Olympia Business Watch

Wash. Supreme Court Sides with Employees In Punitive Damages Case

One of the few areas where Washington law allows the imposition of punitive damages is in employment law, where an employer may be found liable for double damages and attorney's fees when he or she "wilfully and with with intent to deprive the employee of any part of his wages" fails to pay the employee all the wages he or she is due.  This law also one of the few areas that "pierces the corporate veil" in that corporate officers are personally (as opposed to corporately) liable for the damages.

So it's a big deal. And there has been some uncertainty over what the law means by a failure to pay wages that is "wilful" and "with intent to deprive."  Our Supreme Court has previously held that a struggling employer's financial inability to pay wages owed is no defense to a finding of willful withholding.

This morning, the Supreme Court extended that principle to hold that a legal inability to pay wages is also no defense.  In Morgan v. Kingen, the court held 6-3 that an employer's involuntary chapter 7 bankruptcy proceeding, in which its assets are under court supervision and it lacks any legal ability to pay wages, still counts as failing to pay wages "wilfully and with intent to deprive."

Maybe it's time to re-think how workers' comp benefits are figured

Word today from the state Department of Labor & Industries that workers' compensation benefits will go up 3.4 percent beginning July 1 is surely welcome news for anyone receiving such benefits.

But for anyone who runs a business, it could be foreshadowing of a looming rise in workers' compensation tax rates.

It's not hard to predict that higher benefits will equal higher taxes.

In addition to the bump in wage-replacement benefits, the department announced a 4 percent rise in the amount it will pay out for a permanent partial disability.

In a press release, Labor & Industry officials characterize the benefit increases as cost-of-living raises. State law requires a yearly recalculation to reflect the change in the average wage from the previous calendar year.

That's fine. But the formula for calculating cost-of-living adjustments - which is based on the average annual wage of all workers in Washington - has resulted in unreasonable increases in recent years.

The timing of this increase - when the state unemployment rate stands at 9.4 percent - only underscores that point.

The "implicit price deflator" would make for a more reasonable formula, says Kris Tefft, AWB's general counsel and director of government affairs for employment law. Under this inflation-based figure, benefits would not have gone up at all this year. Even under the CPI for wage/clerical workers in Seattle, that index is in negative numbers in late 2008 and 2009.

It's something the Legislature ought to take a look at.

Oregon becomes first state to pass union "gag rule" bill

Oregon became the first state in the nation** to pass the national AFL-CIO's model "Worker Freedom Act," the gag rule bill known in Washington the last several sessions as the "Worker Privacy Act."  It purports to rebalance federal labor law in unions' favor by restricting employers' ability to effectively communicate with employees about labor issues during organizing and bargaining campaigns.  The Oregonian reports here, with statehouse coverage here.

The bill now heads to Governor Ted Kulongoski, who the Oregonian reports is expected to sign it.  After the Washington version of this proposal died last session, Governor Gregoire was quoted as saying she would have vetoed it had it passed.

With good reason.  If the measure is signed, expect a court fight.  One of the reasons it took national unions so long to find a state willing to pass the bill is its extremely dubious legality. Especially in light of the U.S. Supreme Court broadly striking down a similar California measure aimed at employer speech about unions, these proposals have been viewed as attempting to take away rights that employers clearly enjoy under federal labor law -- something states are pre-empted from doing.

** The Oregonian imprecisely implies Oregon joins New Jersey in passing this bill.  New Jersey passed a version in 2007 that did not include the provisions related to employer speech about unions.  No other state has passed this full version of the model "Worker Freedom Act" bill.

“The only thing that gets SHRM members more riled up than HFA is EFCA”

More on the Healthy Family Act, the bill in Congress mandating all but the smallest employers provide up to seven days per year of paid sick leave (see here, here, and here):

Mike Aitken, director of governmental affairs for the Society for Human Resource Managment (SHRM), puts SHRM's position on the bill in context, saying “The only thing that gets [SHRM members] more riled up than HFA is EFCA.”  EFCA, the so-called "Employee Free Choice Act," is organized labor's card-check unionization bill and has just about everyone in the nationwide business community appropriately riled up. 

AWB members: is mandatory paid sick leave next down on the list?

Mandatory Paid Sick Leave Ordinance Struck Down in Milwaukee

We have been following the national debate over a bill in Congress mandating employers provide paid sick days to employees, and noting implications of the debate for employers in Washington (most recently, here and here). 

Interestingly, while no state has passed such a requirement (Senator Karen Keiser, D-Des Moines, introduced a version in Washington in 2006 but it died in committee), three municipalities have adopted paid sick leave ordinances: San Francisco, Washington D.C., and Milwaukee. 

Milwaukee's ordinance, which was adopted by referendum last November, was struck down last Friday.  A Circuit Court judge declared the law invalidly enacted and unconstitutional in a challenge brought by the local chamber of commerce. 

Both legal defects stemmed from the insertion of mandatory time off for victims of domestic violence, sexual assault, or stalking, which the judge found to be neither reasonably referenced in the referendum's ballot title nor reasonably related to the underlying purpose of the ordinance.

The Milwaukee ordinance was somewhat unique in this regard.  The "Healthy Families Act" pending in Congress does not include a domestic violence provision.  And while Washington, in 2008, joined a relatively small handful of states requiring time off for victims of domestic violence, sexual assault, and stalking, there is no requirement that time be paid. 

Paid leave proponents in Milwaukee how vowed an appeal.  Whether the ruling stands, and has more than merely local signifcance to the overall debate about mandated paid leave, remains to be seen.

Putting Together a Social Media Policy

Jason Hagey posted this morning about some of the risks and rewards of business embracing social media, with some thoughts and recommendations derived from a seminar earlier this week by attorneys at AWB member law firm Perkins Coie in Seattle.  

Recommendation number one is "develop a social media policy and enforce it."  What should a social media policy say?

Here is one HR professional's take, writing at the social media wesbite Mashable.com: 10 Must Haves For Your Social Media Policy.  It includes as examples social media policies from a couple different companies.

Take a look.

On the Merits of Shop Class

What sort of notion gets a favorable nod from such seemingly distant corners of the universe as the Washington State Labor Council and the National Association of Manufacturers?  Mention of a new book by philosopher and motorcycle repair shop owner Matthew Crawford, Shop Class as Soulcraft: An Inquiry into the Value of Work. KPLU's Bellamy Pailthorp has an audio blurb on it this morning, described thusly:

Mastery of a blue collar craft can provide a livelihood that not only pays well, but also challenges the intellect. And it's work that can't be outsourced. Yet schools today still try to steer everyone toward college. A new book seeks to restore the honor of the manual trades as a life worth choosing. It's called "Shop Class as Soulcraft" and its author, Matthew B. Crawford, holds a PhD in Philosophy - but has chosen to work most of his days getting his hands dirty.

AWB's Don Brunell has written about this topic in Washington, most recently here and here.  It's very interesting. Your undersigned has a degree in philosophy, and a law degree -- but can barely change the oil or assemble pre-fabricated furniture. I didn't take any shop classes but the older I get the more I wish I had.

Congress Considers Mandates on Paid Sick Leave, Family Leave

Paid family leave continues to be a hot topic.  Although our state's troubled program, passed in 2007 but unfunded and unimplemented, has now been deferred again until 2012, employees in New Jersey will begin participating in a paid leave program next month after the Garden State became the third state in the country to adopt a paid leave program after California and Washington.   

In Congress, the topic was hot today as the U.S. House Education and Labor Workforce Protection Subcommittee held hearings on HR 2460, the "Healthy Families Act," which mandates all but the smallest employers in the country provide up to seven paid sick days per year to employees, and HR 2339, the (rather inelegantly titled) "Family Income to Respond to Significant Transitions Act," which provides federal grants to states to fund paid family leave programs.

This on the heels of the House's passage last week of an act providing four weeks of paid parental leave for federal employees on leave to care for the birth or adoption of a new child. 

AWB national affiliate the U.S. Chamber of Commerce and ally the Society for Human Resource Management both presented concerns with the approach in today's hearings, calling for more incentives toward flexibility in workplace leave management as opposed to broad and inconsistent mandates.  The flexibility approach is favored in this short policy brieffrom the National Center for Policy Analysis.

Paid family leave, paid sick leave, mandates versus flexibility: employers will be hearing a lot more about it this summer and beyond.

Breastfeeding at Work?

From law firm Stoel Rives's World of Work law blog: US Senator Jeff Merkley, D-Oregon, has announced his sponsorship of the Breastfeeding Promotion Act (BPA) in the U.S. Senate, following introduction of a companion in the U.S. House yesterday.  The measure would amend the anti-discrimination provisions of the Civil Rights Act of 1964 to:

• protect breast-feeding in the workplace;
• provide tax incentives for employers that establish private lactation methods in the workplace;
• establish minimum safety standards for breast pumps;
• make breast feeding equipment tax deductible; and
• create time and privacy for working mothers to express milk.

Congress about to introduce paid sick leave mandate; employers seek flexibility

After Washington legislators hit the snooze button on our state's troubled paid family leave program, delaying its implementation from 2009 to 2012 for want of funding, news comes from the other Washington about a reworked congressional proposal to mandate employers provide a minimum number of paid sick days per year. A similar concept was introduced in Washington in 2006 but didn't get a hearing.

The soon-to-be re-introduced "Healthy Families Act" would require workers each year to accrue one hour of paid sick leave for every 30 hours worked, up to a total of 56 hours (7 days).  This differs from a prior version of the bill which simply required all but the smallest employers to provide seven paid sick days per year without regard to accrual.  The new version also includes time-off protections for victims of domestic violence, not unlike the mandate our Legislature passed in 2008.

Meanwhile, employers are helping to shape the debate. The Society for Human Resource Management(SHRM), for instance, sent a letter to all U.S. senators and representatives on May 7, 2009, announcing a set of principlesit would like to see applied to federal leave policy, including:

·       Encourage employers to offer uniform and coordinated paid leave.

·       Create administrative and compliance incentives for employers who meet the leave standard.

·       Provide certainty, predictability and accountability for employers and employees.

·       Allow for different work environments, industries and organizational size. 

This focus on flexibility and incentive rather than one-size-fits-all mandate has been an animating theme in AWB's legislative objectives on workplace leave policy (e.g., in 2007 and 2009). Expect that same focus to color the national debate as it's teed up this summer in DC.