Newsletter April 13, 2023

POLICY

• Legislative Update
• Status of employment law bills
• Warehouse legislation moves forward with WR-backed amendments
• Data privacy bill advances – likely to become law 
• Paid family and medical leave rate could increase under budget proposals
• Breaking down the three state budgets under consideration this session
• Comparing the Senate- and House- operating budgets

ECONOMY

• Millions of SBA Covid EIDL loans are coming due
• Small businesses concerned about labor and taxes
• Inflation expectations on the rise again: What's behind the shift?
• E-commerce prices decline by 1.7% in March

TRENDS

• Interest rates and bank cautiousness press brakes in downtown Seattle recovery
• Walmart to build EV fast-charging network nationwide by 2030

RETAIL THEFT & PUBLIC SAFETY

• From stolen cars to stolen iPhones, thieves are busy in Washington state.

SAFETY

• Sprains and strains at work are costly

Legislative Update

April 12 at 5:00 p.m., was the last opportunity to pass bills from the opposite House, except for initiatives, alternatives to initiatives, budgets, matters necessary to implement budgets, and differences between the houses.

Just ten days remain for the 2023 Legislative session, assuming it finishes on schedule. The WR government affairs team continues to work diligently on several bills of great importance to our members.

SB 5352 — Concerning vehicular pursuits

Senate Bill 5352 addresses the 2021 legislation HB 1054, which increased the criteria for police pursuits from reasonable suspicion to probable cause that an individual has committed specific crimes before initiating a chase.

The bill made it out of the Senate in March and was watered down significantly, excluding property crimes. The bill passed out of the House on Monday with amendments that modified the evidentiary threshold required for engaging in a vehicular pursuit. The amended version allows an officer to conduct the vehicular pursuit if the officer has reasonable suspicion—rather than probable cause—that a person has or is committing vehicular assault. Officers may also pursue in situations where the subject of the vehicular pursuit poses a serious risk of harm to others.

Early Tuesday morning, the House of Representatives passed a version of a bill that would lower the threshold for police to pursue a suspect from probable cause to reasonable suspicion. Pursuits would only be permitted for limited crimes, including a violent offense, sex offense, an escape, a DUI, vehicular assault, or domestic violence assault in the first, second, third, or fourth-degree offense.

Under existing legislation, pursuits are permitted solely when an individual presents an "immediate danger." At the same time, the House's proposal broadens the criteria to include cases where a person poses a "significant threat of harm to others." The bill now returns to the Senate for concurrence. Senate Minority Leader John Braun said he is concerned the bill will likely die in the Senate.

SB 5187/HB 1140 — ORC Task Force Funding – Operating Budget

We continue to urge for full funding for the task force. In response to the Attorney General’s request for $3 million, the governor recommended funding the task force at $2.2 million. The House budget proposes funding at $1.1 million, and the Senate budget includes $2.2 million. WR is urging the House budget team to increase their proposal to $2.2 million for approval.

Status of employment law bills

As we approached Wednesday’s floor cut-off, several employment law bills continued to move forward with amendments. One bright spot is the personnel file bill, which is dead for this session.

SB 5217 Ergonomics – This week, the House approved SB 5217, which repeals the voter-approved ban on rulemaking on musculoskeletal injuries. It authorizes the Dept. of Labor and Industries to promulgate one rule per year for an industry or sector with more than twice the rate of musculoskeletal injuries compared to the state’s overall rate. The bill includes WR-supported amendments to delay rule implementation for three years and to exclude sub-sectors of an industry that are not meeting the threshold rate of injuries. The intent is to focus on those sectors and businesses incurring a high rate of injuries and not sweep in those operating safely.

HB 1068 Workers’ right to record Independent Medical Exams – the Senate approved HB 1068, which allows an injured worker to videotape an independent medical examination (IME). WR has repeatedly pointed out that finding physicians to conduct IME examinations is already challenging. Even L&I expressed concerns that this new will reduce the number of IME physicians and cause delays in progress for workers. The Senate added WR-supported amendments requiring the injured worker to provide a 7-day notice of intent to videotape an examination, prohibit workers from posting the recording to social media, and eliminating a workers representative from taping an examination.

HB 1521 Workers’ compensation duties for self-insured – the Senate approved HB 1521, which originally added a new duty of “good faith and fair dealing” for third-party administrators in dealing with injured workers on behalf of self-insured employers. Significantly, the bill added a new private right of action, putting third-party administrators at risk of lawsuits. The bill was initiated in response to a dispute between local firefighters and one municipality; however, as drafted HB 1521 included all public and private self-insured employers and their third-party administrators. The Senate amended the bill to limit the bill to only municipal employers, defined those employers, and eliminated the risk of a private right of action. The House must now approve the changes made by the Senate.



HB 1320 Personnel files – which required employers to provide an employee’s full personnel record within 14 days, or be at risk of lawsuits, failed to pass the Ways and Means Committee this week and is considered “dead” for the session. WR has testified multiple times over two sessions on this bill, and we expect it will return in 2024.

Warehouse legislation moves forward with WR-backed amendments

The Washington State Senate passed HB 1762, Protecting Warehouse Employees, with several amendments supported by the Washington Retail Association. Although WR was hopeful the bill would fail to move forward, in the end, Senate leadership agreed to several changes to get the bill passed. The changes include:

1. Removing the ability of an employee, former employee, or their designated representatives to file a private right of action for injunctive relief and, in the case of retaliation, for damages.
2. Removing the ability of the Attorney General to bring a civil action for violations.
3. Changing the standard for rebutting a presumption of retaliation from “clear and convincing” to “a preponderance of the evidence.” Although the bill contains a prohibition on retaliation, discrimination, or adverse action against an employee who exercises their rights under the bill, this is a much fairer standard. 

Despite the changes, WR and our coalition partners remain opposed to the bill. HB 1762 now returns to the House for concurrence, where we expect the unions and trial lawyers to ask the prime sponsor, Rep. Beth Doglio, not to concur. Accordingly, this bill will likely be active until adjournment.

Data privacy bill advances – likely to become law 

House Bill 1155, My Health My Data, passed the Senate last Friday and now is before the House for consideration of concurrence with the Senate amendments—which will likely happen soon. The Governor has already indicated he intends to sign the bill when he receives it.

WR has been working diligently to clarify the broad legislation to help our members implement and comply with the provisions. Unfortunately, as the bill is currently written, retailers are greatly concerned about their ability to implement or comply with the requirements fully; exposing them to potential legal action.

More concerning is the confusion and angst the bill will create for consumers and retail employees. The new law will require opt-in consent by shoppers for anything that can be considered “health-related,” which includes millions of items and services. Retailers will likely be forced to have customers opt-in for all purchases to protect themselves.

Retail workers on the front line will bear the brunt of consumer frustration as they question the new, repetitive, and irritating opt-in requirements. Sadly, consumers in Washington will not receive the same level of service as they do in other states. Special deals and discounts on products and services will become the exception—not the norm—for customers that don’t choose to take part by opting in.

WR is concerned that the unintended consequences of HB 1155 far outweigh the perceived benefits of the legislation. HB 1155 must be fixed before it becomes law. 

Paid family and medical leave rate could increase under budget proposals

SSB 5286 would change the paid family and medical leave (PFML) rate structure. Both the Senate and the House have passed the bill.

The legislation requires the premiums to be set to maintain a new three-month reserve. The legislative task force on paid family and medical leave premiums recommended in November that the reserve be seeded with money from the general fund–state (GFS). Last year, in the 2022 supplemental, the Legislature had set aside $350 million from the GFS for the PFML account, but that was only to ensure that the account would not be in a deficit at the end of 2021–23.

Both the Senate and House-passed 2023 supplemental budgets would reduce the $350 million appropriation—to $225 million in the Senate and to $200 million in the House. Under both proposals, the appropriation would be direct (not contingent on a deficit).

Read the article

Breaking down the three state budgets under consideration this session

As the legislative session in Olympia approaches its final weeks, focus has shifted to the state's budgets.

Washington state operates on three budgets, each following a biennial cycle. During the "long" 16-week legislative session held in odd-numbered years, the Legislature establishes these budgets.

The three state budgets include the operating budget (significantly the largest, currently just below $70 billion for the upcoming biennial cycle); the transportation budget (whose size is more challenging to define, as it comprises approximately $12 billion of state taxpayer funds plus additional federal contributions); and the capital budget (roughly $8 billion for the two-year period). The specifics of these budgets will not be finalized until the session concludes, which is currently set for April 23.

Read Rep. Jim Walsh’s (R-19) full commentary

Comparing the Senate and House-passed operating budgets

Washington Research Council

Compared to the 2022 supplemental, the Senate-passed operating budget proposal would increase 2023–25 appropriations by 8.2% and the House-passed proposal would increase appropriations by 9.4%. Neither the Senate nor the House would increase general taxes. To fund the new, ongoing spending, both proposals—but especially the House’s—would use one-time funds, including reserves.

Last year the Legislature enacted the state’s largest ever supplemental operating budget. As a result, 2021–23 appropriations from funds subject to the outlook (NGFO) increased by a record high 24.3% over 2019–21. By comparison, the 2023–25 operating budget proposals that have been passed by the Senate and the House appear relatively modest. The Senate-passed proposal would increase appropriations by 8.2% and the House-passed proposal would increase appropriations by 9.4%. (From 1993–95 through 2021–23, the average biennial spending growth was 10.1%.)

The Senate would increase NGFO spending by $5.254 billion and the House would increase spending by $6.003 billion in 2023–25 (these figures include both maintenance and policy level changes). With the March 2023 revenue forecast, the Legislature has $3.106 billion more to work with over the six-year budget window than anticipated when the 2022 supplemental budget was adopted.

Neither the Senate nor the House would increase general taxes.



Download the full report

Millions of SBA Covid EIDL loans are coming due

As millions of Small Business Administration (SBA) Covid Economic Injury Disaster Loans (EIDL) are coming due, borrowers struggling to repay face limited options and uncertain guidance. The SBA approved around 3.9 million loans totaling $378 billion, with a 3.75% interest rate and a 30-year term, before the program ended in May 2022.

Initially, EIDL loan payments were to begin 24 months after disbursement, but the SBA added a six-month deferment period, totaling 30 months. Consequently, business owners still recovering from the pandemic or whose businesses have failed are left with few options to handle payments.

A Hardship Accommodation Plan is the primary option for small-business owners unable to make payments. This plan reduces the borrower's payments by 90% for six months before resuming regular payments. However, experts argue this may not be the best solution for many borrowers, as it only postpones the problem.

Due to a lack of collateral and personal guarantees, the SBA has limited options for collecting delinquent EIDL loans. Although the agency maintains that business owners must repay their loans, it has charged off approximately $330.3 million in Covid EIDL loans through 2022.

A key issue for business owners struggling to repay is the lack of guidance on the "offer in compromise," which enables borrowers to pay a portion of the loan and have the rest charged off. While the SBA provides this option for other loan products, it has not done so for EIDL loans.

If a business owner chooses to walk away, they face negative credit reporting, confiscation of tax refunds, and, in extreme cases, wage garnishment. Additionally, future policy changes could impact the SBA's collection efforts on smaller loans.

Small businesses concerned about labor and taxes

Newly released survey data shows that small business businesses cite the labor market as their top concern.

The National Federation of Independent Businesses released a survey of small businesses which found that the labor market is their top concern, with 43% of small businesses saying they have job openings they cannot fill.

“The labor force participation rate remains below pre-COVID levels, which is contributing to the shortage of workers available to fill open positions,” NFIB Chief Economist Bill Dunkelberg said. “Small business owners are struggling to take advantage of current sales opportunities.”

Small business owners' worries coincide with recent federal hiring data that reveals a slowdown in hiring. The U.S. Bureau of Labor Statistics reported that in March, employers added 236,000 jobs, maintaining an unemployment rate of around 3.5%.

“The labor force participation rate, at 62.6%, continued to trend up in March,” BLS said. “The employment-population ratio edged up over the month to 60.4%. These measures remain below their pre-pandemic February 2020 levels (63.3& and 61.1%, respectively).”



The National Federation of Independent Business (NFIB), representing thousands of members, has become increasingly vocal about the Biden administration's policies. Amid businesses grappling with elevated inflation, the NFIB has opposed Biden's environmental regulations and tax increases. In response to tax increases proposed for small businesses in President Biden's recent budget, the organization launched an ad campaign to challenge these proposals.

“Main Street cannot afford these new tax increases,” said NFIB President Brad Close. “As expectations for better business conditions remain low, while high inflation and worker shortages continue to plague Main Street, these proposals would hurt small businesses’ ability to recover, grow, and create jobs. The White House should instead focus on promoting economic growth by providing certainty, such as permanently extending the Small Business Deduction.”

Inflation expectations on the rise again: What's behind the shift?

For several months, consumers have demonstrated growing confidence in the Federal Reserve's ability to manage inflation, as indicated by a steady decline in near-term inflation expectations. However, this trend has recently shifted. In March, median inflation expectations for the year ahead increased for the first time since October, raising concerns about the future stability of inflation rates.

According to the New York Fed's latest survey, median inflation expectations for the upcoming year increased by a half-percentage point to 4.7%. Curiously, this occurred even as expectations for price increases on essential goods and services, such as food, gas, rent, and medical care, declined last month. This data suggests that the public's belief in the Fed's ability to control inflation may be waning, and that inflation may not fall as much as previously anticipated.

While a single month of data does not necessarily signal a significant shift in inflation expectations, continuous readings of this nature could become a cause for concern among Federal Reserve officials. If inflation expectations continue to rise, the Fed may need to reconsider its approach to managing inflation and consider more aggressive measures to maintain price stability.

In addition, rising inflation expectations could have broader implications for the economy, including reduced consumer spending, increased borrowing costs, and uncertainty in financial markets.

The rise in inflation expectations is significant and needs close attention. If this trend persists, it could indicate waning confidence in the Fed's inflation control, possibly requiring a policy change.

Understanding the factors behind the shift in expectations is crucial for policymakers, businesses, and consumers alike, as they navigate an increasingly complex economic landscape.

E-commerce prices experienced a 1.7% decline in March

Despite ongoing inflationary pressures, online prices saw a 1.7% decrease in March compared to the previous year, as revealed by the Adobe Digital Price Index published by Adobe Analytics. This marks the seventh consecutive month of year-over-year price reductions in more than half of the categories monitored by Adobe.

Categories such as groceries, clothing, and personal care items experienced price increases of 10.3%, 6.6%, and 4.4%, respectively. On the other hand, the report indicated that electronics and furniture/bedding product prices fell by 12.9% and 0.9%, respectively.

Other categories witnessing price declines included flowers and gifts (24.3%), appliances (4.9%), toys (6.6%), and home and garden products (4.9%), as per the Adobe report.

Last year's record inflation continues to affect both retailers and consumers this year, prompting some shoppers to...

Read the rest of the article

Interest rates and bank cautiousness press brakes in downtown Seattle recovery

Already faced with public safety concerns and ongoing work-from-home challenges, commercial real estate projects downtown and across the city are slowing due to interest rate hikes, high construction costs, and increased bank caution. As a result, some see less housing construction and rising financial problems for office buildings.

“It’s a tougher lending environment to get construction loans right now. . . . Lenders are just being super selective. . . . A lot of deals just aren’t penciling [out],” said senior loan officer Robert Meunier of Bellevue Capital Group. 

These challenges are compounded by declining residential rents—down 1% from a year ago. Similar problems are crippling office buildings, as leasing volume is down 39% from last year. Available office space has climbed from 19% in 2022 to 23% in 2023.



“Places like Seattle, San Francisco, Washington [and] New York, have all struggled with the remote work, hybrid work environment,” according to Stephen Buschbom, research director at Trepp, and banking industry turmoil is a “stress multiplier.”

Walmart to build EV fast-charging network nationwide by 2030

Last week, Walmart announced plans to build 2,500 electric vehicle (EV) fast charging stations and 11,000 individual chargers across Walmart and Sam’s Club stores nationwide.

“By 2030, we intend to build our own EV fast-charging network at thousands of Walmart and Sam’s Club locations coast-to-coast,” said Vishal Kapadia, Walmart SVP of Energy Transformation, in an email to WR. “With a store or club located within 10 miles of approximately 90% of Americans, Walmart is uniquely positioned to deliver a convenient charging option that will help make EV ownership possible whether people live in rural, suburban, or urban areas.”

Walmart is positioned to deliver a convenient charging option to help make EV ownership possible whether people live in rural, suburban, or urban areas — even if they do not have a charger at home.  



In a press release, Walmart says the development of low-cost EV charging stations is a part of their mission to help people save money and live better and will help ease transportation costs—the second-highest household cost for much of our country.

From stolen cars to stolen iPhones, thieves are busy in Washington state.

Although not directly connected, these two crime stories involve burglaries and theft of valuable items in Washington state. In the first story, thieves broke into a coffee shop and made a hole in the bathroom wall to access an adjacent Apple store. They then stole over $500k worth of merchandise, including over 400 iPhones, as well as iWatches, and other products. The suspects wore masks and left no fingerprints behind, making it difficult for the police to identify them.

In the second story, the Centralia Police responded to a burglary alarm and caught four suspects fleeing from a business. The police performed a PIT maneuver to disable the suspect's vehicle and apprehended two of the suspects. Although the other two suspects escaped capture, they have been positively identified and will be tracked down by law enforcement. The suspects admitted to committing ten burglaries in the area, including thefts from ATMs located in local businesses.



Both stories highlight the prevalence of theft and burglaries in Washington state and the challenges faced by law enforcement in identifying and apprehending suspects. While the first story was more sophisticated and well-planned, the second involves more opportunistic and impulsive acts of burglary. Nonetheless, both stories illustrate the importance of effective policing and cooperation among law enforcement agencies in combating crime.

Sprains and strains at work result in costly claims

According to L&I data, Over-exertion claims represent about 37% of workers’ comp costs in retail, and the average cost per overexertion claim is a little over $11,500. Lifting boxes, especially automotive parts, is the most frequent cause of overexertion. Carrying was second, followed closely by pushing and pulling. The back was clearly the most frequently injured part of the body, with shoulder injuries a distant second.

Overexertion injuries generally fall into two categories: sprains, the stretching or tearing ligaments, and strains, the stretching or tearing tendons or muscles. These injuries are associated with lifting, repeated bending while twisting at the waist, long-term bending at the waist, pushing/pulling and carrying, reaching, and chronic poor posture.

To help prevent overexertion:

• Stretch and warm up before heavy lifting or strenuous activity
• Use hand trucks and carts as much as possible
• Lift with your legs bent and objects held close to your body
• Avoid bending, overreaching, and twisting when lifting
• Get help when lifting large or heavy items

To successfully reduce such injuries, management and employees must work collaboratively to identify and optimize tasks for efficiency and safety. To equip employees with skills and capabilities to perform their jobs safely and effectively, it is imperative to train them on proper posture, body mechanics, and ergonomics.

Regular assessments, feedback mechanisms, and proactive measures are essential to create a healthy and safe work environment that minimizes the risk of overexertion injuries.

Our safety team is available to help members take their safety to the next level. Contact us 360-943-9198 x122 or safety@waretailservices.com to learn more.

WR diversity statement

WR is committed to the principles of justice, equity, diversity, and inclusion. We strive to create a safe, welcoming environment in which these principles can thrive.

We value all people regardless of race, ethnicity, gender, religion, age, identity, sexual orientation, nationality, or disability, and that is the foundation of our commitment to those we serve.