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Home / Washington Business - September/October 2003 / Human Resource Issues 2003 |
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Human Resource Issues 2003 |
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Written On: September/October |
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SUMMARY
Employers in Washington state continue to struggle to provide jobs, in part to high labor costs. In 2003, employment costs increased substantially – and they are expected to increase again in 2004 with no end in sight. Unemployment insurance rates went up an average of 15%, workers’ compensation premiums were increased an average of 29%, and health care costs are skyrocketing out of control with increases of 30% and higher. If that isn’t enough, Washington has the second highest minimum wage rate in the nation and is the only state with a comprehensive ergonomics rule that further threatens our competitiveness standing.
Employers are faced with cutting back voluntary benefits such as health care or reducing the number of employees in order to sustain their current level of benefits and employment taxes. What’s an employer to do? That’s where AWB comes in.
Each year we lead the business community on human resource issues with our expert lobbying staff, and this year was no exception. Many legislators voted in a bipartisan manner to support key reforms to unemployment insurance and the timeliness for filing workers’ compensation claims for hearing loss. In addition, AWB successfully blocked a large number of bills in every area in human resources that the trial lawyers and labor unions were aggressively pushing throughout the session.
While the Senate also passed other bills in a bi-partisan manner, key issues such as health care, ergonomics and reforms to wage and hour laws were not addressed in the House of Representatives. Given the condition of human resource laws in our state, significant action is still needed by the state Legislature in the coming session to complete the work that it started this year in making our state a better place for employers to provide jobs.
UNIFIED BUSINESS COMMUNITY SCORES SUBSTANTIAL UI SYSTEM REFORMS!
The most substantial piece of human resources legislation to pass this year is unemployment insurance system reform. After many years fraught with business infighting, AWB engaged in the debate on comprehensive unemployment insurance reforms. Following the rejection of last year’s unemployment insurance reforms via Referendum 53, AWB went to work to try and bring all of the various parties in the business community to the table to discuss significant reforms to our outdated and broken unemployment insurance system.
Currently, Washington has the second most costly unemployment insurance system in the country and ranks nearly 317 times higher than the national average cost per employee. As far as competitiveness goes, this factor is a MAJOR disincentive to current and prospective employers. Building on the fact that all business representatives agree that our system needs a major overhaul, AWB began moderating discussions among business groups to try and achieve consensus.
A united business community reached broad agreements to proceed to the Legislature with SSB 6097, which accomplishes the following goals:
• Establish a new tax system that more fairly represents an employer’s actual experience rating and a more equitable distribution of the "social" costs of the system to all employers.
• Significantly change the calculation of claimant benefits to reflect true earnings.
• Restrict the growth of our state’s maximum benefit payments until we reach a level more in line with our competitor states.
• Bring more accountability and sense to the provision of benefits for an employee’s voluntary separation from employment.
• Strengthen misconduct provisions and penalties for such misconduct.
• Provide more oversight and accountability to the system as a whole.
The enactment of SSB 6097 represents the most sweeping changes to our state’s unemployment insurance system in over two decades. A great big thanks to all of our members that helped get the message to the legislature that our UI system needed an overhaul. You should begin to see the fruits of this labor as soon as 2004 since many of the benefit reforms contained in SSB 6097 will be included in the
calculations of an employer’s 2004 tax bill.
WASHINGTON’S BROKEN WORKERS’ COMPENSATION SYSTEM
With escalating medical costs, increasing legal uncertainty, deteriorating claims management at the state fund, and agencies and courts making policy decisions instead of the Legislature, Washington state’s workers’ compensation system is broken. Bold action is needed by the agency, the governor and the legislature to bring greater certainty and fairness to the workers compensation system.
On November 27, 2002, the Department of Labor & Industries (L&I) announced a 29 percent increase in workers’ compensation rates for state fund employers. L&I also stated similar increases would be expected for three more years.
Court decisions such as Cockle and Avundes have also wreaked havoc on the traditional approach to how wages are calculated in determining benefit awards. The Cockle decision now requires that health care costs must be included in the calculation of wages. The decision left the door open on other benefits such as pensions, 401-K contributions, banked leave hours or other benefits of like nature.
The Avundes decision focused on intermittent and seasonal workers, the result is that these types of workers can now earn more money on workers' compensation than they ever did working. This decision not only adds substantial costs to the system it creates a disincentive for employees to return to work.
The business community, with leadership by Sen. Jim Honeyford (R-Sunnyside) and Rep. Bruce Chandler (R-Granger), introduced SB 5378 and HB 1834 to address these decisions and to simplify the claims management process. SB 5378 passed the Senate only to die in the House of Representatives after failed negotiations with labor who insisted on changes that would increase benefits resulting in higher costs for employers. L&I introduced agency request legislation, SB 5271 to establish two-year statute of limitations where hearing loss claims must be filed. SB 5271 passed the Senate in both the regular and special session. The bill ultimately passed the House of Representatives and was signed into law by Gov. Locke.
SENATE VOTES TO MAKE ERGONOMICS VOLUNTARY-HOUSE FAILS TO ACT!
2003 marked the third year in a row that the Senate voted to make the state ergonomics rule voluntary until more is known about the costs and effectiveness, just as the governor’s Competitiveness Council recommended. SB 5161, introduced by Sen. Mike Hewitt (R-Walla Walla) enjoyed strong bi-partisan support this session while the House refused to pass the bill after Gov. Locke threatened to uphold his promise to labor to veto efforts to repeal or change the state ergonomics rule.
Litigation on the issue continues as a challenge by AWB and the WE CARE Coalition is pending before the state Supreme Court. Initiative 841 has been certified for the November elections, guaranteeing that the issue of regulating ergonomics will be before the public this November. AWB’s Board of Directors has voted to support the initiative and will be active in the campaign.
DETAILS
SB 6097 - Unemployment Insurance
Due to the comprehensive and complex nature of these unemployment insurance system reforms, AWB staff has compiled a lengthy side-by-side comparison that reviews current law as it relates to the new reforms found in SB 6097. The full, detailed summary can be found at http://www.awb.org/policy/spotlights/ui/sb6097analysis.htm.
SB 5378 & SB 5371 - Workers’ Compensation
SB 5378 would have simplified the workers’ compensation wage by implementing a business community package. It would have incorporated several additions to the old law by including; the use of a 65.5 percent flat rate, excluding all benefits, use of an average wage based upon the highest four out of eight consecutive quarters, and the use of the same standard for self insured as the sate fund in closing claims. SB 5378 would have provided more than a $124 million savings to the State Fund workers’ compensation system by simplifying the administration and addressing some very costly recent court decisions. Introduced by Rep. Jim Honeyford (R-Sunnyside), SB 5378 passed
the Senate and died in the House of Representatives Commerce and Labor Committee.
While SB 5378 did not pass, Gov. Locke signed SB 5271, which will reform the workers’ comp hearing loss claims system. Employers will save nearly $20 million per year. This legislation will limit disability payments to workers who file within two years after leaving their job. SB 5271 is a good step forward, but short of the needed reforms that AWB advocated for. AWB commends the governor for signing SB 5271.
SB 5161 - Ergonomics
SB 5161 would have changed the rules dealing with musculoskeletal disorders. If passed, the ergonomics rules would have had no force or effect, but would have remained in place as voluntary guidelines for employers. SB 5161 would have directed the Department of Labor and Industries to:
• Establish an ergonomics resource center to provide expertise and assistance to employers within the state of Washington;
• Create an ergonomics clearinghouse to encourage businesses to share their proven methods of reducing hazards and preventing injuries;
• Establish a small business ergonomics task force. The task force shall work with the Department of Labor to produce a small business ergonomics assistance guide;
• Appoint an ergonomics ombudsman who shall assist employers with problems implementing the ergonomics guidelines in the workplace;
• Establish a two-year demonstration project, which includes ergonomic assistance for small businesses seeking to reduce hazards and prevent injuries.
Health Care
SB 5521 - Small Group Insurance
SB 5521 would have provided greater choices to employers by expanding access to health insurance for small groups. Specifically, SB 5521 would eliminate the "Every Category of Provider" requirement for all groups and individuals. In addition the bill allows for more factors such as aging and industry in developing groups and changes the definition of a small group from 1-25 to 2-50 to be compliant with HIPPA. This bill passed the Senate and died in the House of Representatives.
SB 5209 & HB 1643 - Medical Malpractice Reform
SB 5209 would have limited noneconomic damage claims to $350,000 for medical malpractice claims in an effort to make medical malpractice insurance affordable for Washington physicians. This bill passed the Senate and died in the House of Representatives. The House version, HB 1643 also failed to get addressed in the House of Representatives.
HB 1828, HB 1825 & HB 1067 - Mandated Benefits
The number of mandated benefit proposals were fewer this year then in years past, primarily because of the economic recession facing our state. AWB began the session with a position of opposing new, and supporting the reduction of mandated benefits and other restrictions that unnecessarily add costs to the system. Proposals to increase the number of mandated benefits include:
• HB 1828 –Requiring insurance plans to cover mental health;
• HB 1825 – Requiring insurance plans to cover newborn hearing screening; and
• HB 1067 - Requiring insurance plans to cover neurodevelopmental therapies for individuals age eighteen and under.
All of the above mentioned bills died in the House of Representatives.
SSB 5807, HB 1830 & SB 5704 – Basic Health Plan
SSB 5807 would have reorganized and reprioritized who is covered by the state’s Basic Health Plan, and what benefits enrollees receive. AWB supported this bill which addressed significant shortfalls in the Basic Health Plan budget. This bill passed the Senate and died in the House of Representatives.
HB 1830 and SB 5704 were opposed by AWB. Both of these bills would have required employers to reimburse the state for individuals who are on the Basic Health Plan or Medicaid. HB 1830 and SB 5704 died in their respective houses due to the hard work of AWB’s health care lobbyist.
SB 6680- Prescription Drugs
Gov. Locke and the Legislature made addressing prescription drugs for seniors a priority this session. Rep. Eileen Cody (D-Seattle) introduced HB 1214, supported by Gov. Locke, which required agencies to pool their purchasing power that was then extended to all citizens. AWB expressed concerns over the state entering into competition with the private sector while supporting state agencies being more prudent
purchasers of prescription drugs by pooling their resources.
SB 5904 was introduced by Sen. Alex Deccio (R-Yakima) and was the preferred legislation by AWB, as it also required state agency pooling for purchases but limited the eligibility in the program. Both bills had similar education programs but enough major differences that negotiations began between the House, Senate and Governor’s office.
As a result, SB 6680 was introduced as compromise legislation that requires the Department of Social and Health Services (DSHS) to provide a plan for a state-subsidized drug benefit under a waiver of federal Medicaid rules. The Health Care Authority will have to negotiate with prescription drug manufacturers for price discounts. Under the plan, statesubsidized drugs would be available to any Washington resident at least 50 years old, or between 19 and 49 years old with a disability. It also includes families whose income does not exceed 250 percent of the federal poverty level and who otherwise lack prescription drug coverage. Health care providers and members of the public will obtain help in accessing manufacturer-sponsored prescription drug assistance programs through a state-sponsored Pharmacy Connection. AWB will keep an eye on this new program to make sure it is costeffective, fair and well managed.
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