Washington Legislative Session is open. Report January 21, 2023

Committee action heats up in week two

The second week of the session has come to a close, with just under 1,000 bills now introduced, split roughly equally between the House and Senate. With the exception of honoring Dr. Martin Luther King, Jr. on Monday, the two chambers have spent very little time on the floor and instead have been in committees hearing and voting on bills. This pace is likely to continue for the next month, as non-fiscal bills have until February 17^th to receive a vote in committee, and bills in the fiscal committees have until February 24^th.  

Top events and issues from the second week, and coming action, include:   

• Taxes. Activity has ramped up on the taxation front. On Thursday, legislators announced the introduction of SB 5486 and HB 1473, creating a “wealth tax” that would treat stocks, bonds, and other financial assets over $250 million as property, and impose a 1% tax on that property. Collections from the tax, which is estimated to raise $3 billion per year from about 700 Washington taxpayers, would be spent on education, housing, disability services, and tax credits for working families. While likely to receive a public hearing in the coming weeks, some legislative leaders have expressed caution on the idea moving this year. Notably, the idea was considered but not included in the recently-completed work of the state Tax Structure Work Group.  

One recommendation of the Work Group, however, is to replace the B&O tax with a margins tax, and this proposal was introduced Thursday as SB 5482, and is set for public hearing Thursday, January 26^th in the Senate Business, Financial Services, et al. Committee. The Work Group has released a series of tools for stakeholders to evaluate the proposal, including an overview of the margins tax, a comparison with the B&O tax, a review of current B&O tax incentives in the margin tax, and a tax calculator for individual businesses. 

Finally, the state’s capital gains tax, which features in Governor Inslee’s biennial operating budget proposal, is tapped once again and increased in SB 5335, which creates a state-run universal health care system. SB 5335 has not been set for hearing yet, although the Washington Supreme Court will be holding oral arguments on the appeal over the constitutionality of the capital gains tax next Thursday morning, casting a shadow of legal uncertainty over any use of the tax in current budgeting or legislation. 

• Data Privacy.  HB 1155, this session’s data privacy bill concerning consumer health data is now set for public hearing on January 24^th, with a committee markup scheduled for January 27^th. Its Senate companion, SB 5351, has not yet been scheduled for hearing. Both bills limit and regulate the collection, selling, and sharing of health data. Industry groups continue to have technical concerns with the proposal’s definitions, coverage, and enforcement mechanisms. 

• Environmental Issues. Both chambers’ versions of the Washington Recycling and Packaging (“WRAP”) Act, HB 1131 and SB 5154, were heard in their respective committees on Tuesday. This proposal sets up a series of complex regulatory structures governing producer responsibility for packaging and paper products, post-consumer recycled content requirements, bottle deposit standards, and amendments to solid waste management. The bill as introduced received strong criticism from affected industries. Neither bill has been set for a committee vote yet, and sponsors Rep. Liz Berry, D-Seattle, and Sen. Christine Rolfes, D-Bainbridge Island, have implied a willingness to consider amendments to make various elements of the bill more workable. Focus here is particularly centered on exemption language for certain materials, and better alignment with federal law and similar laws in other states.  

• Labor & Employment Law. Regulation of the employment relationship has been a particularly active area this session. HB 1136, which requires employers to reimburse employees for any expenses or losses incurred as a result of their work, had a public hearing in the House Labor & Workplace Standards Committee on Wednesday, and is scheduled for a committee vote this Friday. This bill has raised concerns because it is enforced by a newly created private right of action with pre-judgment interest included. SB 5123, restricting an employer’s ability to screen for an applicant’s lawful us of cannabis, now has a committee vote set for Tuesday. SB 5110, providing a private cause of action for employees to enforce the prohibited employment practices in Chapter 49.44 RCW, was voted out of the Senate Labor & Commerce Committee on Tuesday and moved to the Rules Committee. HB 1187, creating an evidentiary privilege for communications between employees and their union representatives, was heard in the Senate Law & Justice Committee on Wednesday, but was pulled from a scheduled committee vote on Friday. SB 5327, which would outlaw the concept of unpaid internships in Washington, is set for public hearing on Monday in the Senate Labor Committee. Finally, SB 5417, a significant union organizing bill, was introduced and set for public hearing on Monday morning in the Senate Labor Committee. It would prohibit employers from having mandatory communications with employees on political or religious topics, but is crafted so that union organizing is included prominently in the list of prohibited political topics. Its aim is to prohibit employer meetings or communications opposed to prospective unionizing efforts.    

• Workers’ Compensation & Workplace Safety. HB 1068, a controversial measure authorizing a worker’s casual audio and video recording of an independent medical examination, and a statutory renaming of the exam as a “compelled medical examination,” is now set for a committee vote on Tuesday. SB 5217, repealing 2003’s citizen Initiative 841, and allowing the Department of Labor & Industries to adopt ergonomics-related safety rules impacting one industry per year, is set for public hearing on Tuesday morning in the Senate Labor & Commerce Committee and is expected to draw substantial business opposition.  

• Insurance. SB 5026 and HB 1061, proposals to remove a dubious barrier to entry to becoming a licensed insurance producer – mandatory pre-license education hours – are set for a committee vote in the Senate on Tuesday and likely in the House next week. 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, were both voted out of committee this week and have moved to their respective Rules Committees. HB 1266, regarding registration of e-mail addresses by licensed producers and regulating the Commissioner’s e-mail communications with them was heard on Friday. Bills authorizing mutual insurers to reorganize as mutual holding companies, HB 1060 and SB 5220, also received votes in their respective committees this week, moving to the Rules Committees, while HB 1208 and SB 5319, adopting the model bill on issuance of pet insurance, received a hearing in both chambers and is set for committee votes in both chambers next Tuesday. SB 5053, requiring a declaration page for residential policies with sublimits, advanced from the Senate Business Committee Thursday, and SB 5326, providing for a system of online verification of drivers’ liability insurance is now scheduled for public hearing on Monday in the Senate Transportation Committee.    

Liability Reform. The pre-judgment interest bill, SB 5059, requiring that interest on tort judgements starts running when the cause of action accrues, is now set for public hearing in the Senate Law & Justice Committee on Tuesday morning and will draw widespread opposition from public sector entities like school districts, counties, cities, and non-profits, as well as the general business community and defense bar. Lastly, SB 5090, related to standing in statutory violation cases, attorneys’ fee determinations in common-fund class actions, with inflationary increases to statutory damages, was heard in the Senate Law & Justice Committee on Wednesday and involved a debate between plaintiffs’ lawyers and the trial lawyers’ association, with conflicting opinions on the bill’s provisions. In an unusual pairing, both the Washington Liability Reform Coalition and the Washington State Association for Justice opposed the bill at hearing. It was originally scheduled for a committee vote on Friday but was pulled from the calendar and faces an uncertain future.