H-4063

AN ACT Relating to termination of employment; adding new sections to chapter 49.44 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. The legislature finds that a proper balance must be maintained between an employer's interest in operating a business efficiently and profitably, the employee's interest in earning a living, and society's interest in seeing its public policies carried out. The legislature recognizes that the employment-at-will doctrine is undergoing considerable erosion throughout the country, primarily because the basic premise that each employee has the power to individually negotiate his or her workplace rights is inconsistent with the modern workplace. The legislature also recognizes that fair treatment of workers results in greater productivity. Most industrialized nations have adopted laws that protect employees against wrongful discharge.

The availability of employee benefits, particularly health benefits and pension benefits, is a major consideration when an employee makes a choice in jobs. It is not uncommon for a person to forego a job that pays a higher salary for a job that has better health and pension benefits. The legislature finds that many employees are terminated from employment shortly before qualifying for health or pension benefits as a cost-avoidance measure by some employers. The loss of health or pension benefits has a devastating effect on a family, particularly older workers who may have no other opportunity to establish these benefits. The legislature finds that if a business holds out health or pension benefits as being available to its employees, then the employees have a reasonable expectation that these benefits will be provided. The legislature therefore declares, as a matter of public policy, that employers must show good cause to terminate employees if the termination occurs shortly before the employee qualifies for health or pension benefits.

NEW SECTION. Sec. 2. A new section is added to chapter 49.44 RCW to read as follows:

(1) An employer may not terminate an employee within one year of an employee vesting for a pension or qualifying to receive benefits under any provision of a pension, or terminate an employee within sixty days before the employee qualifies for health benefits, without good cause.

(2) Good cause to terminate an employee under subsection (1) of this section may be established by: (a) Showing a reasonable basis for termination by reviewing the employee's employment in view of relevant factors and circumstances, that include the employee's duties, responsibilities, conduct, job performance, and employment record, and the appropriateness of termination for the conduct involved; or (b) showing the termination is a good faith exercise of business judgment by the employer in setting its economic goals and determining methods to achieve those goals, organizing or reorganizing operations, discontinuing or divesting operations or parts of operations, determining the size of its work force and the nature of the positions to be filled by its work force, or determining and changing standards of performance for positions.

Good cause to terminate an employee does not exist if the avoidance of paying health benefits or pension benefits was a substantial factor in the employer's decision to terminate the employee.

(3) This section does not apply to:

(a) Employees who are terminated at the expiration of an express oral or written agreement of employment for a specified duration related to the completion of a specified task, project, or undertaking. If the employment continues after the expiration of the agreement, this section applies to the termination unless the parties enter into a new express oral or written agreement under this subsection;

(b) Employees who have been employed by an employer for a total period of less than one year. A layoff or break in service may not be counted in determining whether an employee's period of employment totals one year, but the employee is considered to be employed during paid vacations and other authorized leaves. An employee's period of employment with two separate legal entities may be combined if both legal entities meet the definition of an employer under section 4 of this act, and the subsequent employer is a successor to the previous employer; or

(c) Employees covered by a collective bargaining agreement, unless the collective bargaining agreement fails to include a provision for good cause termination subject to arbitration.

(4) A right of an employee under this section and section 3 of this act may not be waived by agreement except as provided in this section. All other agreements, disclaimers, or provisions, including provisions contained in employee manuals, that purport to waive employee rights established in this section, or section 3 of this act, are void as against public policy and given no force or effect. The right of an employee to be terminated for good cause may be waived under the following circumstances:

(a) By express written agreement, an employer and an employee may mutually waive the requirement of good cause for termination, if the employer agrees that upon the termination of the employee for a reason other than the willful misconduct of the employee, the employer shall provide severance pay in an amount equal to at least one month's pay for each full year of employment, at the employee's rate of pay in effect immediately before the termination. The employer may make a lump-sum payment or a series of monthly installment payments, that must be at least equal to one month's pay plus interest. The lump-sum payment or the installment payments must begin within thirty days after the employee's termination. An agreement between an employer and an employee under this subsection is subject to a duty of good faith in its formation, performance, and enforcement; or

(b) An employer and an employee may settle a dispute or claim arising under this section.

NEW SECTION. Sec. 3. A new section is added to chapter 49.44 RCW to read as follows:

(1) An employee who believes that he or she has been terminated from employment in violation of section 2 of this act may file suit in superior court. An employee shall file suit for a violation of section 2 of this act within one hundred eighty days after the termination occurs. The one hundred eighty day time period to commence an action in superior court is suspended while the employee is pursuing internal remedies provided by the employer, but resort to an employer's internal procedures is not a condition for filing a suit under this section.

(2) The court may grant one or more of the following remedies for a termination in violation of section 2 of this act:

(a) Reinstatement to the position of employment the employee held when employment was terminated, or, if that is impractical, to a comparable position;

(b) Full or partial backpay and reimbursement for lost fringe benefits with interest, reduced by interim earnings and benefits received, or amounts that could have been received with reasonable diligence;

(c) If reinstatement is not awarded, a lump-sum severance payment at the employee's rate of pay in effect before the termination, for a period not exceeding thirty-six months from the date of the award, together with the value of fringe benefits lost during that period, reduced by likely earnings and benefits from employment elsewhere, and taking into account such equitable considerations as the employee's length of service with the employer and the reasons for termination; and

(d) Reasonable attorneys' fees and costs.

(3) If the court dismisses an employee's complaint and finds it to be frivolous, the court may award reasonable attorneys' fees and costs to the prevailing employer.

(4) Nothing in section 2 of this act or in this section displaces or extinguishes rights or claims that an employee may have against an employer arising under any other statute, regulation, contract, collective bargaining agreement, or the common law.

NEW SECTION. Sec. 4. A new section is added to chapter 49.44 RCW to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply to sections 2 and 3 of this act:

(1) "Employer" includes a person, firm, corporation, partnership, business trust, legal representative, or other business entity that engages in a business, industry, profession, or activity in this state and employs one or more employees, and also includes the state, a state institution, a state agency, a political subdivision of the state, a municipal corporation, or a quasi-municipal corporation.

(2) "Employee" means an individual who works for hire, including an individual employed in a supervisory, managerial, or confidential position, but not including an independent contractor.

(3) "Good faith" means honesty in fact.

(4) "Termination" means: (a) A dismissal, including that resulting from the elimination of a position, of an employee by an employer; or (b) a layoff or suspension of an employee by an employer for more than two consecutive months.

NEW SECTION. Sec. 5. 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.