WSIA

The 2025 session of the Washington State Legislature is scheduled to adjourn by midnight, Sunday April 27th. Because, for the most part, what remains to be accomplished in the Legislature's final weekend is debate and passage of the state's operating, transportation, and capital budgets, and the revenue measures necessary to support them, we can move ahead a few days early with a wrap-up of legislative activity impacting WSIA members. Here's a run-down of the top action this session:

Good Faith and Fair Dealing

As WSIA members know, we went into the session in January knowing two things for certain about 2023's landmark law creating a "duty of good faith and fair dealing" for municipal self-insured employers, as defined, and their third-party administrators (TPAs), and stiff monetary and decertification penalties for employers found to violate the standard: (a) it would be a top priority of unions and the claimants' bar to extend the duty to all self-insured employers (SIE) and TPAs and (b) given the loss of more moderate, employer friendly voices in the Legislature due to retirements and the '24 elections, the political environment would make it difficult to stop this expansion.

Sure enough, SB 5463 was introduced to expand the duty and penalties to all SIE/TPAs. WSIA and many of our individual members put up a session-long fight on this bill, and in the end were able to persuade lawmakers that if the duty and penalties are to be extended, the penalty that creates the most risk and uncertainty for employers -- automatic decertification upon a finding of "three strikes" in a three year period -- would have to be addressed. An amendment was adopted on the bill that removed the original "three strikes" penalty from 2023 and replaced it with a corrective action or probationary opportunity for an employer, triggered by a second violation in three years, that would allow the employer and Department to enter into an agreement to fix whatever deficiency led to the violations prior to losing self-insurance status. This new approach to the original "three strikes" penalty applies both to the private sector SIE that will be pulled in when the law goes into effect on January 1, 2026, as well as the municipal SIE who were subject to the 2023 law. The bill has yet to be signed by the Governor, but there is no reason to believe it will not in the coming weeks.

You can read SB 5463 as it passed the Legislature here.

Separately in this area, the Department of Labor & Industries came forward with HB 1275, which would provide the Department statutory authority to adopt administrative rules in the future to figure out how it would take over the program of a decertified municipal employer and ensure accrued liabilities on the self-insured claims could be paid by the employer. The Department viewed this as necessary, since public agency SIE are not required to hold collateral for their liabilities. It is unclear whether the amendment to the decertification rules described above in SB 5463 will alter the Department's plans, but they will most likely move forward with rulemaking in one form or another to address that potential occurrence. The Governor has already signed HB 1275, and it goes into effect July 27.

TTD/PTD and Marital Status

The other significant workers' compensation bill to pass in 2025, also awaiting a likely signature from the Governor, is HB 1788. This bill started out as an ambitious proposal to have the value of employer-provided health care benefits, when not otherwise continued by the employer during a period of disability, removed from the calculation of a worker's wage at time of injury for time loss (TTD) and pension (PTD) purposes, and instead superimposed at 100 percent on top of the TTD and PTD monthly payment amount. Secondarily, the bill proposed to eliminate the differences in the TTD/PTD schedule of benefits between married and unmarried workers with dependents, where current law adds a five percent bump to the benefit rate for married claimants with dependents.

Due to its staggering fiscal cost, the health care component of the bill was removed as the bill progressed through the process. At the end of the day, it passed with the marital status issue addressed, creating a new set of TTD/PTD percentages to be applied to married and unmarried claimants alike, depending on the number of dependents they have, ranging from the current 60 percent with no children, to 75 percent with six or more children. The law goes into effect July 1, 2026, and will require updating time loss payment systems in the meantime.

It is unlikely the trade unions behind the push for full health care benefits will give up on this pursuit, and a bill reviving the issue is highly likely to return in 2026. In the interim, there are murmurs that the Department may convene a stakeholder group to discuss ways of addressing the coverage of health insurance during a period of workers' comp disability.

Not the Year for PTSD Expansions

Two bills were proposed to expand, in one way or another, occupational disease coverage for posttraumatic stress disorder. HB 1002 would have added non-presumptive PTSD coverage for county coroners and their investigative staff. HB 1070 would have created presumptive PTSD coverage for state and local correctional facility workers. Neither passed out of their chamber of origin, primarily due to cost concerns, but the now-yearly pursuit of expanded PTSD presumptions for new occupations is unlikely to go away.

No Expansion for Heart Problems Presumption

The Legislature also took a look at HB 1571, which would have removed all current restrictions in law for presumptive occupational disease coverage for heart problems among law enforcement and firefighters. Currently, there are time and activity based limitations on which a heart problem can be presumed to arise from employment for these first responders. The bill received a public hearing after it was introduced, but did not advance further. Notably, the Department's epidemiological advisory committee, created in 2019 the last time the first responder presumptions were expanded, studied this issue and recommended against removing the limitations.

Other New Labor Laws

Notable laws passing outside the workers' comp space, but with broad-based impact on employers' human resources and employee relations, include:

• HB 1308, guaranteeing prompt employee access to personnel records, backed by a private right of action for employer delay. Notably, this bill has been backed by the workers' comp section of the claimants' bar, viewing it as a tool to obtain information outside of formal discovery processes to support their claims.
• SB 5041, granting six weeks of unemployment insurance benefits to workers who go on strike. This was one of the most hotly contested labor issues of the session.
• HB 1213, granting expanded protections under the state's paid family and medical leave insurance program. Notably, the bill lowers the minimum benefit increment to four hours of leave, and expands job protection and continuation of benefits from the current standard of employers of 50 or more to employers of 8 or more by 2028.

That's it for the 2025 session. If the Governor surprises by vetoing any of the above bills headed to his desk, or if there are notable appropriations or studies ordered in the Department's budget, we'll update with that information after Sunday. Also, keep in mind that bills are introduced on a biennial basis, meaning that proposals that were introduced this year but did not pass are revived for the 2026 session for possible consideration come January.