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Businesses push back against “cash cow” bill

Businesses push back against “cash cow” bill

State lawmakers are considering legislation that would allow private parties to sue employers on a state agency’s behalf and receive part of the penalties imposed, a move business advocates warn would undermine efforts to rebuild the state’s workforce after the spike in unemployment last year.

SSHB 1076 sponsored by Rep. Drew Hansen (D-23) cleared the state House on March 5 in a 53-44 vote and is now scheduled for executive action in the Senate Ways and Means Committee.

Critics testifying at the bill’s March 30 public hearing warned that California’s Private Attorneys General Act (PAGA) creating a similar policy offers a forewarning of what may come should the bill pass.

“If you value the ability of employees to organize and collectively bargain in Washington state, this is absolutely the wrong bill to support,” Alaska Air Group Legal Senior Vice President Kyle Levine said. He added the bill would “fundamentally change our relationship with our labor partners and undermine the validity of our collective bargaining agreements for represented employees. If you support having labor-organized companies headquartered in this state, I urge you to oppose this bill.”

The state has a variety of agencies that handle different types of work laws. The Department of Labor and Industries (L&I) enforces the Minimum Wage Act, while the Washington State Human Rights Commission (HRC) enforces the Washington Law Against Discrimination (WLAD).

Under SSHB 1076, a private party known as a “relator” would be able to bring a qui tam action against an employer for violating both these laws, as well as:

  • the Gender Equal Pay and Advancement Opportunities Act;
  • farm labor contractor laws;
  • Industrial Welfare Act; and
  • The Washington Industrial Safety and Health Act.

The relator would have to provide both the state agency and the employer notice of the legal action. If the agency decides to investigate, resolution must occur within 180 days of the notice. If no investigation occurs, the agency must notify the relator within 60 days of the notice.

The bill prohibits qui tam action under various circumstances, including if the employer shows proof of resolution with the state agency regarding the violation. If there are penalties, the relator would be entitled to a part of it, with the rest distributed to affected employees.

However, Levin described the bill as a “cash cow” for trial lawyers, saying that of the $100 million the company has paid under California’s law, “a fraction of those penalties go to employees.”

Washington State Hospital Association lobbyist Lisa Thatcher also spoke against the bill, saying that settlements under California’s law can cost a hospital between $200,000 to $2.5 million. “This will result in millions of dollars leaving our healthcare system.”

Washington Food Industry Association Legislative Director Catherine Holm noted that the bill would incentivize employers to settle out of court rather than continue with litigation. A similar observation was made by Washington Trucking Association Vice President Sheri Call, who said the bill would have an “extremely adverse impact on Washington’s trucking industry. It’s worthwhile to pay off the relator…rather than face the time and expense of the qui tam litigation.”

Washington Retail Association lobbyist Bruce Beckett said “we need to be removing barriers to hiring people back to work. (HB) 1076 does the opposite. It just puts the fear of lawsuits and frivolous claims into the eyes of employers for simply having people on their payroll.”

“Litigation is going to explode after COVID,” Witherspoon Kelley defense attorney Bill Symmes said. “The courts are absolutely bogged down. This is not the time to create further cause of action that will clog up our courts.”

The bill is scheduled for executive action on April 2.

TJ Martinell is a native Washingtonian and award-winning journalist. Born and raised in Bellevue, he’s been involved in the news industry since working at his high school newspaper.

His investigative reporting for various community newspapers in the Puget Sound region has been recognized by the Washington Newspaper Publishers Association and the Society for Professional Journalists.

A graduate of Eastern Washington University, he has a B.A. in journalism and was the news editor of EWU’s student university newspaper.

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