BILL REQ. #:  S-5043.1 

READ FIRST TIME 02/06/06.   

     AN ACT Relating to establishing minimum labor standards for certain large employers as related to health care services expenditures; adding a new chapter to Title 49 RCW; and prescribing penalties.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that:
     (a) Washington has a long and proud history of establishing minimum labor standards and protecting employee rights. This history is exemplified by the state's industrial welfare, minimum wage, safety and health, and family leave laws, and the state's industrial insurance and unemployment compensation systems;
     (b) Most working Washingtonians obtain health insurance coverage through their employment, and a substantial majority of very large employers responsibly offer health coverage to their employees in Washington state. However, the failure of some very large employers to offer affordable health coverage to their employees in Washington state has created inappropriate competitive advantages for those employers, and greatly increased the likelihood that their employees will be uninsured or enroll in publicly funded health care programs;
     (c) Washington state has a long standing tradition and interest in financing and providing access to appropriate health care services for low-income working families. Currently, one in six Washington state residents receive health care coverage through either the medicaid program, the state children's health insurance program, or the Washington basic health plan. Despite this tradition, in 2004, more than six hundred thousand Washingtonians were uninsured. The number of uninsured Washingtonians has grown in the last several years, due in substantial part to erosion in employer-sponsored health benefits; and
     (d) Most uninsured working-age adults have workers in their family, and low-wage workers are at greatest risk of being uninsured. This situation impacts Washington state, as uninsured low-wage workers seek health coverage through publicly funded programs such as the Washington basic health plan, medicaid, and the state children's health insurance program. In addition, uninsured low-wage workers seek care in hospital emergency rooms and community health clinics when addressing their health problems cannot be delayed any longer. This results in uncompensated care costs that are shifted to health care purchasers, including the state, its taxpayers, and private employers.
     (2) It is the intent of the legislature to set minimum labor standards for some large employers in Washington state with respect to health benefit expenditures, and to further the state's interest in ensuring that its residents have access to appropriate health care services. Ensuring that employers do not eliminate employer-paid health care is important for minimizing the burden on taxpayers and the public health system, and protecting the health, safety, and well-being of the residents of Washington state.
     (3) It is not the intent of the legislature to influence the establishment, content, or administration of employee benefit plans. The legislature is neutral as to whether employers covered under this chapter choose to meet the minimum expenditure standard by providing or reimbursing the costs of health care services for their employees or paying to the state the difference between the minimum expenditure and their actual expenditures.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Average annual wage" means the average annual wage as defined in RCW 50.04.355.
     (2) "Director" means the director of labor and industries.
     (3) "Employee" means any individual employed by an employer.
     (4) "Employer" means an employer as defined in RCW 49.46.010 who employed a total of five thousand or more employees in any calendar quarter in the preceding calendar year at any and all locations in Washington. Employees of a franchisor's franchisees are not employees of the franchisor.
     (5) "Health care services expenditures" means amounts paid by an employer for the purpose of providing or reimbursing the cost of health care services, as defined in RCW 48.43.005, for its employees or their dependents in the state of Washington. These amounts include, but are not limited to: Payments by an employer on behalf of its employees or their dependents for medical care, prescription drugs, vision care, dental care, long-term care, and health savings accounts as defined under section 223 of the United States internal revenue code, and reimbursements by such an employer to its employees or their dependents for the cost of health care services when the employees or their dependents had no entitlement to the reimbursement. These amounts do not include: Payments made directly or indirectly for workers' compensation or medicare benefits; any costs of health care services, taxes, or assessments that such an employer is required to pay pursuant to any federal or state law other than section 4 of this act; or any amounts deducted from an employee's wages.
     (6) "Payroll" means all wages paid by an employer to its employees.
     (7) "Wage" means wage as defined in RCW 49.46.010.

NEW SECTION.  Sec. 3   (1) On July 1, 2007, and each following July 1st, every employer shall report to the director: (a) The employer's health care services expenditures in the preceding calendar year; and (b) the employer's payroll in the preceding calendar year.
     (2) When reporting the employer's payroll under subsection (1)(b) of this section, the employer may exclude: (a) Wages paid to an employee that are in excess of one hundred fifty percent of the average annual wage; and (b) wages paid to an employee who is enrolled in or eligible for medicare.
     (3) When reporting the employer's payroll under subsection (1)(b) of this section, the employer shall make the report in the form specified by the director. The employer's chief executive officer or an individual performing a similar function shall sign the report and an affidavit under penalty of perjury. In the affidavit, the signing officer shall affirm that the information in the report:
     (a) Was reviewed by the signing officer, and is true to the best of the signing officer's knowledge, information, and belief; and
     (b) Does not contain any untrue statement of a material fact or omit a material fact necessary to make the statement not misleading.
     (4)(a) An employer that fails to report to the director as required under this section shall be assessed a civil penalty of two hundred fifty dollars for each day that the employer fails to report up to a maximum civil penalty of seven thousand five hundred dollars for thirty days that the employer fails to report. If, after thirty days, the employer continues to fail to report to the director as required under this section, the employer is presumed to have failed to spend any percentage of the employer's payroll on health care services expenditures as required under section 4 of this act, and shall be assessed the amount due, the interest penalty, and the civil penalty specified in section 4 of this act.
     (b) The employer must be afforded the opportunity for a hearing, upon request to the director made within thirty days after the date of issuance of the notice of assessment. The hearing shall be conducted in accordance with chapter 34.05 RCW.
     (c) If any employer fails to pay an assessment after it has become a final and unappealable order, or after the court has entered final judgment in favor of the director, the director shall refer the matter to the state attorney general, who shall recover the amount assessed by action in the appropriate superior court. In such an action, the validity and appropriateness of the final order imposing the penalty is not subject to review.

NEW SECTION.  Sec. 4   (1) Except as provided in subsection (2) of this section, an employer shall either:
     (a) Spend at least nine percent of the employer's payroll on health care services expenditures; or
     (b) Pay to the director an amount equal to the difference between the employer's health care services expenditures and an amount equal to nine percent of the employer's payroll.
     (2) An employer that is a nonprofit organization or governmental entity shall either:
     (a) Spend at least seven percent of the employer's payroll on health care services expenditures; or
     (b) Pay to the director an amount equal to the difference between the employer's health care services expenditures and an amount equal to seven percent of its payroll.
     (3)(a) An employer that fails to comply with this section shall be assessed for the amount due under this section, plus an interest penalty of one percent per month on the amount due and a civil penalty of two hundred fifty thousand dollars.
     (b) The employer must be afforded the opportunity for a hearing, upon request to the director made within thirty days after the date of issuance of the notice of assessment. The hearing shall be conducted in accordance with chapter 34.05 RCW.
     (c) If any employer fails to pay an assessment after it has become a final and unappealable order, or after the court has entered final judgment in favor of the director, the director shall refer the matter to the state attorney general, who shall recover the amount assessed by action in the appropriate superior court. In such an action, the validity and appropriateness of the final order imposing the penalty is not subject to review.

NEW SECTION.  Sec. 5   The director shall:
     (1) Administer and enforce this chapter;
     (2) Review reports, inspect records, and conduct investigations and audits of employment, payroll, and health care services expenditures, as the director deems necessary or appropriate, to determine whether an employer has complied with this chapter;
     (3) Adopt rules necessary to implement this chapter; and
     (4) Deposit payments required and civil penalties assessed under this chapter into the health services account established under RCW 43.72.900.

NEW SECTION.  Sec. 6   This chapter does not apply to workers hired by a business whose purpose is to provide workers to other employers on a temporary basis. For purposes of this section, "temporary" means no more than ninety days.

NEW SECTION.  Sec. 7   Sections 1 through 6 of this act constitute a new chapter in Title 49 RCW.