Personnel Issues of Note from the 2023 Legislative Session

The 2023 Regular Legislative Session passed a number of bills that public agency employers should take note of, including establishing protections for employees who report securities fraud, amending the statutory definition of employment, modifying procedures for reviewing and approving request for partial wage replacement for unemployed workers, and updating hospital staffing standards.

Establishing a Whistleblower Award and Protection Act

The passage of HB 1370 has authorized awards to whistleblowers who provide information regarding securities fraud and prohibits acts of retaliation against whistleblowers. The Act also amended RCW 43.320.115, increasing the award amount a whistleblower may receive from the Securities Prosecution Fund from $350,000 to a limit of $1 million. From a municipal perspective, securities activities may include the issuance of bonds and municipal fund securities that may be issued to fund a variety of public projects and create cash flow for government needs.

Retaliation protections

Under the Act an employer may not directly or indirectly terminate, discharge, demote, suspend, threaten, harass, or retaliate in any other manner against an individual because of any lawful act done by the individual, including:

• Providing information to the state or law enforcement agency concerning a possible violation of state or federal securities laws, rules, or regulations that has occurred, is ongoing, or is about to occur;
• Initiating, testifying in, or assisting in any investigation, or administrative or judicial action of the securities administrator, Washington State Securities Division, or other law enforcement agency based upon or related to such information;
• Making disclosures that are required or protected by law, rule, or regulation subject to the jurisdiction of the U.S. Securities and Exchange Commission (SEC), or the federal Securities laws; or
• Making disclosures to a person working for the employer who has the authority to investigate, discover, or terminate misconduct, regarding matters subject to the jurisdiction of the securities administrator, state Securities Division, or the SEC.

In short, an individual may not be impeded from communicating directly with state securities division staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement with respect to such communications.

Awards

Prior to receiving any award from the securities administrator, a whistleblower must disclose their identity and provide additional information as required by the securities division. Information that could reasonably be expected to reveal the identity of the whistleblower is exempt from disclosure under the Public Records Act.

Considerations for the award amount available, as determined by the securities administrator, include:

• The significance of the original information provided by the whistleblower to the success of the administrative or judicial action;
• The degree of assistance the whistleblower provides in connection with the administrative or judicial action;
• The interest of the securities administrator in deterring securities law violations by making awards; and
• Any other factors the securities administrator considers relevant.

Updating the Definition of Employment

Traditionally, the terms “master” and “servant” have been used in common law to describe the relationship between employer and employee. HB 1107 addresses this outdated language by removing the terms “master” and “servant” from Titles 50 and 50A, the Unemployment Compensation Act and Family and Medical Leave Act respectively.

The definition of “employment” has been modified as it applies to unemployment insurance and the Paid Family and Medical Leave Program by replacing a reference to the “relationship of master and servant” with “any employment relationship.”

Specifically, “employment” has been modified to mean any personal service, of whatever nature, unlimited by any employment relationship as known to the common law or any other legal relationship, including service in interstate commerce, performed for wages, or under any contract calling for the performance of personal services, written or oral, express or implied.

Changes to Unemployment Insurance Procedures

The unemployment insurance (UI) system, administered by the Washington State Employment Security Department (ESD), is designed to provide partial wage replacement for unemployed workers.

The ESD makes a determination or redetermination as to whether an applicant is eligible for UI benefits. When an employee or employer disagrees with a decision made by the ESD, they may appeal the determination to the Washington State Office of Administrative Hearings (OAH) within 30 days of receiving the notice/mailing from ESD. The administrative law judge with the OAH is directed to review certain items in any case involving UI benefits, regardless of the basis upon which an employee or employer filed an appeal.

HB 1656 specifies that all matters covered by an initial determination, or redetermination on a person’s claim for unemployment insurance benefits are at issue in an appeal, regardless of the particular grounds set forth in the notice of appeal.

The bill also has the effect of removing the requirement that the OAH review a claimant’s availability for work in every dispute. For disputes involving claims for waiting period credits or benefits, all matters and provisions relating to the individual’s right to receive such credit or benefits for the period in question, including the claimant's availability for work, are deemed to be an issue irrespective of the particular grounds set forth in the notice of appeal — and the claimant's availability for work must be determined apart from all other matters.

Workers Compensation — Updates to Required Medical Examinations for Injured Workers

In the workers' compensation system managed by the Washington State Department of Labor and Industries (L&I), an employer's claim manager may request that an injured worker submit to a medical examination performed by an L&I-approved medical provider, which is typically referred to as an independent medical exam (IME). The purpose of an IME is to:

1. Determine whether to allow or re-open a claim;
2. Resolve a new medical issue, an appeal, or case progress; or
3. Evaluate the worker's permanent disability or work restriction.

Prior to the statutory amendment, L&I’s rules prohibited a worker from recording an examination. SHB 1068 amends RCW 51.36.070 to specifically allow an injured worker to make an audio and video recording of an independent medical examination and to have one person of the worker's choosing present during the examination.

The worker or worker's representative must notify the scheduling entity that the examination will be recorded no less than seven calendar days before the date of the examination. L&I is required to develop and implement rules defining this notification process, though it is not clear when agencies can expect these rules to be released.

If requested, the worker must provide a copy of any recording of an independent examination to the L&I or self-insured employer within 14 days of the request, but not prior to the issuance of the written report of the examination. Such recordings are considered confidential as provided under the existing RCW 51.28.070 confidentiality statute.

If an injured worker chooses to have an observer present during an independent examination, that person must be at least 18 years of age and may not be:

• The worker's legal representative or an employee of the legal representative, or
• The worker's attending provider or an employee of the attending provider.

L&I’s webpage What's New in Claims provides a detailed overview of what a worker can expect under the changes.

Changes to Hospital Staffing Standards

Relevant to public hospital employers, E2SSB 5236 addresses hospital staffing standards, which were set to lapse after 2023. The bill makes changes to nurse staffing committees and staffing plan requirements, including the following:

• Requiring hospitals to report noncompliance;
• Requiring both the state department of health and L&I to establish a formal agreement on oversight and enforcement roles; and
• Creating a hospital staffing advisory committee.

The bill also amends meal and rest break provisions — including requiring reporting noncompliance — and amends overtime provisions for health care employees.

Additional information regarding the changes and new requirements for compliance under E2SSB 5236 is available on the Washington State Hospital Association website.