AN ACT Relating to employer obligations to reduce the impact on employees and communities from reductions in business operations; adding a new chapter to Title 49 RCW; and declaring an emergency.

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

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

(1) Employment is vitally important to an individual's economic well-being and self-respect. The employees of a business invest their skills and efforts into a business and have a vital stake in its continued operation and their continued employment. When their employment with a business is terminated due to the closure, transfer of ownership, or relocation of the business, they suffer a heavy economic and personal loss.

(2) When an employer closes or relocates, particularly in cases in which the employer employs a large number of employees in a locality or within an industry, it is difficult, and sometimes impossible, for the former employees to find employment with another employer that offers comparable wages and benefits.

(3) Because local economies rely on incomes of persons employed in the community, the local government has a substantial stake in mitigating the job and income loss that can result from the closure, relocation, or transfer of local business.

(4) The potentially disastrous effects, on both the employees and the community, of the sudden elimination of an employee's employment should be shared by the employer, who has made the decision that closure, sale, or relocation of the business is an economic advantage. Moreover, continuity of employment is a desirable goal, which vitally affects the well-being of thousands of individuals and the public as a whole, and should be encouraged.

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

(1) "Affected employee" means an employee who in any work week may reasonably expect to be unemployed or is unemployed as a result of a reduction in business operations.

(2) "Community" means the county, city, or town, or a combination, in which an employer's business is located.

(3) "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.

(4) "Department" means the department of trade and economic development.

(5) "Director" means the director of the department of trade and economic development.

(6) "Employee" includes any individual employed by an employer.

(7) "Employee-owned business" means a business in which:

(a) The majority of the business is owned by a majority of the employees of that business; and

(b) The business is controlled by those employees or by a board of directors the majority of whom are selected by those employees.

(8) "Employer" means a person, firm, partnership, corporation, trust, association, or other form of private business organization that employs an average of twenty-five or more employees per week at a workplace within this state during any of three consecutive months in the twelve-month period immediately preceding the reduction in business operations at that workplace.

(9) "Jointly owned business" means a business owned by both parties named in subsections (3) and (7) of this section, and controlled by a board of directors selected by those parties.

(10) "Local government" means the legislative authority of the county, city, or town, or a combination, in which an employer's business is located.

(11) "One month's pay" means the average monthly compensation of an employee by an employer, including wages and premiums for health benefits and payments of pension plans, based on the amount of compensation paid by the employer during the preceding twelve months.

(12) "Predecessor employer" means an employer who has transferred the ownership of a business or a part of a business to another.

(13) "Reduction in business operations" means the total or partial closure of a workplace, relocation of a workplace, transfer of ownership, the layoff of employees, or any other action, whether temporary or permanent, taken by an employer during any thirty-day period that affects, for thirty days or more, the following number of employees at a workplace:

(a) At least twenty-five percent of the employees and at least fifteen employees; or

(b) At least two hundred employees.

Layoffs of two or more groups of employees at a workplace within any ninety-day period that, taken individually, are below the limits stated in (a) and (b) of this subsection shall be aggregated, and shall constitute a reduction in business operations under this section, unless the employer can show by a preponderance of the evidence that each individual layoff resulted from separate and distinct causes.

(14) "Relocation" of a business or part of a business means removal of all or substantially all of the operations of the business, of a workplace, or of a distinct division or department of a business to a location at least sixty miles from their original location for a period exceeding thirty days.

(15) "Substantially equal" means at least eighty-five percent.

(16) "Successor employer" means an employer to whom the ownership of a business or a part of a business has been transferred.

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

(18) "Termination" of a business or part of a business means cessation of all or substantially all operations of the business, or of one or more workplaces of the business, or a distinct division or department of the business, for a period exceeding thirty days with no specific plan for restarting its operations.

(19) "Transfer of ownership" of a business or part of a business includes any transfer, by any means, of ownership in a business, a workplace, or a distinct division or department of a business, including, without limitation, sale of stock, a sale of assets, a foreclosure or other form of repossession by creditors, or by gift and devise.

(20) "Workplace" means any single site of employment in this state, and includes a factory, plant, office, or other facility, whether the site exists as a separate branch, operating unit, or distinct division or department of the employer.

(21) "Years of service" includes all years during which the employee was employed by the employer, or any owner, subsidiary, division, or entity otherwise related to the employer, or during which the employee was employed in the same operation, workplace, or facility while it was owned by a predecessor to the employer.

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

(1) Occurring at construction sites or other workplaces that were intended to be temporary or seasonal workplaces at the commencement of employment at the workplace;

(2) Resulting from seasonal factors that are customary in the industry of which the employer is a part; or

(3) Resulting from any form of natural disaster, including but not limited to flood, fire, drought, or earthquake.

NEW SECTION. Sec. 4. Any employer that engages in a transfer of ownership of a business or part of a business shall be liable to the employees for severance pay at the rate of one month's pay for each year of service by the employee, not to exceed twelve months' pay. The employer is liable to employees who have been employed by the employer for at least one pay period but less than one year for severance pay in the amount of one month's pay. The severance pay owing shall be in addition to any final wage payment to the employee and shall be paid within one regular pay period after the employee's last day of work. An employer's liability for severance pay under this section shall be limited to the value of the business at the time of the transfer of the ownership of the business or part of the business.

NEW SECTION. Sec. 5. An employer shall not be liable for severance pay under this chapter to an employee if the employee accepts employment with the new owner of the business or with the predecessor employer at a different workplace that provides wages and benefits substantially equal in value to those the employee received prior to the transfer of ownership of the business.

NEW SECTION. Sec. 6. If a former employee of a predecessor employer accepts a job with a successor employer, and the employee is discharged, except for misconduct connected with the employee's work, within one year after the employee's date of hire by the successor employer, the employee shall receive, from the successor employer, severance benefits as required by this chapter, based on the employee's service with the predecessor employer.

NEW SECTION. Sec. 7. Sections 4 and 6 of this act do not apply to a former employee of a predecessor employer if the former employee held a managerial position with the predecessor employer in which the employee was responsible for setting fundamental company policy, and it is necessary for the successor employer to replace the employee in order to implement its management plan. However, if the employee is not offered an alternative position for which the employee is qualified, the employee shall receive severance benefits as required by this chapter.

NEW SECTION. Sec. 8. A predecessor employer may not avoid the obligation under section 4 of this act by discharging or laying off employees prior to the transfer of ownership of the business or part of the business. A predecessor employer is relieved of obligations to an employee employed during the twelve months prior to the transfer of ownership only if the employer proves by clear and convincing evidence that the employee's discharge or layoff was not a result of the expected transfer of ownership of the business or part of the business.

NEW SECTION. Sec. 9. (1) Except as provided in subsection (2) or (3) of this section, an employer that intends to implement a reduction in business operations shall provide notice at least one hundred days before the reduction is to take effect. Notice shall be in writing and shall:

(a) Be transmitted to:

(i) All affected employees of the employer, including part-time employees;

(ii) The organization that represents the affected employees for purposes of collective bargaining, if any;

(iii) The dislocated worker unit in the employment security department;

(iv) The business and job retention program of the department of trade and economic development; and

(v) The chief elected official of the community in which the affected workplace is located; and

(b) Provide the following information:

(i) Name, location, and nature of the workplace subject to the reduction in business operations;

(ii) Reasons for and expected length of the reduction in business operations, and the date when the reduction in business operations is expected to occur;

(iii) Number of affected employees;

(iv) Possible alternatives to the reduction in business operations; and

(v) Rights of the affected employees and procedures for ensuring due process in implementing the rights, including seniority, severance pay, and continuance of health benefits, that are guaranteed by a collective bargaining agreement between the employee organization and the employer.

(2) An employer may provide reduced notice of reductions in business operations if:

(a) The employer shows by clear and convincing evidence that the reduction in business operations resulted from the employer operating under a contractual or financial arrangement fulfillment of which was made impracticable by the occurrence of a contingency that was not reasonably foreseeable at the inception of the contract or arrangement. To comply with the reduced notice requirement under this subsection, the employer shall give as much notice as possible, in accordance with subsection (1) (a) and (b) of this section, and shall include in the notice a statement of the reason for the reduced notice; or

(b) The employer is receiving, or has aggressively made a bona fide attempt to seek, technical assistance and consultation from the business and job retention program. To comply with the reduced notice requirement under this subsection, the employer shall provide notice in accordance with subsection (1) (a) and (b) of this section at least sixty days before the reduction in business operations is to take effect.

(3) Notice in accordance with subsection (1) of this section shall be required for a reduction in business operations of more than thirty days which, at its outset, was announced to be a reduction of less than thirty days unless:

(a) The extension beyond thirty days is caused by business circumstances, including unforeseeable changes in price or cost, not reasonably foreseeable at the time of the initial reduction in business operations; and

(b) Notice is given at the time it becomes reasonably foreseeable that the extension beyond thirty days will be required.

(4) If the date when a previously announced reduction of business operations is expected to occur is delayed by less than sixty days, an employer shall provide notice of the delay in any manner that effectively communicates the information to all affected employees. If the date when a previously announced reduction of business operations is expected to occur is delayed by sixty days or more, the employer shall issue a new notice conforming with the requirements of subsection (1) of this section.

(5) When a transfer of ownership occurs, the predecessor employer shall be responsible for providing notice of a reduction in business operations as required by this chapter, up to and including the effective date of the sale or transfer. After the effective date of the sale or transfer, the successor employer shall be responsible for providing notice of a reduction in business operations as required by this chapter. Reductions in business operations by the predecessor employer and the successor employer that occur within ninety days of the effective date of the sale or transfer shall be aggregated to determine applicability of this chapter. For the purposes of this subsection, any person who is an employee of the selling or transferring employer on the effective date of the sale or transfer shall be deemed an employee of the successor employer immediately after the effective date of the sale or transfer.

NEW SECTION. Sec. 10. (1) Upon receipt of the notice specified in section 9 of this act, or upon receipt of other notice of a reduction in business operations or of an intent to reduce business operations, the department shall, within five working days, notify:

(a) The governor's office;

(b) The department of social and health services;

(d) The clerks of all taxing districts that could be adversely affected by the decision to reduce business operations.

(2) Within thirty days of receipt of the notice specified in section 9 of this act, the business and job retention program shall, within appropriated funds, complete an appropriate assessment of alternatives to reduction that would maintain the existing level of employment at the affected workplace at wages and benefits substantially equal to their current level. Assessments shall be conducted in consultation with a labor-management team of affected employees and the employer, and with the assistance of other state agencies as necessary. An assessment may include, but not be limited to, consideration of new sources of financing for the employer, reorganization of management or production, opening new markets for existing goods or services produced by the employer, and production of modified or different goods or services.

(3) As needed to respond to a reduction in business operations, the department shall coordinate, in cooperation with other state agencies as appropriate, agency assistance to the rapid response team from the state dislocated worker unit. The rapid response team shall establish on-site contact with the business and the employees or the employee representatives within forty-eight hours of receipt of the notice specified in section 9 of this act.

NEW SECTION. Sec. 11. An employer that intends to reduce business operations at a workplace shall:

(1) Cooperate in the assessment required under section 10(2) of this act; and

(2) In the event of an intended total closure or relocation, first 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 who represent a majority of the employees of that employer, who singly or in combination are seeking to form a community-owned, employee-owned, or jointly owned business at the workplace being closed. The community or employees shall exercise the right of first refusal within one hundred days of receiving the offer of sale.

NEW SECTION. Sec. 12. (1) If a reduction in business operations occurs for which notice is required but has not been given as specified in this chapter, the employer shall, in addition to any other requirements under this chapter:

(a) Pay to each affected employee for each day in which the required notice was not given an amount equal to one day's wages and benefits, computed as an average of the regular rate of compensation received by the employee over the preceding three years or the final regular rate of compensation received by the employee, whichever is greater;

(b) Pay in full for the continuation of existing group health insurance, regardless of where the policy was written, issued, or delivered, for the benefit of each affected employee and dependents, if covered under the group policy, for a period of at least six months from the date of the reduction in business operations or until the employee becomes eligible for other group coverage, whichever is the lesser period;

(c) Pay an amount equal to the total amount paid or payable under (a) of this subsection to the business and job retention program; and

(d) Provide to the director a relocation or retraining plan, or both, as applicable, for the affected employees.

(2) An employer who is required to give notice, but who does not give the notice specified in this chapter:

(a) Shall not be eligible to enter into any contract to perform any work for the state or its political subdivisions for ten years following the last day of violation of the notice requirements;

(b) Shall not be eligible for state economic development loans or grants or any other form of state-provided economic assistance for ten years following the last day of violation of the notice requirements; and

(c) Shall reimburse the appropriate governmental agency for any loan, grant, or other economic assistance provided by that agency during the ten-year period preceding the reduction in business operations, together with interest at twelve percent per year. This subsection (2)(c) shall apply only to loans, grants, or other economic assistance provided after the effective date of this act.

NEW SECTION. Sec. 13. Any person aggrieved by a violation of this chapter, including the organization representing the affected employees for the purpose of collective bargaining, the affected local government, or the department, may bring suit on his or her own behalf or on behalf of other persons similarly situated, or both, in the superior court of the county in which the violation occurred or in which the employer transacts business.

NEW SECTION. Sec. 14. (1) A person with a claim for a violation of this chapter shall have a lien for moneys owing under this chapter on:

(a) All of the property used in the operation of the business or part of the business that has been relocated, terminated, or transferred creating an obligation under this chapter; and

(b) All proceeds of the sale or transfer of ownership of the property.

(2) Within sixty days of the employee's layoff or termination, a notice of the claim shall be filed with the auditor of the county in which the affected business or part of the business is or was located. The notice of claim shall contain a statement of the employee's demands, the name and address of the employer, the name and address of the successor employer if applicable, and the date of the employee's last service. A copy of this notice shall be served or mailed to the employer and, if applicable, to the successor employer at the time it is filed.

(3) The lien may be enforced within the same time and in the same manner as mechanics' liens are enforced when the lien is upon real property, or in the same manner as chattel liens are enforced when the lien is upon personal property.

(4) This lien shall be preferred to any encumbrance that may attach after the reduction in business operations that created the obligation under this chapter and to any encumbrance that may have attached prior to that time but was not filed or recorded so as to create constructive notice of the encumbrance at the time of the reduction in business operations.

NEW SECTION. Sec. 15. Any person who successfully prosecutes a claim for a violation of this chapter shall be awarded costs and attorneys' fees, including costs and attorneys' fees necessary to collect a judgment.

NEW SECTION. Sec. 16. If a collective bargaining agreement covering the workplace that is subject to a reduction in business operations requires greater employee protections than required by this chapter, the protections of the collective bargaining agreement shall not be reduced or impaired by this chapter.

NEW SECTION. Sec. 17. This chapter shall be known and may be cited as the "community economic stability act."

NEW SECTION. Sec. 18. 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. 19. Sections 1 through 18 of this act shall constitute a new chapter in Title 49 RCW.

NEW SECTION. Sec. 20. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.