H-166                _______________________________________________

 

                                                    HOUSE BILL NO. 620

                        _______________________________________________

 

State of Washington                              49th Legislature                              1985 Regular Session

 

By Representatives Sayan, Wang, Unsoeld, R. King, Fisch, Fisher, Belcher, Basich, Vekich and Lux

 

 

Read first time 2/8/85 and referred to Committee on Commerce & Labor. Referred to Committee on Ways & Means 3/6/85.

 

 


AN ACT Relating to economic stabilization and worker displacement; adding a new chapter to Title 49 RCW; prescribing penalties; making an appropriation; and declaring an emergency.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

 

          NEW SECTION.  Sec. 1.     The legislature finds and declares that:

          (1) Unemployment which results from layoffs, shutdowns, sales, relocations, or other forms of closure is clearly a social and economic problem rather than solely an individual problem and requires a societal response;

          (2) Economic and social disruptions resulting from the loss of jobs adversely affect communities as well as individuals;

          (3) Private employers which create job losses through layoffs and closures should engage in planning that is intended to prevent unemployment from occurring as a result.  This is fundamental to the social responsibility of the employment relationship;

          (4) Both employees and their communities will benefit by advance notification, investigations, compensation, public services, and technical assistance that will minimize or avoid the economic and social disruption resulting from job losses;

          (5) Economic planning to avert the dislocation of employment opportunities and new mechanisms of public control are needed to prevent or minimize the harmful economic and social effects of unemployment on employees, their communities, and local government.

 

          NEW SECTION.  Sec. 2.     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

          (1) "Affected employee" means an individual who in any work week is unemployed by reason of a reduction in business operations.

          (2) "Business" means a person, firm, partnership, corporation, trust, association, or other form of private business organization which employs one hundred fifty or more persons at a workplace within this state at any time during the six-month period prior to a reduction in business operations at that workplace.

          (3) "Community" means any municipal corporation in which a business is located, or if a business is not located in a municipal corporation, the county in which a business is located.

          (4) "Community-owned business" means a business, at least fifty-one percent of which is owned by a not-for-profit corporation, established primarily for the purpose of advancing the economic development of the community, if the majority of the members of the controlling board of directors of the not-for-profit corporation are comprised of elected representatives of the community.

          (5) "Department" means the department of community development.

          (6) "Director" means the director of community development.

          (7) "Employee-owned business" means a business owned entirely by employees of that business and controlled by those employees or by a board of directors selected by the employees.

          (8) "Jointly-owned business" means a business owned by both parties named in subsections (4) and (7) of this section, and controlled by a board of directors selected by those parties.

          (9) "Reduction in business operations" means the total or partial closure or relocation of a workplace, the layoff of employees, or any other action taken by a business that would reduce the number of employees at a workplace during any six-month period:

          (a) In the case of a business with fewer than six hundred fifty employees, by fifty percent of the work force or one hundred employees, whichever is less, for a period exceeding three months; or

          (b) In the case of a business with six hundred fifty or more employees, by fifty percent of the work force or two hundred fifty employees, whichever is less, for a period exceeding three months.

          (9) "Relocation" means the permanent transfer of all or part of the business to a place located beyond a fifty-mile radius.

          (10) "Taxing district" means any county, city, or special district permitted by law to tax businesses with workplaces located within the district's boundaries.

          (11) "Workplace" means any factory, plant, office, or other facility where a business has hired employees to produce items or provide services.

 

 

          NEW SECTION.  Sec. 3.     This chapter does not apply to reductions in business operations:

          (1) Resulting solely from labor disputes as defined by the National Labor Relations Act;

          (2) Occurring at construction sites;

          (3) Whenever the reduction results from seasonal factors, which are customary in the industry of which the business is a part, as determined by the department;

          (4) That are coincident with a sale, assignment, or other transfer of all or part of a business operation if:  (a) The successor business conducts or will conduct substantially the same business operation, or offer the same service and use the same physical facilities as the predecessor business; and (b) the successor business agrees to be bound by any existing collective bargaining agreement in force between the predecessor business and a labor organization;

          (5) Resulting from fire, flood, war, or other acts of God; or

          (6) Resulting from bankruptcy.

          This chapter shall apply in all other situations without exception.

 

          NEW SECTION.  Sec. 4.     (1) To carry out the legislative purpose of coordinating the most effective response of state and local governmental agencies and the affected community to a reduction in business operations, a business intending to reduce business operations at a workplace is encouraged to give notice of that intent as provided in this section.  A business which complies with subsections (2) and (3) of this section is not subject to section 10 of this act.

          (2) Written notice of an intent to reduce business operations should be provided at least six months before the reduction is to take effect.  This notice should be transmitted to:

          (a) All employees of the business located at the affected workplace;

          (b) The organization which represents its employees for purposes of collective bargaining, if one exists;

          (c) The department; and

          (d) The legislative authority of the county in which the affected workplace is located.

          (3) The notice under subsection (1) of this section should specify:

          (a) Name, location, and nature of the workplace affected;

          (b) Reasons for and expected length of the reduction in operations;

          (c) Possible alternatives to undertaking the action of reduction in operations:

          (d) Number of employees to be affected by the contemplated action; and

          (e) Rights and provisions for the welfare of employees concerning due process, seniority, and severance pay in the event of a reduction in business operations, which are guaranteed by collective bargaining agreements between employee organizations and the business or otherwise set forth in the personnel policies of the business.

 

          NEW SECTION.  Sec. 5.     Upon receipt of the notice specified in section 4 of this act, or upon receipt of other notice of a reduction in business operations, or of an intent to reduce business operations, or  upon receipt of a request from the local economic stabilization task force provided in section 13 of this act:

          (1) Within five working days the department shall notify in writing:

          (a) The governor's office;

          (b) The department of commerce and economic development;

          (c) The employment security department;

          (d) The department of social and health services;

          (e) The department of labor and industries; and

          (f) The clerks of all taxing districts that could be adversely affected by the decision to reduce business operations, requesting from these officials within fifteen additional working days such information concerning taxation as may be required to prepare a preliminary economic impact statement.

          (2) Within thirty working days, with the assistance of other state agencies as necessary, the department shall:

          (a) Complete an investigation, in consultation with the employees as well as management of the business, of alternatives to reduction which would maintain the existing level of employment at the affected workplace.  This investigation should include as appropriate, but not be limited to, consideration of new sources of financing for the business, reorganization of management or production, opening new markets for existing goods or services produced by the business, and production of modified or different goods or services; and

          (b) Prepare and present to the business, as well as to all parties notified under sections 4(1) and 5(1) of this act, a preliminary statement of economic impact and alternatives for the contemplated or defacto reduction in business operations.

          (3) Within fifty working days, if the business cannot be persuaded to adopt an alternative to reduction identified under subsection (2) of this section, the department shall:

          (a) Convene a meeting of:

          (i) Representatives from the ownership and management of the business;

          (ii) Representatives from the organization representing employees of that business for purposes of collective bargaining, or if there are no such organizations, the specially elected representatives of those employees;

          (iii) Members of the local economic stabilization task force provided in section 13 of this act, or if there is no task force, representative members from the affected community's county legislative authority; city commission or council; port commission, if one exists; and local chamber of commerce;

          (iv) Each member of the affected community's state legislative delegation; and

          (v) State agency representatives as the director deems appropriate; and

          (b) Mandate this body to develop a plan detailing steps to be taken by the parties listed in subsection (3)(a) of this section in response to the decision to reduce business operations, which will:

          (i) Prevent, to the extent possible, unemployment from occurring as a result of this decision; and

          (ii) Minimize disruption in the economic lives of affected employees and affected communities.

          (4) Within one hundred thirty working days the department shall:

          (a) Complete an in-depth investigation of the reasons and underlying causes for the reduction in business operations which shall include review of the relevant financial records of the business;

          (b) In the event of an intended or defacto closure or relocation, complete an initial study of the feasibility and economic viability of establishing a community-owned, employee-owned, or jointly-owned business to continue operations at the workplace and make this study available to the parties identified in subsection (3)(a) of this section; and

          (c) Prepare, as documentation of the activities described in this subsection and the planning process mandated in subsection (3)(b) of this section, a statement of determination of economic and social impact and action which shall include descriptions of:

          (i) The causes for the reduction in business operations;

          (ii) The potential economic impact of this reduction in terms of incomes lost to affected individuals, direct and indirect number of jobs lost to affected communities, revenues lost to affected taxing districts, retail sales lost, supplier, wholesaler, retail, and other related business failures and public service job losses;

          (iii) The projected cost incurred by local, state, and federal agencies in providing financial assistance and services to affected communities;

          (iv) The potential social impact in terms of emotional, physical, and related problems created by the loss of incomes or jobs; and

          (v) The actions which will be taken by the business operation, affected employees and their organizations, affected communities, private financial institutions, and state agencies to offset the detrimental aspects of this impact;

          (d) Publish this statement and its recommendations for public review and comment.  Public hearings may be held; and

          (e) Modify this statement and its recommendations, as appropriate, on the basis of public comment and the findings of public hearings, if held.

 

          NEW SECTION.  Sec. 6.     (1) Services shall be provided to individuals and communities adversely affected by decisions of businesses to reduce business operations, when such services are deemed necessary through planning under section 5(3) of this act or contained in the statements of determination of economic and social impact and action described in section 5(4) of this act.  These services shall include but not be limited to:

          (a) Job search services, including placement in comparable positions to jobs lost by affected employees;

          (b) Training programs, including retraining for occupations offering similar wage levels to those jobs lost by affected employees;

          (c) Relocation assistance, including moving subsidies within Washington for affected employees;

          (d) Targeting temporary subsidized employment in public and private sector jobs for affected employees; and

          (e) Targeting social service programs for individuals and families which strengthen support systems in affected communities.

          (2) The services specified in subsection (1) (a) through (d) of this section shall be provided by the employment security department or, where appropriate, the commission for vocational education or other appropriate agency.  The services specified in subsection (1)(e) of this section shall be provided by the department of social and health services.  Other services shall be provided by the employment security department or the department of social and health services, as appropriate.

 

          NEW SECTION.  Sec. 7.     The department shall provide public services to communities adversely affected by decisions of businesses to reduce business operations when such services are deemed necessary through planning under section 5(3) of this act or contained in statements of determination of economic and social impact and action under section 5(4) of this act.  These services shall include but not be limited to:

          (1) Targeting industrial revenue bonds, revolving funds where applicable, and similar funding sources to stimulate economic development in affected communities;

          (2) Targeting state economic development grants and low-interest loans to create new employment opportunities in affected communities at comparable wage levels to those of the business reducing operations; and

          (3) Targeting state public works projects and federal economic development administration "pass-through" funds for public works to strengthen the economic infrastructure of affected communities.

 

          NEW SECTION.  Sec. 8.     The department shall provide the following technical assistance upon request by employees or communities adversely affected by decisions of businesses to reduce business operations:

          (1) Conducting informational meetings for employees, employee organizations, community organizations and appropriate government agencies about the advantages and disadvantages of community-owned business, employee-owned business, or jointly-owned business, and about the services and technical assistance available through the department as authorized by this chapter;

          (2) In-depth evaluation of the feasibility and economic viability of a proposed community-owned business, employee-owned business, or jointly-owned business based on the results of the initial study described in section 5(4) of this act if previously conducted;

          (3) Technical assistance as needed to community groups, government agencies, or employee groups seeking to form a community-owned business, employee-owned business, or jointly-owned business;

          (4) Assistance  in obtaining financing for the purchase and operation of community-owned, employee-owned, or jointly-owned business, including preference in low-interest state and federal economic development loans;

          (5) Coordinating the efforts of local, state, federal, and private agencies assisting in the formation of a community-owned, employee-owned, or jointly-owned business; and

          (6) Assistance, counseling, and training in the management of a community-owned, employee-owned, or jointly-owned business.

 

          NEW SECTION.  Sec. 9.     A business which intends to reduce business operations at a workplace shall:

          (1) Cooperate in the conduct of the investigation and planning under section 5 of this act; and

          (2) In the event of an intended closure or relocation, make good faith offers of sale at fair market values for plant, equipment, and inventory to the community in which that workplace is located, and to agents of the employees of that business, which singly or in combination are seeking to form a community-owned, employee-owned, or jointly-owned business at the workplace being closed.  These offers shall not be withdrawn until the employees, employee organizations, and community officials have first been notified in writing by the business of the assistance available from the department under section 8 of this act, and have had at least fifty working days from such notice for the opportunity to avail themselves of this assistance.

 

          NEW SECTION.  Sec. 10.    In the event of a total workplace closure or total relocation of a workplace, for which notice has not been given as specified under section 4 of this act, the business shall:

          (1) Pay to the unemployment compensation trust fund an amount equal to fifty percent of the state unemployment taxes paid on the wages of the affected workplace's employees for services performed in the most recent eight completed calendar quarters prior to closure;

          (2) Continue for the benefit of affected employees for at least six months from the date of closure or relocation, in the same manner and on the same basis, the health care benefits that the employees were provided immediately prior to the closure or relocation of the workplace; and

          (3) Provide to the director a relocation and/or retraining plan, as applicable, for the affected employees.

 

          NEW SECTION.  Sec. 11.    Any person knowingly making false statements under this chapter is guilty of a gross misdemeanor under RCW 9.92.020.

 

          NEW SECTION.  Sec. 12.    An economic stabilization task force shall be formed by July 1, 1985.  This task force shall be composed of the commissioner of employment security, the  secretary of social and health services, the director of commerce and economic development, the director of community development, a representative of the commission for vocational education, a representative of the business community, and a representative of organized labor.  The task force shall be chaired by the governor or the governor's designee.

          The purpose of this task force shall be to provide a timely, coordinated response by agencies of the state of Washington and community organizations in the event of a reduction in business operations.

          When the task force is informed of a reduction in business operations which is likely to have a major impact on a community, the task force shall meet in a timely fashion to determine the most effective way to:

          (1) Provide short-term assistance to affected workers;

          (2) Promote the rapid reemployment of affected workers;

          (3) Provide alternatives to the reduction in business operations, where appropriate;

          (4) Assist local communities in the planning and implementation of effective responses to the reduction in business operations; and

          (5) Where appropriate, assist the communities in long-term economic development efforts.

          The task force shall utilize existing staff and resources.

          In determining the most effective response to a reduction in business operations, the task force shall consult with representatives of local government, community organizations, other state agencies, and other groups which can provide guidance on the appropriate response.

 

          NEW SECTION.  Sec. 13.    (1) The legislature finds that it is beneficial to the state's economic health and general welfare, and a recognized governmental function of the state of Washington, to encourage communities to take steps that will mitigate the economic and social costs of a reduction in business operations.  One means of providing effective community response to such business reductions is the formation of local economic stabilization task forces.  To support these local task forces, a state emergency economic assistance fund is established.  Eligibility for allocations from this fund to local economic stabilization task forces shall be determined as provided in this section.

          (2) Each affected community may form local economic stabilization task forces composed of representative members from the county legislative authority; the city commission or council; the port commission, if one exists; the local chamber of commerce; an employee organization, the selection of which shall be made by the director; and each member of the affected community's state legislative delegation.  The names of the members of a local task force shall be submitted to the director for appointment.  The director or a designee shall participate in the activities of the local economic stabilization task force.  The director may request the participation of other state agency representatives as the director deems appropriate.  Members of the local economic stabilization task force shall not receive remuneration for services rendered to the task force, nor be compensated or reimbursed for travel expenses from any funds of the local emergency economic assistance fund.

          (3) The functions of the local economic stabilization task force, in cooperation with the department and other appropriate governmental agencies, shall be:

          (a) Providing research and technical assistance regarding the feasibility of alternatives to reductions in business operations;

          (b) Coordinating the dissemination of information to employees regarding training and benefit programs for employees affected by a reduction in business operations;

          (c) Promoting employee and employer communication and cooperation before and during the commencement of a reduction in business operations;

          (d) Planning economic development programs in affected communities; and

          (e) Entering into such contracts as are appropriate for carrying out the functions under (a) through (d) of this subsection.

          (4) If a local economic stabilization task force establishes an emergency economic assistance fund for the purpose of providing such administrative support and technical resources as may be appropriate to carry out the task force's functions under subsection (3) of this section, matching funds may be provided on a dollar for dollar basis from the state emergency economic assistance fund.  Applications for matching funds shall be submitted to the director on a form prescribed by the department.  The department shall adopt rules for determining the eligibility for matching funds based on the impact of the reduction of business operations on the community's economic condition, the number of employees affected, the unemployment rate in the county in which the workplace is located, and the resources available in the community to assist in economic recovery.  In allocating matching funds, the following restrictions shall apply:

          (a) If the reduction in business operations involves a business identified under section 2(8)(a) of this act, the amount of matching funds shall not exceed one hundred thousand dollars; and

          (b) If the reduction in business operations involves a business identified under section 2(8)(b) of this act, the amount of matching funds shall not exceed two hundred fifty thousand dollars.

          In no event may the amount paid from the state emergency economic assistance fund to a local emergency economic assistance fund exceed two hundred fifty thousand dollars during a biennium.

          (5) Whenever the director determines that a local economic stabilization task force qualifies for matching funds under subsection (4) of this section, the affected community shall be deemed by law to be in a state of emergency which shall render the local economic stabilization task force eligible to apply for any and all emergency funding available under state law for emergency projects, provided that the specific project under consideration for emergency funding meets all other criteria established by law for such projects.

          (6) The local economic stabilization task force shall select a treasurer, who shall be responsible for making disbursements from the local emergency economic assistance fund and who shall keep records of all such disbursements.  The records kept by the local economic stabilization task force treasurer shall be made available for annual audit by the state auditor.

          (7) The department shall report annually to the legislature on the activities of local economic stabilization task forces and allocations made to local emergency economic assistance funds, making recommendations for improving state and community responses to reductions in business operations.

          (8) This section shall expire on July 1, 1989.

 

          NEW SECTION.  Sec. 14.    If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

 

          NEW SECTION.  Sec. 15.    Sections 1 through 14 of this act shall constitute a new chapter in Title 49 RCW.

 

          NEW SECTION.  Sec. 16.    The sum of one million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1987, from the general fund to the department of community development for the purposes of this act.

 

          NEW SECTION.  Sec. 17.    This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.