Note: A version of this article first appeared on Lane Powell PC's website (www.lanepowell.com/Our-Insights) on April 12, 2024.
Correction: This article states below that recently passed legislation SSB 5979 refined sick leave payout requirements to apply to "employers primarily engaged in site preparation for new construction (excluding residential construction) ... ." That description is too narrow. With the exception of residential building construction employers described by North American industry classification system industry code 2361, the change applies to all construction industry employers described in North American industry classification system industry code 23, not just those employers engaged in the preparation of sites for new construction.
Summer has arrived, bringing with it a wave of new employment laws. In the session that ended in March, the Washington Legislature expanded the scope of several key laws, signaling a need for swift action from employers—who will need guidance from counsel who advise them.
These legislative expansions include:
- broadening the Equal Pay and Opportunities Act to encompass all protected classes;
- amending the state's Paid Sick Leave Act to offer additional grounds for leave and narrowing sick leave payment requirements for construction workers; and
- expanding restrictions on the use of noncompetes and other restrictive covenants.
In addition to these amendments to existing legislation, the Legislature passed a new act—the Employer Free Choice Act—prohibiting employers from requiring employees to attend mandatory captive audience meetings. The Legislature also passed a new law providing hiring and retention protections for grocery workers following a purchase or merger.
Keep reading for insights into these recent legislative changes and strategies to help the employers you advise stay on the sunny side of compliance.
EMPLOYEE FREE CHOICE ACT BANS MANDATORY CAPTIVE AUDIENCE MEETINGS FOR POLITICS AND RELIGION
The Legislature passed ESSB 5778, known as the Employee Free Choice Act (EFCA), marking a significant development in Washington labor laws. This act prohibits employers from mandating, under the threat of disciplinary action, that employees attend meetings or speeches on religious or political matters. The law is set to take effect on June 5, 2024.
Understanding Captive Audience Meetings
Traditionally, employers have held mandatory "captive audience" meetings to share corporate and personal views. An employee's unexcused absence from these meetings could result in discipline. These meetings are especially common during labor organizing efforts and when employers have aligned personal or business-related interests with particular political or religious candidates or movements.
Defining Political and Religious Matters
Under the EFCA, "political matters" means any matters relating to political office or parties, legislative or regulatory proposals, and the decision to join any political party or political, civic, community, fraternal, or labor association or organization. "Religious matters" means any matters related to religious affiliation or practice, and the decision to join or support any religious organization.
Prohibited Employer Activity
The EFCA applies to all employees in Washington state and there are no exceptions for supervisors and managers. The EFCA prohibits all Washington employers, public and private, from requiring employees to attend meetings where the "primary purpose" of the meeting is to communicate the employer's opinion concerning political or religious issues. The EFCA does not define "primary purpose." Employers must also post a notice of the employee rights described in the law.
Employees have the right to refuse to attend or participate in captive audience meetings, and any adverse actions against them for refusal can result in legal action. Aggrieved employees may file a lawsuit in superior court within 90 days of an alleged violation. Potential remedies could include injunctive relief, reinstatement, expungement of records, back pay, reestablishment of benefits, or other appropriate relief.
The Legislature carved out several exceptions to the EFCA, including: legally mandated communications to employees, voluntary meetings, communications necessary for job duty performance, and workplace anti-harassment or anti-discrimination training. Additionally, religious organizations exempt from Title VII requirements are also exempt from the EFCA concerning speech on religious matters to employees who perform activities on behalf of the religious entity.
Impact on Labor Organizing Efforts
Captive-audience meetings have historically been utilized by employers to combat unionization efforts. Such meetings were legal but regulated by the National Labor Relations Board and state agencies. Prior to the EFCA, the only major restriction on mandatory captive-audience meetings was that such meetings could not be held too close to the start of the secret ballot election period.
However, because its broad definition of "political matters" encompasses the decision to join a labor organization, the EFCA forbids employers' mandatory captive-audience meetings relating to the decision to join a labor association or organization. This could potentially conflict with existing labor laws and affect labor organizing activities in Washington.
Although legal challenges are anticipated, attorneys representing employers should:
- Pay close attention to EFCA implementation and legal challenges.
- Encourage clients to revise handbooks, policies, and HR practices to ensure compliance with EFCA, clarifying that attendance at political or religious meetings is strictly voluntary.
- Encourage clients to refrain from coercive language or actions regarding attendance at political or religious meetings, and treat all employees equally, regardless of attendance at such meetings.
EXPANSION OF RESTRICTIONS ON NON-COMPETE AGREEMENTS IN EMPLOYMENT CONTRACTS
The Legislature's passage of SSB 5935 introduces further constraints on restrictive covenants in Washington. These amendments, aimed at "facilitating workforce mobility," are set to take effect on June 6, 2024, and will apply retroactively. There are several key changes:
> Expanded Definition of Noncompetition Covenants. The amendments expand the definition of "noncompetition covenant" to include agreements that "directly or indirectly prohibit[] the acceptance or transaction of business with a customer." This change effectively eliminates the use of "no acceptance of business" covenants, which allowed businesses to protect their customer base from competition without having to prove that their former employee engaged in solicitation.
> Narrowing of Customer Nonsolicitation Agreements. The carve-out for "nonsolicitation agreements" now applies solely to "current" customers of the business, although who qualifies as a current customer or when a current customer transitions to former customer status is not clear from the new law.
> Retention of Prior Exceptions. Existing exceptions to noncompetition covenants remain intact, including confidentiality agreements, covenants prohibiting the use or disclosure of trade secrets or inventions, and covenants entered into by a franchisee when the franchise sale complies with RCW 19.100.020(1).
> One Percent Ownership Interest Requirement. The "ownership interest" exception is now limited to "a covenant entered into by a person purchasing or selling the goodwill of a business or otherwise acquiring or disposing of an ownership interest, but only if the person signing the covenant purchases, sells, acquires, or disposes of an interest representing 1 percent or more of the business."
> Enforcement by Non-Parties. The amendments allow affected persons, regardless of contractual party status, to seek relief under the law.
> Scrutiny of Pre-2020 Agreements. "Explicitly leveraging" a pre-2020 noncompete results in scrutiny of the agreement under the statute. A claim can now be brought when a business either enforces or "explicitly leverage[s]" the existing agreement.
> Pre-Hire Disclosure Clarification. Noncompete agreements must now be disclosed before "initial oral or written" acceptance of the job offer. Businesses that utilize noncompete agreements should be advised not to make oral job offers to avoid the possibility that the applicant will immediately accept the job before the noncompete covenant is disclosed, effectively requiring new or additional consideration.
> Voiding of Noncompetes Which Apply Non-Washington Law. Noncompete covenants are void if they "allow[] or require[] the application of choice of law principles or the substantive law of any jurisdiction other than Washington state," making it more difficult to apply the law of other states.
> Displacement of Traditional Contract Principles. The amendments further displace conflicting contract principles relating to discharge by assent or alteration.
> Construction of Protections and Exceptions. Protections are to be liberally construed, while exceptions are to be narrowly construed.
> Automatic Increases to Earnings Thresholds. The 2024 earnings thresholds are now set at $120,559.99 for employees (as reflected on box one of the employee's Form W-2 from the prior year) and $301,399.98 for independent contractors (as reported on Form 1099-MISC). Failure to meet these thresholds renders noncompete covenants unenforceable. These thresholds will continue to increase yearly.
Attorneys who advise businesses operating in Washington that utilize noncompete or customer nonsolicitation agreements should advise their clients to consider the following steps:
- Review existing restrictive covenants to ensure compliance with updated laws.
- Disclose restrictive covenants to applicants before or at the time of job offers, avoiding oral offers.
- Disclose noncompete agreement terms before or at the time of job offers.
- Coupled with the recent nationwide ban on noncompetes under the Federal Trade Commission's Rule1 that may or may not become effective, businesses may need to explore alternative methods to protect interests without restrictive agreements, such as by using confidentiality, nondisclosure, or trade secret agreements.
- Pay attention to the ever-increasing earnings thresholds and consider releasing employees from unenforceable agreements when they depart.
WASHINGTON'S EQUAL PAY AND OPPORTUNITIES ACT EXPANDED TO PROTECT ALL CLASSES
Washington's Equal Pay and Opportunities Act (EPOA), originally enacted in 2018 to prohibit gender-based discrimination in compensation and career advancement, has undergone significant expansions in recent years. In its 2024 session, the Washington Legislature broadened the law's scope to cover all classes protected from discrimination under state law.
The amended EPOA now safeguards individuals from discrimination based on age; sex; marital status; sexual orientation; race; creed; color; national origin; citizenship or immigration status; honorably discharged veteran or military status; presence of any sensory, mental, or physical disability; or the use of a trained dog guide or service animal by a person with a disability.
Noncompliant employers risk complaints being filed against them with the Washington State Department of Labor and Industries. Additionally, aggrieved employees retain the right to pursue individual or class action lawsuits seeking damages, penalties, and attorney fees.
With the passage of SHB 1905, slated to become effective on July 1, 2025, attorneys should urge employer clients to review and update their practices and policies related to compensation and career advancement to ensure compliance with the expanded EPOA. Employers should also consider conducting a pay equity audit in consultation with legal counsel to identify and address any disparities among similarly situated employees across all protected classes.
EXPANSION OF PAID SICK LEAVE ACT AND CHANGES TO LEAVE PAYOUTS FOR CONSTRUCTION WORKERS
Washington's Paid Sick Leave Act, initially enacted through a voter initiative in 2017, mandates employers to provide paid sick leave to nonexempt employees. Recently, the Legislature introduced two significant amendments to this Act.
Expansion of Reasons for Taking Leave
The passage of ESSB 5793 broadens the reasons for which employees may take paid sick leave. In addition to existing provisions allowing leave when a child's school or place of care closes for health-related reasons, employees can now utilize paid sick leave when such closures occur following a government-declared emergency.
The legislation also updates definitions related to family members. Under the new definitions, "family member" encompasses individuals who either regularly reside in the employee's home or where the relationship creates an expectation that the employee will care for the individual and the individual depends on the employee for care. However, this definition excludes individuals who merely share the same residence without an expectation of care. Furthermore, amendments to the definitions of "child," "grandchild," "grandparent," and "spouse" have been made, with "child" now including a child's spouse.
These changes are set to take effect on Jan. 1, 2025.
Limitations on Leave Payouts for Construction Workers
Recent legislation, which became effective in January 2024, mandated sick leave payouts for all workers covered under the North American Industry Classification System (NAICS) Code 23 within the construction industry upon separation, including those not directly involved in construction work. SSB 5979 refines this requirement, stipulating that, as of March 13, 2024, employers primarily engaged in site preparation for new construction (excluding residential construction) must provide accrued sick leave payouts to construction workers who perform service, maintenance, or construction work on job sites, in the field, or in fabrication shops if they separate before completing 90 days of employment.
Employers should be advised to review and update paid sick leave policies, ensuring compliance with new requirements, especially for the construction industry.
NEW LAW PROVIDES PROTECTIONS FOR GROCERY WORKERS DURING STORE OWNERSHIP CHANGES
The Legislature passed ESSB 6007, introducing protections for grocery workers in the event of a merger or change in ownership. Effective June 6, 2024, this law ensures certain rights for grocery employees during transitional periods.
The law provides that grocery workers affected by a change in ownership or control are entitled to preferential hiring or retention for a minimum of 180 days during the transition period. This protection extends to workers at distribution centers as well. Following the initial 180-day period, affected workers must receive a written performance evaluation. If the affected worker's performance is deemed satisfactory, the successor grocery employer is obligated to consider offering continued employment to that eligible worker.
Should a successor grocery employer fail to hire or retain eligible workers for the specified duration, they are required to provide a "dislocated grocery worker allowance" equivalent to one week of pay for each full year of employment.
It is important to note that these provisions only apply to successor grocery stores owning, controlling, or operating 20 or more stores after a change in control.
Employers in the grocery industry should be advised to prepare for new hiring and retention protections for grocery workers in case of changes in control or ownership of their stores.
CONCLUSION
Washington attorneys should work with the employers they counsel to review policies, practices, and agreements to ensure compliance with the most recent wave of new and expanded protections for workers.
Footnote
1. www.ftc.gov/system/files/ftc_gov/pdf/noncompete-rule.pdf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.