WA State Legislative Report – January 30, 2023

Legislature continues hearing and moving bills in third week

Nearly 1,300 bills are now in play in the Washington State Legislature as action continues to focus on committee hearings, amendments, and votes. Lawmakers are working toward the February 17th cutoff deadline for non-fiscal bills to emerge from their policy committee. A limited number of bills have been voted off the floors of both chambers, but so far early floor action has been limited to non-controversial topics.

Top updates and issues from the third week, and coming activity, include:

  • Taxes. The Senate Business, Financial Services, Gaming & Trade Committee held a hearing Thursday on SB 5482, sponsored by Sen. Noel Frame, D-Seattle, which replaces the B&O tax with a margins tax. At the hearing, the proposal was either opposed outright, or with concerns expressed, by most major business and industry organizations, the state’s AFL-CIO, and the Department of Revenue. Concerns with the proposal ranged from needing more time to evaluate the industry-specific impacts of a lengthy and highly complex bill, to concerns that the proposal’s mix of rates and deductions, if enacted, would create an untenable mix of “winners” and “losers” in each industry depending on size and business activity. Sen. Frame acknowledged these issues in her opening and closing remarks on the bill, and hinted that this will be a project requiring time beyond this legislative session to properly vet and advance.

Also on Thursday, the Washington Supreme Court heard oral arguments over the validity of the state’s capital gains tax. Opponents, who have achieved at least one legal victory at the Superior Court level, contend that the tax is a graduated income tax, and therefore unconstitutional under prior Supreme Court precedent. The state has contended that the measure is an excise tax, not subject to constitutional limitation, or alternatively, if it is found to be an income tax, then prior precedent should be overturned. Because the Department of Revenue has been given authority to collect the tax starting in April, and because the state’s biennial operating budget is likely to rely on as much as $500 million in capital gains tax collections, all parties are eager to see a Supreme Court decision by the time session adjourns April 23.

Because tax measures are by their nature related to the passage of the budget, they are generally exempt from session cutoff deadlines. Hearings on other tax measures, such as the wealth tax proposals introduced last week (SB 5486 and HB 1473) have accordingly not been scheduled yet.

  • Data Privacy.  HB 1155 on protecting privacy in consumer health data, received a public hearing on Tuesday where a group of business and tech brought forward a number of definitional concerns. The bill was originally scheduled for a vote on Friday in the House Civil Rights & Judiciary Committee, but was rescheduled to an executive session on Wednesday, February 1st. With its Senate companion, SB 5351, not yet scheduled for hearing, it is fair to conclude the House version is the likely vehicle. Industry groups are advancing a series of clarifying or carve-out amendments in advance of the committee’s executive session. 
  • Environmental Issues. Both chambers’ versions of the Washington Recycling and Packaging (“WRAP”) Act, HB 1131 and SB 5154, are now set for a committee vote with the House bill up on Thursday, February 2nd, and the Senate version on Friday, February 3rd. Similar to the effort around data privacy, focus here is particularly centered on industry exemption language for certain materials, and better alignment with already governing federal law and similar laws in other states.  
  • Labor & Employment Law.  HB 1136, which requires employers to reimburse employees for any expenses or losses incurred as a result of their work, was originally scheduled for a committee vote Friday but the executive session was rescheduled to next Friday while discussions continue around an amendment to strip the proposal’s private right of action. SB 5123, restricting an employer’s ability to screen for an applicant’s lawful us of cannabis, was also scheduled for a committee vote on Tuesday but was pushed forward to next Tuesday, January 31. SB 5110, providing a private cause of action for employees to enforce the prohibited employment practices in Chapter 49.44 RCW, inched closer to a Senate floor vote with a pull from the Rules Committee on Wednesday. SB 5327, which would require most internships in Washington to be paid at least minimum wage, received a public hearing on Monday in the Senate Labor Committee but is not yet set for a vote. HB 1217, which allows the Department of Labor & Industries to collect interest in administrative wage payment disputes, and forbids the Department from waiving or reducing interest, was heard in the House Labor Committee on Friday and is set for a committee vote February 3.
  • Transportation Network Companies. Following last session’s landmark legislation creating a statewide regulatory framework and access to social insurance programs for transportation networking companies, HB 1570 was introduced this week to facilitate greater access to unemployment insurance and create a further framework where drivers may be able to opt-in for unemployment insurance as self-employed individuals, with related reporting requirements for TNC platform companies to their drivers. The bill is set for a public hearing on Friday, February 3. 
  • Workers’ Compensation & Workplace Safety. For companies who self-insure for workers’ compensation, HB 1521 and SB 5524 were introduced this week, imposing a controversial duty of good faith and fair dealing on employers and third party administrators of their claims, along with stringent penalties for violations. The House version is up for public hearing in the Labor & Workplace Standards Committee on Wednesday.  HB 1068, an effort to stymie worker’s comp independent medical examinations by allowing workers or observers to make audio or video recordings of the exam, was voted out of committee on Tuesday with some modest amendments. SB 5217, allowing the Department of Labor & Industries to adopt ergonomics-related safety rules impacting one industry per year, received a hearing on Tuesday in the Senate Labor & Commerce Committee and, despite business opposition, has been described as one of the committee chair’s top priorities for the session.  
  • InsuranceHB 1061, making mandatory pre-license education hours for licensed insurance producers optional was passed out of the House Consumer Protection & Business Committee on Tuesday. Legislation to adopt the updated NAIC Model Regulation requiring that annuity sales be in the best interest of the consumer, SB 5210 and HB 1120, moved closer to a floor vote this week, with the Senate version having been made eligible for a floor vote. HB 1208 and SB 5319, adopting the model bill on issuance of pet insurance, were both voted out of committee this week and were referred to their respective chambers’ Rules Committees.  SB 5326, providing for a system of online verification of drivers’ liability insurance received a public hearing on Monday in the Senate Transportation Committee with industry support. New bills introduced this week included HB 1632, establishing a study of Washington consumers’ financial options in retirement and feasibility of creating a state-sponsored retirement savings program, and HB 1634, which regulates insurers’ ability to underwrite on the basis of specific dog breeds. Both bills were introduced by House Consumer Protection & Business Committee vice-chair Kristine Reeves, D-Federal Way, and both are slated for public hearing Friday, February 3.
  • Liability Reform. The pre-judgment interest bill, SB 5059, received a public hearing in the Senate Law & Justice Committee on Tuesday morning and was voted out of committee on Thursday after four separate amendments were offered to exempt public agencies, non-profits, and medical malpractice claims failed. The bill moves to the Senate Ways & Means Committee for additional hearing on the fiscal impact of the measure. A similar proposal, HB 1649, was introduced in the House on Friday by Rep. David Hackney, D-Tukwila but has not yet been scheduled for hearing. HB 1649 differs from SB 5059 primarily by carving out judgments entered after settlement by the Attorney General’s office in tort or civil rights actions brought against the state.  

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