Personnel & Labor Relations

Overview

With the national and state economic crises at the center of attention, the Legislature focused on bills designed to stimulate the economy including a temporary increase to workers’ compensation benefits. Most bills detrimental to the business community and employers in general were not aggressively pursued. There were bills designed to both eliminate and to expand paid family leave. In the end, the family leave program was delayed for three years. Pension contribution rates were reviewed carefully as the State sought operating resources from every source possible.

Funding was once again made available for the LEOFF 1 Medical and Long-term-care costs study group to continue its work toward a solution to the $1.745 billon state actuary defined local government liability. The stakeholder group will soon complete phase one of the study outlining the problem and will now work on phase 2 – possible solutions. This issue remains a top priority for AWC.

Major Bills

Annexation of unincorporated areas served by fire protection districts (SB 5808) – AWC Priority

This bill, signed by Governor Gregoire on Friday, April 10, sets forth procedures regarding employment rights of fire district fire fighters when any portion of a fire district is annexed or incorporated into a city, code city, or town. The new law requires notification by both the fire district and the annexing city to existing fire district employees of the proposed annexation and any impacts on employment. If needed to retain current service levels in the newly annexed area, and unless an agreement for different terms of transfer is reached between the collective bargaining representatives of the transferring employees and the fire protection jurisdictions (both city and district), eligible fire district employees would be transferred to the annexing city retaining certain employee rights and benefits equal to those of the fire protection district. These rights and benefits would be subject to collective bargaining at the end of the current bargaining period for the jurisdiction to which the employee has transferred.

The bill also provides for a new Interlocal annexation process and sets uniform standards for the petition annexation method. These changes are further described in the Land Use section of this Bulletin. This legislation was a compromise agreement between cities, fire fighters, fire chiefs and the fire districts. As with most compromises no single party is completely satisfied. AWC is pleased with the changes to the annexation processes.

[C 60, L 09; Effective Date: July 26, 2009]

Pension Systems Funding (SB 6161)

SB 6161 makes several changes to pension funding methods and assumptions for all of the state’s retirement plans, except the Law Enforcement Officers and Fire Fighters’ Plan 2 (LEOFF 2) for the 2009-2011 fiscal biennium.

The changes are summarized below:

• Delay the projected mortality improvement assumptions until after the 2009-11 fiscal biennium.
  
• Lower the general salary increase assumption from 4.5% to 4%.
  
• Delay the implementation of minimum contribution rates for PERS 2 and 3 until 2011.
  
• For the July 1, 2009 - June 30, 2011 biennium, the contributions collected to amortize the Plan 1 Unfunded Actuarial Accrued Liability (UAAL) will be 1.13% of pay in PERS and PSERS. After June 30, 2011, the funding method used to pay off the Plan 1 UAAL will be revised and contributions will be set to amortize the UAAL over a rolling 10-year period, subject to a minimum contribution rate of 5.25% of pay in PERS and PSERS.
  
• Revised contribution rates for the 2009-11 fiscal biennium as compared to current and previously adopted rates are outlined in the chart below. Although these changes create short term savings, any rate reductions will be followed by higher future contribution rates for cities and other public employers resulting in higher long-term costs.

[C 561, L 09: Effective Date: July 1, 2009]

Improving economic security through unemployment compensation (ESHB 1906)

ESHB 1906 modifies the unemployment compensation system as follows:

• Provides for a temporary increase in unemployment benefits by adding $45 to the weekly benefit amount, and increasing the minimum weekly benefit from $129 per week to $155 per week.
  
• Expands eligibility for the training benefits program to low-wage workers, military personnel and National Guard members, and persons who are disabled.
  
• Eliminates restrictions in the shared work program on the number of employees per employer that may be enrolled and the number of weeks these employees may receive benefits.

While the $45 benefit will not be charged against contribution paying employers; the $45 benefit will be charged to reimbursable employers – including many cities. Funds from the healthy unemployment reserve account will be used to pay for the benefit enhancement for contribution paying employers.

AWC staff testified before the Senate Labor and Ways and Means Committees noting the impact of the bill on city and county reimbursable employers. City and county reimbursable employers, along with other political subdivisions, pay dollar for dollar on unemployment insurance (UI) benefits. When benefits are increased so are the costs. The impact of ESHB 1906 to local governments is estimated to be $3.6 million.

[C 3, L 09; Effective Date: April 4, 2009]

Expanding the rights of state registered domestic partners (E2SSB 5688)

This sweeping piece of legislation is over 100 pages and amends nearly 200 sections of statute to provide that for all purposes under state law, except RCW 26.04 (marriage) and where inconsistent with federal law and federal programs, state registered domestic partners shall be treated the same as married spouses. The new law amends many state statutes to include state registered domestic partners when spouses, marriage, marital, husband, wife, widow, widower, next-of-kin or family are referenced. Because of the wide range of potential impacts of this legislation, AWC continues to seek more in depth analysis and will report more on the bill’s impacts at a later date.

Opponents of the new domestic partners law filed Referendum 71, hoping to force a statewide public vote on the issue, during the November election. The bill has various effective dates, but most of the sections impacting public employers are scheduled to go into effect 90 days after the session adjourns or July 26, 2009. However, if enough signatures are gathered to place Referendum 71 on the November 3 ballot, the bill would not go into effect until after the outcome of the election.

[C 521, L 09; Effective Date: July 26, 2009]

Family Leave Insurance Program (ESB 6158)

This bill passed the Legislature on the final day of the session and delays the implementation of the paid family leave program for three years. This program was created in 2007 to provide $250 per week for up to five weeks for individuals to care for a newly born or adopted child. The program was previously scheduled to begin on October 1, 2009, and is now delayed until October 1, 2012.

[C 544, L 09; Effective Date: July 26, 2009]

Minor Bills

State Operating Budget 2009-2011 Biennium – LEOFF 1 (ESHB 1244) – AWC Priority

The state operating budget for fiscal years 2009-2011 provides $25,000 for continuation of an actuarial evaluation of local government liabilities for Law Enforcement Officers’ and Fire Fighters’ Retirement System Plan 1 (LEOFF 1) medical benefits and long-term-care costs. The budget also includes $5,000 for the maintenance of the online tool to assist local government employers who participate in the Public Employee Benefits Board (PEBB) with their financial reporting for Other Post Employment Benefits (OPEB).

[C 564, L09; Effective Date: May 19, 2009]

Calculating compensation for public retirement purposes during the 2009-2011 fiscal biennium (SB 6157)

In the Public Employees’ Retirement Systems, retirement benefits are calculated using a formula that includes years of service and final average compensation. This bill directs the Department of Retirement Systems (DRS) to include compensation that is lost during the 2009-2011 fiscal biennium as a result of reduced work hours, voluntary leave without pay, or temporary furloughs as long as the employer certifies the reduced compensation is due to the employer’s expenditure reduction efforts. The costs for this program will be funded consistent with normal pension funding policy, which means that employers and members will be assessed any increased costs to the retirement systems.

[C 420, L 09; Effective Date: July 26, 2009]

Adjusting veterans’ scoring criteria (HB 1050)

This bill removes the requirement that public employees called to active military duty must serve for at least one year to claim the 5% scoring preference on promotional exams.

[C 248, L 09; Effective Date: July 26, 2009]

Benefits for survivors of firefighters (HB 1506)

The duty death and disability benefits paid to the surviving spouses of members of the Fireman’s Relief and Pensions System (FRPS) under this legislation will not cease upon the remarriage of the surviving spouse. An actuarially-equivalent optional spousal survivor benefit is created for members of the FRPS with spouses otherwise ineligible for survivor benefits under the plan. A member that chooses this optional benefit will receive a reduced retirement allowance until the member is deceased, and survivor benefits begin, or the designated spouse is deceased and the survivor benefit reduction is removed from the member’s benefit. Each city that has members of the FRPS provides for its own pension fund through revenue generated from the 25 percent of the 2 percent state tax on fire insurance policies and other property levies.

[C 156, L 09; Effective Date: July 26, 2009]

Setting forth circumstances under which a person qualifies for benefits when voluntarily leaving part-time work (SB 5804)

This bill is narrowly drawn to provide that an individual is no longer disqualified from unemployment benefits if he or she was simultaneously employed in part-time employment and full-time employment; voluntarily quit part-time employment before the loss of full-time employment; did not have prior knowledge that he or she would be separated from full-time employment, and is otherwise eligible for benefits from the loss of full-time employment.

[C 247, L 09; Effective Date: July 26, 2009]

Requirements of psychological examinations for peace officer certification (HB 1324)

This bill requires that all psychological exams taken by law enforcement officers are standardized and in compliance with the rules of the Criminal Justice Training Commission.

[C 139, L 09; Effective Date: July 26, 2009]

Restricting contact with medical providers after appeals have been filed on industrial insurance claims (SHB 1402)

This bill restricts contact by employers, employees, and the Department of Labor and Industries with medical providers at specified stages after an industrial insurance claim denial has been appealed by the claimant. An employer, after receiving a notice of appeal, may not have contact with the employee’s medical provider to discuss issues in the appeal without written authorization. Likewise, the employee may not have contact with the employer’s independent medical examiner after an appeal has been filed, without written authorization.
Contact with medical providers would be permitted for ongoing claims management, including treatment needs and return-to-work issues. Written authorization for contact is valid only if given after the appeal is filed and expires in 90 days. Employers have expressed concern the passage of this bill will make workers’ compensation claims more costly and prone to litigation.

[C 391, L 09; Effective Date: July 26, 2009]

Bills that Failed

Workers’ compensation death benefits for surviving spouses of law enforcement officers’ and fire fighters retirement systems (HB 1212)

This bill would have modified industrial insurance death benefits for surviving spouses of law enforcement officers and firefighters, allowing surviving spouses to remarry and continue to receive benefits.

Prohibiting employer communication about political or religious matters (HB 1528/SB 5446)

These bills would have prohibited an employer from requiring employees to attend meetings to receive communications related to political (including meetings that involve discussions about labor organizations) or religious matters. Employers would have been prohibited from taking adverse employment action against an employee who refused to attend such a meeting. The bills provided for a cause of action against the employer for violations. Both bills died in their respective Rules Committee.

Increase in duty-related death benefit for public employees (HB 1547/SB 5312)

This proposal would have increased the $150,000 lump sum death benefit to $175,000 paid to survivors of public employees who die as a result of on the job injuries or occupational disease.

Limiting mandatory overtime for corrections officers and sergeants (HB 1800/SB 5907)

These bills would have impacted cities located in King County who operate or plan to operate a jail by limiting mandatory overtime. At the hearing before the Senate Committee on Labor, Commerce & Consumer Protection on February 16, proponents of the bill agreed to remove cities from the legislation.

Expanding presumptive disease for firefighters (HB 1932)

This proposed legislation would have expanded the definition of presumptive occupational diseases affecting firefighters by adding methicillin-resistant staphylococcus aureus (MRSA) and esophageal cancer. AWC testified in opposition to this bill and the expansion of presumptive duty related illness citing the lack of empirical data supporting the claim that firefighters are more prone to these illnesses than the general public. The AWC Legislative Committee identified this issue as one to strongly defend against.

Concerning retrospective rating plans (ESSB 6035)

A retrospective rating plan is an optional program offered by the Department of Labor and Industries that allows groups of employers to assume a portion of industrial insurance risk. Employers pool their individual premiums and claim losses as a single entity. Premiums for the group are adjusted based on the group’s actual claim losses during a coverage period. This bill would have encouraged retrospective rating group sponsors to use refunds to create and maintain workplace safety programs; make refund distributions to members of the group; make administration practices available to the public; make distributions to its members according to a plan which has been disclosed to its members and the Department of Labor and Industries; allowed groups to continue to retain a portion of the retrospective refund upon written authorization from members, to be used for any legal purpose; and mandate that the Department of Labor & Industries conduct an actuarial review of the retrospective rating program annually for five years beginning in 2010.

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