Independent Business Association

 WEEKLY LEGISLATIVE REPORT

2/11/08

 

ACTION ALERT - Important Events This Week

 

Tuesday is the last day for legislation affecting the state’s budget to pass out of the budget committees in the House and the Senate.  Wednesday begins a week of full-time “floor” session where legislation so far approved by all of the committees is voted on by the full body of origin - meaning House Bills in the House and Senate Bills in the Senate.  This is a critical time for you to call your two state Representatives and one state Senator on the following issues – even if you have called them on these issues previously:

 

·        Workplace Bullying – HB 2421  Click Here for more information

 

·        Benefits During Appeal – Industrial Insurance  HB 3139 &SB 6750  Click Here for more information

 

·        Paid Family Leave - HB 2665 and SB 6280  Click Here for more information

 

·        Ex Parte Communication With Medical Provider After Appeal  HB 2980   Click Here for more information

 

·        Local Business License Clarification for new Streamlined Sales Tax Law – HB 3126 - Click Here for more information

 

·        Licensing of HVAC/R Contractors and Certifying HVAC/R Workers That Will Increase The Cost of HVAC/R Work – HB 2966 and SB 5831  Click Here for more information

 

Also, at the end of this Alert is a summary of the WINS and LOSSES so far for small businesses during this 2008 legislative session

 

How To Contact Your Legislators

We recommend you contact your legislators on several issues discussed below.  First, you must know who your legislators are.  You can identify who your legislators are on the Internet at www.ibaw.net/legfind  or by calling 1-800-562-6000.  We recommend you call your Legislator’s offices directly and deliver your message by phone, then follow-up with a short written note.  We are providing you sample messages/letters for major issues now on the move.

 

Important Events Last Week

This past week was the third week of the 2008 legislative session.  There where hearings on:

This coming week will be very active with Legislative Committees meeting up to 14 hours on some days and IBA will be there representing you.  Your calls to your legislators will be critical.

  • NEW State Labor Relations Act - SB 6835  This is a late legislative introduction to establish a state labor relations act to govern union representation in small businesses that are not subject to the National Labor Relations Act.  The Senate Commerce, Labor and Research Development Committee had a hearing on this legislation on Monday at 10am and IBA expressed strong opposition to it.   For more information go to (click on the following link):  www.ibaw.net/6835 
  • Health Care Reform - HB 2640  Sets up a new Washington State health care program for all residents that provides both preventative care.  The House Health Care and Wellness Committee had a hearing on this legislation on Tuesday.  IBA opposed the legislation.  For more information go to (click on the following link):  www.ibaw.net/2640   
  • ASB 6614 Authorizing Exemplary Damages in Lawsuits  Authorizes punitive-like damage awards in most civil lawsuits such as business liability or employment liability issues.  This legislation was heard by the Senate Judiciary Committee on Thursday.  IBA opposed this legislation.  For more information go to (click on the following link):  www.ibaw.net/6614
  • Brinks Court Decision Correction – SB 6867  Legislation to correct the Brinks court decision was heard by the Senate Commerce, Labor and Research Development Committee on this legislation on Tuesday.  IBA supported this legislation.  For more information go to (click on the following link):  www.ibaw.net/6867   If you are interested in attending call IBA at 1-800-562-9989.

 

After the four three weeks, there are already over 1800 legislative proposal introduced, and IBA has identified that 177 of them affect most small businesses.  Below is a list of some of the most significant of the legislative bills so far introduced that affect small businesses and that remain under active consideration:

 

Legislative Issues

Below is a summary of the major issues affecting small businesses that IBA is working on.  Click on the subject area of interest to go to those issues:

 

Health Care

·        HB 2537 – Heath Insurance Partnership Revisions:  In 2007 the Legislature passed the Health Insurance Partnership (HIP) intended to provide health insurance to small businesses through a state contracted health insurance “connector”-style program like that recently implemented in Massachusetts.  IBA expressed a number of significant concerns about this legislation in 2007 and indicated that they felt the proposal would not work.  The board set up to implement the HIP discovered in late 2007 that they could not effectively implement the HIP plan as designed by the 2007 Legislature.  HB 2537 will make changes to the HIP legislation passed in 2007 to exempt it from various insurance law requirements and provide a subsidy for start up funding.  IBA strongly believes the HIP program will only be able to offer higher than market cost health insurance to small businesses.  Yet, the state is spending millions in the development and implementation of a solution not likely to benefit most small businesses. 

 

·        HB 2536 – Health Care Study:  The 2008 Legislature is proposing the establishment of a nine member work group appointed by the Governor in 2008 to examine options for improving access to quality, affordable health care. The work group is required to conduct meetings across the state to seek public input.  The work group will contract for an independent economic analysis of four separate health care proposals to provide affordable health coverage:  (1) allowing health carriers to offer a health plan with a limited scope of benefits; (2) expanding the Health Insurance Partnership to include individuals and large employer groups; (3) providing a guaranteed benefit plan for all Washingtonians; and (4) covering all Washingtonians.  The work group is required to report its findings and recommendations by December 1, 2008.  IBA is not making any recommendation on HB 2536.

 

Paid Family Leave Programs

·        HB 2665 and SB 6280 Paid Family Leave  The 2007 Legislature passed a state Paid Family Leave law that is available to all employees and that is scheduled to take effect in October 2009.  But the 2007 Legislature failed to fund this new unemployment-like $250 weekly benefit for those taking this leave and set up a workgroup to recommend a funding source.  That workgroup has made recommendations to fund this new leave temporarily from the state’s general fund from general tax revenues.  Expect new employee or employer taxes in the future to fund this leave.  But the Paid Family Leave legislation has many other serious problems that will impact small businesses.  IBA opposed the state Paid Family Leave legislation and will continue to do so, but it is unlikely that it can be repealed with the current makeup of the Legislature so IBA will also be working to minimize its impacts on small businesses.  You are encouraged to contact your legislators in opposition to HB 2665 and SB 6280.  For more information about HB 2665 and SB 6280 and a sample letter to your legislators, go to www.ibaw.net/2665-6280

 

Employment Issues

·        HB 2421 and SB 6622  Workplace Bullying  Employers will be prohibited from engaging in or allowing any employees to engage in any workplace “bullying” which is defined as conduct “with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer's legitimate business interests” if proposed legislation becomes law.   Examples of such acts would include but not be limited to “repeated infliction of verbal abuse such as the use of derogatory remarks, insults, and epithets; verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating; or the gratuitous sabotage or undermining of a person's work performance.”  You are encouraged to contact your legislators in opposition to HB 2421.  For more information about HB 2421 and SB 6622 and a sample letter to your legislators, go to www.ibaw.net/2421-6622

 

·        SB 6835  State Labor Relations Act  This legislation proposes to establish a state labor relations act to govern union representation within small businesses that are currently not covered by the National Labor Relations Act.  It would set up complex regulations like those in the National Labor Relations Act that small businesses would have to comply with relative to whether their employees will be represented by a labor union.  IBA is opposing SB 6835.  For more information about SB 6835 and a sample letter to your legislators, go to www.ibaw.net/6835

 

·        HB 2602 – Employment Leave For Domestic Violence, Etc.:  An employee who is a victim of or whose family member is a victim of domestic violence, sexual assault, or stalking may take reasonable leave from employment in order to participate in legal proceedings, receive medical treatment, or obtain other necessary services.  There is a requirement for reasonable notice to the employer and the employer has an obligation to hold the employee’s position, maintain their seniority and accrued benefits, and keep all information confidential. IBA Position:          OPPOSE HB 2602

 

·        HB 2717 – Minimum Wage Exemptions:  Several federal law exemptions to overtime compensation related to individuals employed in agriculture are added to Washington State law.  The include but are not limited to:  transporting or preparing for transportation fruits and vegetables in their natural state, transporting or preparing for transportation fruits and vegetables between the farm and any point within the state, working on a farm in connection with dairying, etc. 

 

Taxes

In 2007, the Legislature adopted “streamlined sales and use tax,” that changes Washington’s sales tax system to a destination-based system instead of an origin-based sales tax system.  The effective date of this legislation is July 1, 2008.  The Department of Revenue held a series of workshops last year all across the state for small business owners to ask questions and express concerns about the new law.  The Department’s website (http://dor.wa.gov/content/Home/Default.aspx) has a long list of helpful tools to assist small business owners in implementing the new system.

 

Additionally, efforts are under way to address the local B&O apportionment issue.  Legislation passed in 2003 required local governments to adopt “model ordinances” for levying local B&O taxes in a consistent fashion to ease administration and ensure that businesses are not being assessed on more than 100 percent of their gross receipts.  An issue has been discovered since the 2003 legislation dealing with the “location of a majority of customer contact” that needs to be resolved..  There are also efforts under way within the business community to see if  local collection of B&O taxes could be combined onto one form and administered by the Department of Revenue, easing compliance and ensuring businesses aren’t charged on more than 100 percent of their business activities.

 

  • HB 2380:  Will provide additional tax credits to small businesses to assist them in complying with the new “streamlined sales and use tax” system adopted in 2007 (effective July 1, 2008).  The original SST bill provided some relief, but it didn’t cover enough businesses to be effective.  IBA Position:  SUPPORT

 

  • HB 3126:  There is a major concern about the new “streamlined sales tax” law about local governments using this new destination-based system to claim “nexus” and charge businesses additional B&O taxes and business license fees.  Legislation has been drafted to address this problem and we’re working closely with the Chair and members of the House Finance Committee to pass this important legislation.  Simply claims that local governments cannot use the new streamlined sales and use tax law to claim nexus and charge businesses with local B&O taxes and business license fees.  IBA Position:  SUPPORT

 

  • HB 2965:  Calls for a feasibility study to consider the practicalities of turning over local B&O tax collection duties to the Department of Revenue.  While there are concerns with giving additional responsibilities to the state, small businesses aren’t currently getting a fair deal from local governments when it comes to paying local B&O taxes.  IBA Position:  SUPPORT

 

Industrial Insurance (Workers’ Compensation)

  • HB 3139 and SB 6750 – Benefits During Appeal:  Currently, when there is a decision to end time-loss benefits and the worker appeals, the worker is not paid any additional time-loss benefits while the appeal is pending.  However, in some cases, the Department of Labor & Industries can continue to pay “conditional” time-loss benefits while an appeal is pending and if the worker losses the appeal, the worker is supposed to pay back the “conditional” time-loss benefits they received.  Under this legislation, an injured worker who appeals a decision to stop paying time-loss benefits would be paid time loss benefits during the appeal unless the Board of Industrial Insurance Appeals orders that the benefits be stopped.  The big concern for small business owners is that most workers who receive time-loss benefits while an appeal is pending and who lose the appeal will not be able to pay back the time-loss benefits they should not have received.  In addition, the Department has the authority to waive the repayment of benefits in certain situations and that waiver is used quite often.  For more information about HB 3139 and SB 6750 and a sample letter to your legislators, go to www.ibaw.net/3139-6750   IBA Position:  OPPOSE HB 3139 and SB 6750

 

  • HB 2980 – Ex Parte Communication With Medical Provider After Appeal:  Prohibits the employer or the Department from having communications with an injured worker’s physician after an appeal of an industrial insurance claim is filed.  This would limit on-going claim management as well make the appeals process more challenging.  IBA Position:  OPPOSE HB 2980

 

  • HB 3139 – Redefinition of Independent Contractors:  The 2007 Legislature set up an underground economy task force for the construction industry.  One of the issues identified by the task force was that there were a significant number of individuals in the construction industry being identified as “independent contractors” who are not.  The task force found that there are effectively two different definitions of who is or is not an “independent contractor” in the state’s industrial insurance and unemployment insurance laws.  HB 3139 would “blend” these two definitions into one.  IBA Position:  Position Pending

 

Unemployment Compensation

  • HB 2655/SB 6409:  Provides that the Employment Security Department more flexibility to consider employers with delinquent tax payments to be “qualified employers” for experience rating purposes.  A “non-qualified” employer because of delinquent taxes pays the highest state unemployment tax rate.  IBA Position: SUPPORT 

 

  • HB 2656/SB 6410:  Makes corrections to two statutory references in the Employment Security Act regarding predecessor and successor employer contribution rates.  IBA Position:            SUPPORT

 

Other Issues

  • HB 2966 and SB 5831 Licensing HVAC Contractors and Certifying HVAC Workers  This legislation would impose new licensing and certification requirements on the heating, ventilation, and air conditioning (HVAC) industry.   It will increase costs on all of us who need to purchase HVAC work and is being pushed primarily by the 3 labor unions and 4 union contractor groups in the HVAC industry.   Consumers are not asking for this legislation and the legislation will primarily benefit those in the HVAC industry by making it harder and more costly to get into the industry for both contractors and workers.  IBA is opposing HB 2966 and SB 5831.  For more information about HB 2966 and SB 5831 and a sample letter to your legislators, go to www.ibaw.net/2966-5831   IBA Position:  OPPOSE HB 2966 and SB 5831

 

  • SB 6395 Contractor’s Liability   This legislation will establish a new liability for contractors.  The contractor has a duty to exercise reasonable care in the construction of any improvement.   The contractor may not avoid this duty even through a warranty provided by the builder or a third party home warranty program.  Contractors believe this legislation is excessive and unnecessary as homeowner already have a right to sue a contractor.  It is likely to make it very costly or impossible for a contractor to get required contractor’s insurance.  IBA is opposing this legislation.

 

  • Budget – State Spending:  The 2007 Legislature passed a $29.6 billion budget for the ’07-’09 budget period.  This is a $2 billion increase from the previous 2 year budget and a $6.1 billion, 26%, increase over four years

 

The 2007 Legislature also approved a state “budget stabilization account” that puts 1% of each year’s revenues into this account.  Funds from this account may be spent by a majority vote of the Legislature if: (1) forecasted state employment growth for any fiscal year is less than 1 percent; or (2) the Governor declares an emergency resulting from a catastrophic event that requires government action to protect life or public safety.  Other withdrawals from the Budget Stabilization Account may be made only by a 60% vote of the Legislature.

 

Some have expressed serious concerns that state spending has grown far faster than have state tax revenues.  With an economic slowdown, some are projecting a state revenue deficit which will require higher taxes or sharp state spending cuts in the near future.

 

BUDGET BILLS NOW BEING CONSIDERED BY THE LEGISLATURE

 

·        HB 2687 and SB 6378 Supplemental State Budget   Governor Gregoire has proposed an increase in state spending in the second year of the state’s current two-year budget of $234 million, a 0.75% increase.  The Governor is proposing to keep a budget surplus, including the 1% put into the state’s budget stabilization account, of $1.2 billion just in case the state’s economy slows down.  IBA Position:           Minimize Any Increase In State Spending

 

·        HB 2342 and SB 6387 Citizen Budget Information Access  These proposals will make detailed budget information available on the Internet so citizens can see where their money is going.

 

 

SOME LEGISLATIVE WINS AND LOSSES ALREADY

 

There have already been a number of likely wins and losses for small businesses in the 2008 legislative session.  Below is a brief summary of some of those wins and losses because legislative proposals failed to move out of their Committee for further consideration by the full Legislature.  However, any of these could come back to life and still pass the Legislature in 2008.

 

WIN - SB 6221 Health Care Reform  A state run health care program is set up that defines a set of benefits and contracts with insurance companies to provide the insurance.  It is paid for by a tax on each employee under age 65 will be assessed between 2 and 4 percent of social security wages; self-employed individuals under age 65 will be assessed between 9 and 10 percent of social security wages; and employers will be assessed between 9 and 12 percent of aggregate social security wages.   SB 6621 failed to be approved for consideration by the full Senate.

 

WIN - HB 2640 Health Care Reform Sets up a new Washington State health care program for all residents that provides both preventative care and insurance.  The details will be developed by a new board established by the legislation.  It also imposes the following new taxes:  employers shall pay three percent up to five hundred thousand dollars of wages, four percent over five hundred thousand dollars of wages and up to one million dollars of wages; and five percent over one million dollars of wages. Employees would pay a flat assessment equal to one percent of their wages subject to the Medicare tax.  HB 2640 failed to be approved for consideration by the full House.

 

WIN - HB 2689 and SB 6365 – Association Health Plan Study:  Directs the Insurance Commissioner to conduct a study of   association health care plans.   IBA opposed this legislation as it appears it is intended to be used to eliminate association health insurance plans in the future.  Association health care plans are the most successful health care plans for small businesses.   HB 2689 failed to be approved for consideration by the full House and SB 6385 failed to be approved for consideration by the full Senate.

 

WIN - HB 2383 and HB 2387  Employer Communications Proposes stop employers from requiring employees to attend specific meetings or receive certain communications regarding politics, religion or union affiliation.    IBA opposed this legislation as it took rights away from employers, especially involving union organizing efforts.  HB 2383 and HB 2387 both failed to be approved for consideration by the full Senate.

 

WIN - SB 6614 Authorizing Exemplary Damages  Washington State, in most cases is NOT a punitive damages state.  Punitive damages are additional court awarded damages imposed on the defendant as a way of penalizing the defendant for their wrongful actions.  Too often, punitive damages in other states are huge amounts, often in the millions or tens of millions.  Most insurance policies do not cover the policyholder if punitive damages are levied against them.  SB 6614 would authorize exemplary (much the same as punitive) damages in Washington State in all civil actions such as business liability issues, etc.  IBA is opposing SB 6614.  SB 6614 failed to be approved for consideration by the full Senate.

 

LOSS - SB 6867 & HB 3294 - Brinks Court Decision Correction:  This legislation would have corrected the  Washington State Supreme Court decision involving Brinks Home Security that the time employees spent driving the company vehicle from home to their first business call, and the time they spend driving from their last business call to their home, was considered work time.  IBA SUPPORTED this legislation and SB 6867 failed to be approved for consideration by the full Senate, and  HB 3294 failed to be approved for consideration by the full House.