harmsworth, and a panel from the Workforce Board. Senate Democrats were invited, but are unable to send a member of their leadership team.

Lunch will be provided.

Small Business Bill of Rights

NFIB’s priority bills, HB 2577 and SB 6408, both received committee hearings this week.

The Senate Financial Institutions, Economic Development & Trade Committee approved SB 6408 Thursday, and sent it to the Senate Ways & Means Committee for further consideration.

HB 2577 was heard Friday, January 31, and is scheduled for a committee vote Wednesday, February 5.

In addition to great comments introducing the bills by sponsors Sen. Lynda Wilson and Rep. Andrew Barkis, Gov. Jay Inslee’s office testified in support along with NFIB at both hearings. As you might imagine, that raised a few eyebrows among committee members. Wilson and Barkis are both former NFIB Washington Leadership Council members.

Labor

The Senate Labor Committee this week heard several bills that would upend the state’s unemployment and workers’ compensation systems. NFIB signed-in opposed to each of these bills.

  • HB 2740 would prohibit an employer from refusing to hire an applicant who tests positive for marijuana. An amendment was proposed to exclude certain safety-sensitive jobs.
  • SB 6234 would limit the use of third-parties, including lawyers, to protest unemployment insurance claims.
  • SB 6235 would provide unemployment benefits to workers who quit due to a change in job duties, but don’t receive a satisfactory raise commensurate with the new responsibilities.
  • SB 6239 would apply public works apprentice utilization requirements to every subcontractor, regardless of the number of workers actually needed on the project.
  • SB 6552 would eliminate the requirement for injured workers to miss three days of work before qualifying for workers’ compensation time-loss benefits.

NFIB also opposed HB 2516, creating a Secure Choice Retirement Program. The bill would require small employers to auto-enroll workers into a state-approved IRA, unless the worker opts out. NFIB successfully negotiated several amendments with AARP and the Employment Security Department to:

  • reduce worker opt-in/opt-outs or contribution amount changes
  • limit recordkeeping penalties
  • consolidate program audits with regularly scheduled unemployment insurance and Paid Family and Medical Leave audits
  • ensure worker and employer representatives are added to the advisory board if the ESD director creates one.

This bill is expected to be amended and approved in committee next week.

Environment

The big (bad) news this week was House passage of HB 1110, enacting a low carbon fuel standard. The bill received public hearings and passed the House last year, so was sent directly to the House floor without any opportunity for amendment. House Republicans put up a spirited opposition to the bill, which passed on a party-line vote, 52-44.

Taxes

Meanwhile, Senate Republicans offered more than two dozen floor amendments during debate on SB 6492, a bill correcting last year’s Business & Occupation (B&O) surcharge legislation, HB 2158. Republicans also argued that a $1 billion windfall in anticipated state revenue collections eliminate the need for new or higher taxes to pay for the free college for some program. All Republican amendments were defeated.

The version that passed the Senate on Thursday would impose a new 1.75% B&O tax rate on service activities on firms with $1 million or more in annual gross sales. That’s down from 1.8% on selected service businesses under last year’s HB 2158. The existing 1.5% rate would still apply to service businesses with less than $1 million in annual gross receipts.

Unfortunately, increases in the Small Business Tax Credit, included in the bill as introduced, were stripped from the substitute bill that passed the Senate.

And, advanced computing businesses – like Microsoft, which took to the pages of The Seattle Times last year calling for the tax hike – managed to get a lower tax rate too. Rather than the 2% or 2.5% tax imposed last year on tech firms with a minimum of $25 billion or $100 billion (yes, BILLION) in worldwide revenues, respectively, SB 6492 imposes a rate of 1.22%. But Big Tech won’t actually pay that amount of tax.

The bill still includes a cap on how much tax Big Tech will pay. The cap was raised from $7 million to $9 million annually. And, the cap still applies to all affiliated entities of these advanced computing businesses combined. One imagines, then, that Amazon plus Amazon Cloud Services plus Whole Foods would together pay a maximum of $9 million. Keep in mind that 1.22% of $25 billion, the threshold for the new tax to apply under last year’s law, is $305 million. So really, the effective tax rate under SB 6492 would be 0.036%, at most, for tech firms earning a meager $25 billion. It drops to 0.009% for those global tech giants earning $100 billion annually.

The bill is scheduled for public hearing in the House Finance Committee at 11 a.m. Monday, February 3.

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