Seattle Employer Fees Still An Option, For More City Labor Law Probes And Outreach

Initiative 125 Was A Bargaining Chip

Seattle Employer Fees Still An Option, For More City Labor Law Probes And Outreach
A ballot measure that would have asked for Seattle voter approval of a special charge on businesses based on employee hours worked, has been put aside. The move is part of a nuanced labor union campaign to expand funding for city labor law enforcement. Photo: mifl68.

Dead for now is a ballot measure on a controversial employee hours-worked tax in Seattle. It would have been to fund more Seattle investigations of employers for city labor law compliance, and for more outreach to workers on their rights. However, special taxes or fees levied on employers for those purposes remain a distinct possibility in 2017 city budget planning.

Representatives of employers say special taxes on businesses to fund day-to-day operations of a city department is a poor budgeting practice. Instead they are strongly urging city council members to use the general fund.

According to a city Finance Department summary, that is the “primary fund” of the city budget, from which are drawn “the majority of resources for services typically associated with the city,” including departmental operations.

However it is paid for, the expansion of Seattle’s Office of Labor Standards (OLS) to as much as $6 million in funding and 22 employees is a city government priority. Created last year, OLS is currently supported by the general fund. It now has 12 employees, and a $3.6 million budget.

In the wake of the withdrawn ballot measure, there are three main choices on how to pay for OLS expansion. One is a $22.47 annual fee for employers per full time worker. A second is another type of fee or tax on employers for OLS growth. A third choice is to use the general fund.

The Leverage Game

Regardless, the ballot measure for the employee hours-worked tax could still be resurrected by its labor union backers if the city funding effort stalls, according to Lens sources.

Earlier this year Service Employees International Union (SEIU) Local 775 filed Seattle Initiative 125, which would have increased OLS funding by adding a new Seattle business tax of one penny for each employee hour worked in the city.

It is unclear why SEIU chose not to turn in required signatures before the August 2 deadline to qualify the measure for the November ballot. Especially because the union had donated $167,050.70 to the Yes on I-125 Committee as of August 4. Repeated requests for comment from SEIU 775, and the Yes committee were not successful.

Business community sources tell Lens that they believe SEIU 775 actually filed the initiative as leverage, to try and get the office funded in some way. Now that the Council is clearly moving toward selecting a funding method on its own, the union has stopped pursuing the ballot measure. The initiative or a similar measure could be back on the table if the union doesn’t get what it wants from the city budget process.

Use The General Fund, Say Some Employers

Some employer groups don’t want any source used other than the city general fund.

“We believe any city department should be funded by the general fund and not a special head tax on businesses,” Jillian Henze, local communications manager for the Washington Restaurant Association and Washington Lodging Association, told Lens.

Seattle Mayor Ed Murray proposed to double OLS support by providing an additional $3.6 million in the 2017 budget. This expansion would come from existing resources in Seattle’s general fund.

“If the [City] Council can find money in the general fund to hire additional legislative assistants and to bail out a bike-share program, it should be able to find a similar amount of money to enforce its own laws,” said Seattle Metro Chamber President and CEO Maud Daudon.

Annual Per-Employee Fee Of $22.47 One Option

Now getting a closer look by the city council to support OLS expansion is an annual per-employee fee based on the size of a business. City calculations are that it would need to be $22.47 per worker, per year.

In addition to the general fund route, other options include the council implementing the SEIU penny-per-hour-worked tax, or a variation of that targeting only full-time employees. Additional possibilities include increasing business licensing fees or raising the Business and Occupation (B & O) tax.

Tony Kilduff of the Seattle City Council Central Staff, in a presentation to the Civil Rights, Utilities, Economic Development and Arts Committee outlined the range of choices. The alternatives are also detailed in a staff memo to the council.

Kilduff said that after discussions with stakeholders, the 2017 OLS budget would need to be increased to $6 million because of a larger need for outreach and education.

Council Member and committee chair Lisa Herbold determined that hikes of license fees and the B & O tax were no longer viable options because of proposed tax increases by Murray to expand the city’s police force.

Herbold suggested the city follow the model established by the Paid Sick and Safe Time (PSST) Ordinance. It imposes different requirements on businesses according to size and number of full-time equivalent employees.

OLS was created last year and is a division of the Seattle Office for Civil Rights. It enforces Seattle labor standards for minimum wage, paid sick and safe time, wage theft and so-called “fair chance” employment for ex-convicts.

Since it went into operation in April 2015, OLS has completed 220 investigations and recovered $316,112.80 for workers, according to the office’s June 2016 dashboard. As of June 30, OLS had 171 open investigations.

According to data provided to Lens by the Washington Employment Security Department, annual employment in Seattle in 2015 totaled 592,366 workers.


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