Seattle, Wa. (December 20, 2019) - As we all get ready to relax and spend time with our family and friends to celebrate the holidays and the coming of a new year, it is a good time to look back at the changes in Washington law that have occurred over the past year, and the changing landscape that Washington employers will face in the next decade. Below are key highlights of the most significant changes facing Washington employers next year.
Washington Severely Restricts Enforceability of Non-Competes
In 2019, the State of Washington passed legislation limiting non-competes that goes into effect on January 1, 2020 and will applied to all non-competes, regardless of whether the non-compete was signed prior to that date (although an employee cannot claim in court that a non-compete signed prior to January 1, 2020 is invalid if the employer does not sue to enforce the non-compete). Here are the key takeaways from the legislation:
(1) Compensation thresholds. Non-competes are unenforceable for employees making $100,000 or less. Lest an employer think that it can circumvent this requirement by converting its employees into independent contractors, the threshold earnings for independent contractors must exceed $250,000. These numbers will be adjusted for inflation.
(2) Presumed reasonable duration of 18 months. Non-competes exceeding 18 months after termination of employment are presumed unreasonable and unenforceable unless the employer can prove by clear and convincing evidence that the duration is necessary to protect the party's business or goodwill. This is difficult to do.
(3) Written notice of non-compete terms. Prospective employees subject to non-competes must receive written notice of the terms by the time the prospective employees accept the employment offer. Current employees who receive non-competes after their employment has begun must receive "independent consideration." The law does not say what constitutes adequate "independent consideration," but continued at-will employment is not sufficient.
(4) Penalties. Prior to this bill, employers were only subject to penalties if the entire non-compete agreement was found unenforceable. Under the new law, if any portion of the non-compete is re-written, modified, reformed, or only partially enforced by a court or arbitrator, the employer is subject to penalties. Those penalties include $5,000 or actual damages, whichever is greater, plus reasonable attorneys' fees and costs.
(5) No effect on other restrictive covenants. The law explicitly excludes the following restrictive covenants from falling under the purview of this new law:
- non-solicitation agreements;
- confidentiality agreements;
- covenants prohibiting use or disclosure of trade secrets or inventions;
- covenants entered into by a person purchasing or selling the goodwill of a business or otherwise acquiring or disposing of an ownership interest; or
- covenants entered into by a franchisee when the franchise sale complies with RCW 19.100.020(1).
- Thus, the enforceability of these restrictive covenants are subject to the previous standard of reasonableness.
Washington Prohibits Applicants from Having to Disclose Salary History
In 2019, the State of Washington passed a new law prohibiting employers from seeking the wage and salary history of an applicant. The purpose of this new law is to reduce gender discrimination in pay, as women historically have been paid less than men for the same positions, which then could be relied upon by prospective employers to justify offering lower pay to female applicants than to male applicants.
There are two major provisions to the law. First, the law prohibits any employer from seeking salary or wage history information from either the applicant or from the applicant's prior employers. It also prohibits any employer from requiring that an applicant's prior wage or salary history meet certain criteria. The law does not prohibit employers from confirming an applicant's salary or wage history in two situations: (1) if the applicant voluntarily discloses their pay history; or (2) after the employer has negotiated and made an offer of employment (including offered compensation) to the applicant. The law does not prohibit employers from asking an applicant's wage or salary expectations, leaving room for interpretation that wage or salary expectation requests are permissible.
Second, for employers with at least 15 employees, upon the request of an applicant after receiving an initial employment offer, the employer is required to provide the minimum salary or wage for the position. Similarly, for employees who are offered an internal transfer or promotion, upon request of the employee, the employer is required to provide the wage scale or salary range for the new position. If there is no wage scale or salary range for the position, the employer must provide the minimum wage or minimum salary set by the employer.
The law creates a private right of action for individuals alleging violations. Penalties for a violation include a $5,000 statutory penalty or actual damages, whichever is greater, plus interest, reasonable attorneys' fees, and costs.
Washington Enacts New Law Protecting "Isolated Workers" in the Hotel, Janitorial, and Security Industries from Sexual Harassment
Earlier this year, Washington enacted a new law regarding sexual harassment training for certain "isolated workers". The goal of this legislature is to prevent sexual harassment and assault, and educate the workforce about protections for employees who report harassment and assault.
The legislation impacts employers of people working as a janitor, security guard, hotel or motel housekeeper, or room service attendant. This applies if the employee either spends a majority of working hours alone or if their primary responsibility involves working without a coworker present.
Employers of the employees who meet the above qualifications must take the following measures to be in compliance:
- Adopt a sexual harassment policy;
- Provide mandatory training to managers, supervisors, and employees, which must include information regarding the following: a) prevention of sexual assault and sexual harassment in the workplace, b) prevention of sexual discrimination in the workplace; c) education regarding protection for employees who report violations;
- Provide a list of resources for the employees to utilize (including EEOC, WSHRC and local advocacy groups working to prevent sexual harassment and assault); and,
- Provide a panic button to each affected employee. (This provision does not apply to contracted security companies.)
Washington Continues to Implement Its Paid Family and Medical Leave Act
Companies that provide janitorial services are also subject to additional reporting requirements. Hotels and motels with 60 or more rooms must meet all of the above requirements by January 1, 2020. All other employers must meet these qualifications by January 1, 2021.
A change many Washington employees may have noticed in their paychecks this year was that they paid premiums for a new law taking effect in 2020 for paid family and medical leave.
Starting in 2020, Washington workers will be able to take up to 12 weeks of paid leave (16 if the leave is due to the employee having given birth). An employee might qualify for paid leave if they have a new child (including adoptions and foster children), or if the employee or a family member has a major medical procedure. This program is also available for military spouses during the family members' R&R leave.
The paid family and medical leave act is potentially available for employees who worked 820 hours in 2019, which includes most full and part time employees. Unlike other forms of leave paid by employers, this leave program is run by the State and in order for an employee to take leave, they must apply for benefits from the State of Washington Employment Security Department (ESD). If leave is granted, the employee receives partial wage replacement, with the dollar amount being capped at $1,000 per week with a minimum of $100, calculated as a percentage of the employee's gross wages.
To continue to fund this initiative, employers will continue to collect premiums from their employees and remit to the ESD quarterly. Currently, the premium is 0.4%. The rate can be adjusted by statute beginning in 2020, but there are no current indications that this will occur until at least September 2020.
If an employer offers their own, distinct program with similar or greater benefit to their employees, they may opt out of the State program. The application costs $250 and, if accepted, the employer must continue to collect employee contributions to be held in a trust. If the plan is withdrawn, all funds must be remitted to the State of Washington.
Grants are available to small businesses to help cover the costs of hiring temporary workers when an employee takes leave. To be eligible, the business must average 150 or fewer employees. Businesses with fewer than 50 employees who are not contributing to the program are not eligible for the grants. These employers have to pay their share of the premiums to be eligible for grants. These threshold numbers of employees are current, but may be amended in September 2020.
Obesity Is a Disability Under Washington Law
In a decision that left many observers agape, the Washington Supreme Court held in July 2019 that obesity is "always" a disability under the Washington Law Against Discrimination (WLAD).
The decision, Taylor v. Burlington N. R.R. Holdings, Inc., 193 Wn.2d 611 (2019), began as a federal case in which a railroad rejected an applicant for a position as an electronic technician because the applicant had a body-mass index over 40. The railroad concluded the applicant was morbidly obese and, therefore, faced significant health and safety risks if he was hired. The federal court asked the Washington Supreme Court to identify the circumstances under which obesity can qualify as an "impairment" under the WLAD. The Washington Supreme Court concluded that obesity is always an impairment under the WLAD.
Under the statute a disability is a medically cognizable or diagnosable physical impairment. Citing this definition, the court held that obesity is a physical impairment because it is an excessive accumulation of fat cells resulting in above-average weight. The court rejected the argument that obesity results from eating or drinking too much, and therefore is not an impairment, but acknowledged at the same time that obesity is an imbalance between energy intake and energy expenditure.
In reaching its decision, the Washington Supreme Court relied on secondary sources of information, such as internet websites, rather than on any competent medical evidence that would be admissible in court. The court also brushed aside the dissent's point that the causes and contributing factors to obesity are multi-faceted and complicated, instead concluding as a matter of law that obesity is always a disability, regardless of the cause.
The Washington Supreme Court also disregarded the evidence that almost 30% of the residents in Washington qualify as obese. In so doing, the Washington Supreme Court, with the proverbial swipe of the pen, transformed almost one-third of the state's population into disabled persons and, literally overnight, subjected all of their employers to possible disability discrimination lawsuits for any actions taken by those employers against those employee.
Washington Court Limits Enforceability of Arbitration When Not In a Contract
In June 2019, an appellate court in Washington limited the ability of an employer to compel arbitration where the arbitration clause was in a handbook but was never expressly agreed to by the employee in a written employment contract signed by the employer before he began work.
In the case, Burnett v. Pagliacci Pizza, Inc., 9 Wn. App. 192 (2019), the employer had its employee sign an agreement that stated the employee was bound by the provisions of the handbook, but the agreement did not contain an arbitration clause. Instead, the arbitration clause was in the handbook, which was not provided to the employee until he began work. The policy, which was found on page 18 of a 25-page handbook, required that any employee wanting to arbitrate a dispute had to first submit the claim to two other senior level employees, and these employees would attempt to resolve the claim. These employees had no limit in the amount of time they could take to try and resolve the claim but, if their efforts failed, the employee could then submit the dispute to arbitration.
The court found that the employer's handling of the arbitration policy was substantively and procedurally unconscionable. First, it was procedurally unconscionable because the employee was not shown the arbitration policy until he began work for the company and, therefore, was not given a meaningful opportunity to read the policy before he began work. Rather, he only understood its terms after he began working. Second, the employee was never advised clearly that he was giving up his right to a jury trial. Third, the policy was substantively unconscionable because it required employees with claims to submit those claims to other employees, foreclosing former employees, who could no longer submit their claim to other employees, from being able to avail themselves of the arbitration procedure without facing an argument by the employer that the employee did not satisfy the conditions precedent to arbitration.
Finally, the policy had the effect of shortening the limitations period because it did not limit the amount of time the pre-arbitration process could last. In theory, the other employees could sit on the claim for months before acting on it, thereby depriving the employee of the three-year limitations period available for claims under the Washington Law Against Discrimination and Washington's wage and hour laws.
Washington Increases Minimum Wages for Salaried, White Collar Employees
Last but not least, this year, the state agency responsible for wage and hour regulations – the State of Washington Department of Labor and Industries (L&I) – implemented a set of regulations raising salary thresholds for the salary basis test for salary-based employees (professionals, administrative, executive, and outside sales). These changes are set to take place January 1, 2021.
For executive, professional, and administrative employees, the salary threshold will undergo a series of increases that end in 2028. The size of the increase between 2021 and 2027 will depend on the size of the employer, i.e., whether the employer has less or more than 50 full- or part-time employees in Washington. For large employers, the increases come one year before small employers, with small employers catching up to large employers one year later.
The amount of the increase are quarter multiples of the minimum wage. For example, in 2021, large employers must pay a weekly salary equal to 1.75x the minimum wage ($945 per week), while small employers must pay a weekly salary equal to 1.5x the minimum wage ($810 per week). In 2022, there is no increase for large employers, but small employers must catch up to the large employers and pay 1.75x the minimum wage. This process continues, increasing by .25x increments until 2028. Particularly, in 2023, large employers must pay 2x the minimum wage ($1,080 per week), while small employers stay at 1.75x. In 2024 the increase remains 2x for large employers, but increases to 2x for small employers. In 2025, the multiple increases to 2.25x the minimum wage for large employers ($1,215 per week) while remaining 2x for small employers. In 2026, the multiple increases to 2.25x for small employers, while remaining 2.25x for large employers. In 2027, large employers face the final jump of 2.5x the minimum wage ($1,350 per week), but remains 2.25x for smaller employers. In 2028, the multiple increases to 2.5x for small employers. By the end of this process, all executive, professional, and administrative employees must be paid at least $1,350 per week or $70,220 per year.
In addition, to this change, there is also a change to the hourly rates for computer professionals. Starting on July 1, 2020, the hourly rate for large employers will be $37.13, while the hourly rate for small employers will be $27.63. In 2021, the hourly rate increases to 3.5x the minimum wage for larger employers while increasing 2.75x for smaller employers. In 2022, the rate stays the same for larger employers but increases to the 3.5x the minimum wage for smaller employers, so all computer professionals will be paid the same hourly rate, depending on the size of the employer.
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