Olympia Business Watch

L&I: Blame the Victim?

This is an unfortunate story out of Wenatchee:

The state Department of Labor & Industries has forced local business owner Jack Colson to pay more than $700 in worker's compensation taxes for a worker he never employed.
L&I officials know they're taxing Colson for workers who didn't exist. But they still insist on collecting.There's nothing else they can do, an L&I spokesman says. Deadlines were exceeded, procedures violated.

The Colsons closed their business and laid off their employees.  But L&I says it never closed its tax account in writing.  Rather:

Sherri Colson, the company's bookkeeper, said both she and her husband had spoken with L&I throughout their downsizing process. They asked for a final audit to ensure all was in order before closing their L&I account.  With downsizing complete and the audit in progress, Sherri Colson said she told L&I's East Wenatchee field agent Aurora Flores in June 2007 that she wanted to close The Woodcrafter's account. The store was closed, she told Flores, and all the workers laid off.   Colson said she hung up the phone thinking that everything was in order and that the account would be closed.  But it wasn't. L&I won't close an account unless the business requests the closure in writing. Colson's request was verbal. Nobody told Colson that.

The small business owners then apparently had the gall to go on Christmas vacation while L&I served them their quarterly tax notice, which wasn't appealed in time.

L&I's defense for pursuing a tax it knows it isn't owed?

Ron Langley, small business liaison for L&I, says the Colsons brought the problem on themselves by not following correct industry procedure and failing to meet deadlines.

There are competing arguments here.  But the Department's response seems especially tone deaf. 

The newspaper article doesn't provide enough info to fully diagnose the dispute, but I do note that RCW 51.16.155, the statute governing the collection of workers' comp taxes when the employer fails or refuses to pay them contains this provision:

The director or the director's designee may compromise the amount of premiums estimated by the department, whether reduced to judgment or otherwise, arising under this title if collection of the premiums estimated by the department would be against equity and good conscience.

What a better approach to resolving a small dispute than what essentially comes off as blaming the victim.

AWB Joins Disability Groups in Supporting Federal ADA Amendments

Earlier this week, AWB joined with state disability rights organizations in supporting the US House passage of H.R. 3195, an amended, compromise version of the ADA Restoration Act which amends the 1990 Americans with Disabilities Act.  From a joint letter led by AWB and the Governor's Council on Disability Issues and Employment:

People with disabilities are a large, underutilized source of new workers, and a rapidly growing segment of our consumer market.  Social justice and our economy are both served when businesses are supported in their efforts to tap into and develop these potentials.

This effort mirrors a similar coalition at the national level between AWB-affiliates like the U.S. Chamber of Commerce and National Association of Manufacturers (NAM) and nationwide disability rights organizations to update certain portions of the ADA to respond to certain judicial limitations on the act and secure greater protection in employment and public accommodations for disabled individuals.  According to NAM President John Engler, "restoring the original intent of the ADA is a practical issue for employers who urgently need qualified workers to fill vacancies - and it's the right thing to do."

Passage of the ADA Restoration Act may have little practical effect in Washington State where, in 2007, the Legislature passed SB 5340 containing many similar protections.  But passage of the federal compromise, in addition to being the right thing to do, would have the beneficial side effect of bringing Washington law into greater consistency with federal law.

Workers' Comp Benefits up 5% July 1st

The Department of Labor & Industries announced yesterday that workers' comp wage and pension benefits will go up a tad over 5% starting July 1st as a result of wage inflation.  From the announcement:

Workers currently receiving Washington workers’ compensation wage-replacement or pension benefits will receive a 5.018 percent cost-of-living increase effective Tuesday, July 1. State law requires that benefits be recalculated each year to reflect the change in the state’s average wage from the previous calendar year.

The fact and timing of this announcement underscores some of the difficulty with Washington's labor-friendly wage calculation system.   Using wage data from the previous calendar year, and including high wages in industries (think: tech sector) that have comparatively little workers' comp claims experience, drives results that seem entirely out of place. 

In other words, at a point right now where consumers are anxious, the state and national economy is slow, unemployment is rising, and companies are forced to consider trimming payrolls, does a 5% increase in benefits seem justified by current economic realities?

Washington already has among the highest workers' comp benefits in the country.  And with higher benefits come higher payroll taxes for employers.  The tax level for 2009 is being developed now and will be announced this fall.  Expect yesterday's announcement to play a role. 

Brunell: Supreme Court Takes Union "Neutrality" off the Table

AWB President Don Brunell's column today in the Vancouver Columbian expands upon the US Supreme Court's June 19th decision invalidating California's restriction on employer communications about labor unions, something we blogged about here.

The bottom line is the significance of the decision here in Washington State:

The high court’s ruling should be the final stake in the heart of a similar union-backed proposal here in Washington. Democratic Gov. Chris Gregoire took the issue off the table last legislative session pending the outcome of the California case.

...

Unions in our state are expected to launch a campaign between now and the 2009 legislation session to convince legislators that their proposal is different than California’s debunked law. But lawmakers should not waste their time or taxpayers’ money on this proposal. The Supreme Court’s decision has clearly put an end to Washington’s employer gag rule.

More Woes for State Paid Family Leave

A couple weeks ago, we noted the first public call for repeal of our state's so-far unfunded, unadministered, unimplemented paid family leave benefit mandate coming from the editorial pages of the Walla Walla Union Bulletin. 

The UB's message was "[i]t's time for the Legislature to face up to reality and scuttle this unfunded, unnecessary paid family leave plan" because, among other things, "[t]he state's economy looks different than it did in early 2007."

This morning, the Vancouver Columbian picked up on this theme, with last week's downward revenue forecast its point of departure:

When state revenue forecasters announced on Thursday that the treasury will take a $167 million revenue hit over the next three years because of the economic slump, one of our first thoughts was the unresolved paid family leave bill. The only good thing that can be said about this turkey is that it’s unresolved. It should be dropped.

The paid leave program clearly fizzled in 2008 as needed implementation legislation was left on the vine when it became clear there was no political will to fund the program. 

And that was before a $2.5 billion budget gap started yawning. 

Some action must take place in 2009 -- there's a so-far unfunded mandate that benefits issue October 1st of next year.  But will the framework of the debate still be "how" -- or will it be, as these editorials suggest, "whether"?

 

US Supreme Court Strikes Down Cali Union Neutrality Law

On a morning when our own state Supreme Court got it badly wrong on an important employment case, good news from the other Washington: the US Supreme Court struck down, 7-2, a California law imposing union neutrality requirements on employers doing business with the state. 

This long awaited decision, Chamber of Commerce v. Brown, ought to tamp down the top legislative priority of unions here in Washington to establish a broader prohibition on employer speech than what even California envisioned.   Indeed, Governor Gregoire cited the pending decision of the court in this case as the primary reason for asking the labor side to withdraw its bill in 2008.

Writing for the majority, Justice John Paul Stevens -- conventionally thought to be the most liberal of the high court justices -- held that the federal labor policy contained in the National Labor Relations Act (NLRA) preempts the attempt of California to impose a rule that prohibits employers receiving state funds from using the funds "to assist, promote, or deter union organizing." 

The NLRA preemption doctrine that captured the court's attention forbids states from regulating conduct "that Congress intended to be unregulated because left to be controlled by the free play of economic forces."  Noting its view under prior case law that "Congress struck a balance of protection, prohibition, and laissez-fair in respect to union organization, collective bargaining, and labor disputes," the court determined California's law attempted to regulate within "a zone protected and reserved for market freedom."

The court further elaborated on the inherent right of employers to engage in "free debate on issues dividing labor and management", that this First Amendment right is enshrined in the NLRA, and that it reflects a policy decision "favoring uninhibited, robust, and wide-open debate in labor disputes" involving "freewheeling use of the written and spoken word."   The constitution, buttressed by the NLRA, provides this freedom; states cannot by legislation or regulation take it away.

The state AFL-CIO proposal in Washington is broader than the invalid California law.  It doesn't hinge on the receipt or use of state funds by an employer.  It bluntly prohibits any employer speech about union matters if it can be viewed as a "required" communication -- in a staff meeting, perhaps in a company-wide e-mail, and so on.  It is enforced (like California's statute) by a strong litigation deterrent attempting to make the state's judicial branch the ultimate referee of permissible workplace speech.

But the high court was clear today:  States are not free to regulate what Congress left unregulated in the NLRA.  "When Congress has sought to put limits on advocacy for or against union organization, it has expressly set forth the mechanisms for doing so."  The law "calls attention to the right of employees to refuse to join unions, which implies an underlying right to receive information opposing unionization."  And the NLRA "expressly precludes regulation of speech about unionization" so long as the communications do not threaten or promise anything to the employee. 

Our state unions may be busy between now and the 2009 legislative session testing arguments to distinguish their proposal from California's overreach.  But today's decision should put an end to Washington's union neutrality bill.

(Cross-Posted at the WashACE blog)

State Supreme Court Deals Blow to UI System, Employers

In a unanimous opinion that is nothing short of astonishing, the Washington Supreme Court this morning bluntly erased a thoroughly negotiated, battleground tested, foundational component of our state's Unemployment Insurance system -- its statutory provisions governing "voluntary quits".

The court held that the law didn't say what the Legislature, the Employment Security Department, the business community, and I'd say a vast swath of the labor community, have since 2003 understood it to say.   That is, a negotiated list of ten "good cause" reasons for leaving work voluntarily  while still maintaining eligibility for UI benefits is an exclusive list of reasons for voluntary quits.

Voluntary quits are an issue in unemployment insurance because the historical purpose of the system is to provide a social safety net with partial wage replacement for a temporary period that an individual is unemployed through no fault of his or her own, and is able, willing, and looking for work.  Allowing benefits for individuals who choose to quit work runs afoul of that purpose. 

But in a landmark 2003 compromise bill, the Legislature specified ten (and in 2008 added an 11th) clear reasons why a voluntary quit may still result in benefit eligibility.  Things like relocation of a military spouse, protection of family from domestic violence, certain substantial reductions in pay or hours, and so on.  This was the other half of legislation that fundamentally altered the collection of UI taxes from employers and addressed other benefit costs.  It was part of a business-labor compromise brokered by then Gov. Gary Locke and set against the backdrop of serious economic competitiveness concerns and the state's efforts to win assembly of Boeing's new commercial airliner.

AWB attempted to impress this point upon the court through an amicus curiae ("friend of the court") brief supporting the Employment Security Department.  But the court stated:

Amicus Association of Washington Business contends that the statutory list was intended to be exclusive and that exclusivity was "the finishing stroke of a multi-year public policy compromise between business and labor over the nature of the Unemployment Insurance system . . . and the eligibility for unemployment benefits for persons who voluntarily leave their job[s]." This may well be true.  Unfortunately, we have not been presented with compelling evidence of this underlying legislative purpose by either of the parties. 

Instead, we discern no clear intent from the legislative history. 

We thought the statute spoke for itself, but the court found it "awkward" and "ambiguous".  So the court swept aside the statutory list, but opened Pandora's box: individualized assessments of a claimant's "compelling personal reasons" for voluntarily leaving work regardless of the statutory reasons. 

This will likely be an administrative nightmare for the Employment Security Department both going forward and, potentially, having to reassess benefit claims since 2003 that were turned down because the voluntary quit did not fall within one of the ten reasons.   

And this indefinitely expansive new universe of potential voluntary quit benefits will result in heightened costs to employers facing a downward trending economy (yesterday's news: state unemployment now over 5%) and a system where Washington's job providers already pay the second highest UI taxes in the country.

The UI system has already become a hot topic for the 2009 Legislature because of a US Department of Labor determination that the Employment Security Department's tax collection system is out of conformity with federal law -- a problem the Legislature must fix.

Now, on the benefit side, today's decision elevates the voluntary quits issue to a similar prominence as the Department, stakeholders, and Legislature figure out whether, and how, to pick up the pieces.

(Cross-posted at the WashACE blog)

Unionization of Colorado Public Employees Moves Ahead: The Minority Rules

In January we posted on the curious, nearly subterranean, ways in which public employees in Colorado gained collective bargaining rights. Odd that we always say it that way, as if all public employees in Colorado wanted collective bargaining. Although I'm not thrilled with the outcome, at least in our state, expanded collective bargaining came about by legislative action and a gubernatorial signature. In Denver, the governor slipped it through by executive order.

Now, we see that the unions continue to gain ground. Hard to tell if it's a move the average public employee supports.

About 6,900 state workers from a pool of 22,500 who were eligible participated in the election, which gave them a choice between Colorado WINS or no union representation. Of those, 5,481 supported the union.

The results were based only on the number of votes cast, but even those who did not vote will now be represented by the union — regardless of whether they pay the voluntary union dues.

Hardly an overwhelming endorsement.

Walla Walla UB: Repeal Paid Family Leave Law

Today's editorial round-up brought a double dose of common sense from Walla Walla.  The Union-Bulletin calls for repeal of the state's so-far unfunded, unadministered, and unimplemented paid family leave benefit mandate, noting "[a] lot has changed since the Legislature gave the OK to paid family leave":

Gregoire has said she wants a statewide vote on any new tax. Beyond that, voters approved an initiative last year calling for a two-thirds vote requirement in the Legislature or a vote of the people for any tax increase.

The state's economy looks different than it did in early 2007. It is no longer booming. And as the price of gasoline and food continue to shoot up, the anxiety level among citizens is on the rise. . . .

In other words, finding funds for this new entitlement won't be a cakewalk in 2009, the year the leave and benefits are supposed to become available.  So:

It's time for the Legislature to face up to reality and scuttle this unfunded, unnecessary paid family leave plan.

It's worth a read. 

2008 AWB Session Review and Voting Record

We've just posted the 2008 Legislative Review and Voting Record to our website. AWB members will soon receive them with the May/June issue of Washington Business, which is in the mail now. Take a minute to review how your legislators voted on business issues in 2007 and 2008.

In the Senate, Republican Senators Jim Honeyford and Linda Parlette scored 100 percent in 2008.

Top ranking House members with 2008 scores of 96 percent were Republican Representatives Larry Crouse, Joel Kretz and Lynn Schindler.

Gov. Chris Gregoire received a 2008 score of 29 percent.