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As the 2025 legislative session reaches its conclusion, we have been laser-focused, monitoring developments that affect our five strategic pillars:
- Economic Competitiveness
- Workforce & Education
- Infrastructure & Transportation
- Regulatory & Tax Reform
- Community & Public Safety
The legislature has finalized its work, but the final chapter awaits Governor Ferguson’s decisions on potential vetoes, with a constitutional deadline of May 20.
In this edition, we provide a comprehensive briefing on the most consequential legislation impacting employers across our region.
From changes in tax and labor policy to new environmental mandates and public safety reforms, this guide is built to empower our member businesses—from Spokane Valley’s leading manufacturers and healthcare providers to small family-owned shops and professional services firms—with the knowledge they need to adapt, plan, and thrive.
Business Climate
HB 1213 – Expanded PFML Job Protections
(Phased in 2026–2028)
Washington’s HB 1213 broadens job restoration and health insurance rights under the PFML program, affecting smaller employers from 2026 to 2028.
Why it matters: This phased expansion makes PFML protections accessible to more workers by lowering the employer size threshold for program participation. It represents a significant shift in the state’s approach to family and medical leave, aiming to strike a balance between employee rights and employer capabilities.
The big picture: By gradually including smaller businesses, the law intends to extend critical job and health insurance protections to a wider segment of the workforce, ensuring stability for employees during family or medical leave.
By the numbers: Starting in 2026, the coverage threshold begins at businesses with 25+ employees, eventually including those with as few as 8 employees by 2028. This staged implementation allows businesses time to adjust to the new requirements.
The bottom line: Employers must proactively prepare for these changes by updating policies, training staff, and budgeting for additional costs. Small businesses, in particular, should explore available grants to ease the transition, ensuring compliance and supporting employee well-being.
HB 1308 – Employee Access to Personnel Files
Effective July 23, 2025
HB 1308 grants employees and recent ex-employees the right to access nearly all employment records, with provisions for legal action if employers fail to comply.
Why it matters: This law significantly expands workers’ rights to access their employment documents, including performance reviews and pay records, and introduces penalties for employers who delay providing these documents.
The big picture: Employers must overhaul their HR policies and systems to ensure compliance, including defining the scope of documents, centralizing storage, and tracking requests to avoid statutory penalties.
By the numbers: Employers face fines ranging from $250 to $1,000 for delays in providing records, in addition to potential actual damages and attorney fees.
The bottom line: A proactive approach in updating HR practices and establishing efficient document management workflows is crucial for businesses to avoid legal repercussions and foster positive employee relations.
HB 1644 – Child Labor Safety Act
Effective July 1, 2026
Washington’s HB 1644 introduces stringent compliance and liability measures for employers hiring minors.
Why it matters: This legislation significantly alters the landscape for businesses employing young workers, emphasizing safety and accountability. Employers must now navigate a complex web of requirements, including obtaining work permits, maintaining detailed records, and undergoing safety inspections, to avoid hefty penalties.
The big picture: The act aims to enhance the safety and well-being of minors in the workforce by setting strict guidelines and penalties for non-compliance. This includes fines up to $71,000 and potential loss of hiring privileges for violations.
By the numbers: Penalties range from $100 for minor paperwork errors to $71,000 for incidents resulting in serious injury or death, underscoring the law’s emphasis on protecting young workers.
The bottom line: Businesses must adapt to these new regulations by implementing comprehensive safety protocols and preparing for increased administrative and training costs. Failure to comply could result in significant financial penalties and the loss of the ability to hire minors, impacting sectors like retail, agriculture, and hospitality the most.
SB 5813 – Capital Gains & Estate Tax Hike
[RETROACTIVE] Effective January 1, 2025
SB 5813 introduces higher capital gains and estate taxes in Washington, targeting the wealthy and businesses with new rates and increased compliance demands.
Why it matters: The law’s changes could reshape financial strategies for high-net-worth individuals, business owners, and investors, impacting investment and succession planning within the state.
The big picture: By raising taxes on capital gains and estates, Washington aims to increase state revenue but risks economic side effects, including potential business relocations and reduced investment.
By the numbers: The capital gains tax sees a new 2.9% surtax on amounts over $1 million, while estate tax rates for estates over $9M jump from 20% to 35%.
Yes, but: Exemptions for real estate and retirement accounts under capital gains, and an expanded family-owned business deduction under estate taxes, offer some relief.
The bottom line: SB5813’s tax increases necessitate careful financial and estate planning, with significant implications for Washington’s economic landscape.
SB 5794 – Tax Preference Reform Act
Effective January 1, 2026
SB 5794 updates Washington’s tax system by eliminating outdated exemptions and clarifying rules to enhance transparency and efficiency.
Why it matters: This legislation represents a significant shift in the state’s approach to tax preferences, potentially increasing tax liabilities for businesses and requiring adjustments in compliance and strategic planning.
The big picture: By repealing obsolete tax preferences and updating legal standards, SB 5794 aims to streamline the tax code and align it with current economic and legal realities.
By the numbers: The repeal affects specific exemptions like those for precious metal bullion sales and certain business and occupation (B&O) tax credits, directly impacting affected businesses’ financial planning.
Yes, but: While the reforms are designed to enhance tax system clarity and fairness, they may also impose new burdens on companies previously benefiting from now-eliminated exemptions.
The bottom line: SB5794’s enactment necessitates a proactive response from Washington businesses to navigate the updated tax landscape and safeguard their financial health.
SB 5041 – Unemployment Insurance for Striking Workers
Effective January 1, 2026
SB 5041 allows certain striking workers in Washington to collect unemployment insurance, altering employer liabilities and compliance.
Why it matters: This law introduces a significant policy shift, potentially extending labor disputes and increasing unemployment insurance costs for employers.
The big picture: By enabling striking workers to receive UI benefits, SB 5041 aims to provide financial support during labor disputes, but raises concerns over longer strikes and higher employer costs.
By the numbers: Employers may see an uptick in UI claims from workers involved in strikes, directly affecting UI tax rates and operational budgets.
Yes, but: The act’s ten-year sunset clause allows for reassessment, suggesting lawmakers are open to revising the policy based on its long-term effects.
The bottom line: With the enactment of SB 5041, employers must navigate new compliance landscapes and consider the broader implications for labor relations and financial planning.
HB 1497 – Organic Waste Reduction and Composting Requirements
Effective July 1, 2027
Washington State has passed HB 1497, a law aimed at significantly enhancing composting efforts and reducing recycling contamination through the introduction of uniform waste-bin color-coding and expanded organics collection services by July 1, 2027.
Why it matters: This legislation represents a major step towards more sustainable waste management practices, directly impacting waste management providers, property managers, developers, and the food service industry by setting new operational and compliance standards.
The big picture: By standardizing bin colors and labels, and mandating compost collection for multi-family residences, Washington is positioning itself as a leader in the U.S. for recycling and composting reform.
By the numbers: All jurisdictions in Washington must comply with the new bin standards by mid-2027, affecting thousands of properties and potentially reducing significant amounts of waste from landfills.
Business implications: Companies in waste management, property management, and food services will need to make operational adjustments and prepare for potential cost impacts due to the new requirements.
Development & Infrastructure
HB 1217 – Washington Rent Control
Effective May 7, 2025
HB 1217 limits annual rent increases for existing tenants to 7% plus inflation, with a maximum of 10%, and introduces a 12-year exemption for new constructions to encourage ongoing development.
Why it matters: This legislation aims to protect tenants from steep rent hikes while balancing the need to encourage new housing developments, affecting landlords, investors, and the broader housing market.
The bottom line: Landlords and rental housing providers in Washington must urgently update their rent increase policies to comply with the new law, facing significant legal and financial risks for non-compliance.
By the numbers: Rent increases are now capped at a total maximum of 10%, with manufactured housing lot rents limited to 5% annually, signaling a major shift in rental property management and investment strategies.
Investment & development risks: The cap on rent increases may lower the market value of older rental properties and shift investment focus towards new constructions, potentially impacting the state’s housing market dynamics in the long term.
SB 5802 – Transportation Fund Rebalancing Act
Effective July 1, 2027
SB 5802 introduces major changes to Washington’s transportation funding, reallocating sales tax revenue and altering fund transfers, set to impact infrastructure investment and business operations starting July 1, 2027.
Why it matters: This legislative shift aims to enhance multimodal transportation options but requires businesses and local governments to adapt to new financial realities, potentially affecting project timelines and operational costs.
The bottom line: Businesses involved in infrastructure development or dependent on Washington’s transportation network must prepare for strategic adjustments due to the funding reallocations outlined in SB 5802.
By the numbers: The law cancels $57 million in annual transfers for the 2025–27 biennium and plans a significant $609 million transfer from the general fund to transportation in the 2027–29 biennium, indicating a major shift in funding priorities.
Business implications: With potential delays in local infrastructure projects and increases in transportation-related costs, companies will need to revisit financial and operational strategies to navigate the changing landscape.
HB 1409 – Expansion of the Clean Fuels Program
Effective July 27, 2025
Starting July 27, 2025, Washington mandates a 45% reduction in carbon intensity for transportation fuels by 2038, affecting gasoline, diesel, and biofuels producers and importers.
Why it matters: This initiative targets significant carbon footprint reduction in the transportation sector, compelling fuel suppliers to adopt cleaner alternatives or purchase credits, indirectly influencing freight costs and consumer prices.
The bottom line: The shift towards lower carbon transportation fuels in Washington will likely lead to increased operational costs for freight companies, potentially impacting household budgets due to higher freight rates.
What this means for freight-dependent households: As fuel suppliers face added costs from cleaner fuel production or buying credits, these expenses are expected to trickle down to consumers through higher prices for goods transported by truck and rail.
Business implications: Companies in the transportation fuel sector must explore more sustainable fuel options or engage in the credits market to meet the new standards, while freight-dependent businesses should prepare for possible increases in shipping costs.
Education & Workforce
HB 2049 – School Funding (Local Levies and State Support)
Effective 2025–26 School Year
HB 2049 aims to significantly adjust K-12 school funding by increasing local levy caps and enhancing state support for special education, starting in the 2025–26 school year.
Why it matters: This legislation represents a major shift in how schools can finance enrichment programs and special education, potentially impacting property taxes and local election outcomes.
The big picture: By gradually raising the per-student levy cap to approximately $5,035 by 2031 and removing the cap on state special-education funding, the bill injects an estimated $870 million into the system, primarily for special education.
By the numbers: The current $2,500 per-student levy cap will more than double over the next decade, reflecting a significant increase in potential local school funding.
Business implications: Commercial property owners in affluent districts could face higher taxes if local voters approve the expanded levies, introducing a new variable into site-selection and financial forecasting for businesses.
SB 5192 – School Operating Cost Funding (MSOC Increase)
Effective 2025–26 School Year
SB 5192 sets out to increase state funding for Washington’s K-12 public schools, targeting non-personnel expenses to enhance learning environments starting in the 2025–27 budget cycle.
Why it matters: This move aims to alleviate financial pressures on schools by providing more resources for essential materials and technology, potentially impacting future workforce quality and local tax rates.
The big picture: The legislation promises a modest per-student funding increase, with additional support for high school students, and mandates regular adjustments to keep pace with inflation and operational costs.
By the numbers: Each student will see a $35 increase in funding, with high school students receiving an extra $214.94, aiming to better support the diverse needs of Washington’s student population.
Business implications: While directly affecting school budgets, the increased funding could indirectly benefit businesses by potentially easing local tax pressures and contributing to a better-prepared future workforce.
SB 5189 – Supporting Competency-Based Education in Schools
Effective July 27, 2025
Washington’s SB 5189 paves the way for K-12 districts to implement competency-based education (CBE) models, ensuring they won’t lose funding while promoting a shift from traditional learning metrics.
Why it matters: This legislation marks a significant move towards recognizing and funding education based on skill mastery rather than time spent in class, potentially reshaping future learning and teaching approaches.
The big picture: By defining CBE and adjusting funding rules, the state encourages schools to adopt innovative learning models that focus on student mastery of material, which could lead to more personalized education paths.
What they’re saying: Education technology providers are urged to align their platforms with CBE principles, indicating a shift towards more flexible, student-centered learning environments.
Business implications: The introduction of competency-based transcripts will require adjustments in how employers and higher education institutions assess applicants, signaling a broader change in the recognition of educational achievements.
Healthcare
SB 5083 – Public Employee Health Plan Reimbursement Reform
Effective January 1, 2027
SB 5083 introduces significant changes for hospitals accepting Medicaid in Washington, requiring them to contract with state employee health plans and setting strict reimbursement caps based on Medicare rates.
Why it matters: This legislation could drastically alter hospital revenue models and operational strategies, particularly affecting service delivery and financial stability across the state.
The big picture: By enforcing reimbursement caps and mandating contracts with PEBB/SEBB, the state aims to control healthcare costs for public employees, but this comes with potential downsides for hospital operations and patient care.
By the numbers: Hospitals face a projected $170 million annual revenue shortfall, which could lead to service reductions or layoffs, especially impacting smaller and rural healthcare providers.
Business implications: The anticipated revenue loss and operational hurdles may not only affect hospital services but also deter future investments in healthcare infrastructure and expansion, posing long-term challenges for the sector.
SB 5579 – Health Contract Termination Publicity Restrictions
Effective July 27, 2025
SB 5579 sets strict guidelines for when and how insurers and healthcare providers in Washington can announce in-network contract terminations, aiming to minimize patient confusion and concern.
Why it matters: This legislation seeks to mitigate patient anxiety caused by premature public disclosures of contract changes between insurers and healthcare providers, as seen in recent disputes.
The big picture: By establishing a blackout period and requiring the use of standardized notification templates, the state intends to streamline communication and ensure patients receive clear, timely information about their healthcare coverage.
Enforcement & Penalties: With fines reaching up to $100 per enrollee per day for violations, the law emphasizes the importance of adhering to the new communication standards to avoid significant financial and professional consequences.
Scope & Exceptions: The rules target insurers, hospitals, and provider groups, with specific exemptions for solo practitioners and certain private communications, focusing on reducing unnecessary public alarm over contract terminations.
HB 1392 – Medicaid Access Payment Program (Healthcare Financing)
Effective January 1, 2026, pending federal approval
HB 1392 aims to increase Medicaid provider payments through a novel funding mechanism involving health insurers.
Why it matters: This legislation represents a significant shift in healthcare financing, directly targeting an increase in Medicaid reimbursement rates to improve access to care for low-income patients. By leveraging fees from health insurers, the state seeks to enhance the quality and availability of healthcare services for Medicaid beneficiaries.
The big picture: The law introduces a “Covered Lives” fee, charging commercial insurers and Medicaid managed-care organizations (MCOs) based on the number of members, to fund higher Medicaid pay rates. This approach underscores a broader strategy to address healthcare disparities by financially incentivizing providers to support Medicaid patients.
By the numbers: Insurers will pay monthly fees—$0.50 per member for commercial insurers and $18.00 per member for Medicaid MCOs, with a cap reflecting about 250,000 people. This structured fee system is designed to generate substantial funds for Medicaid without overburdening any single insurer.
Business implications: Insurance companies will need to adjust their budgeting and pricing strategies to accommodate these new fees, potentially leading to slight premium increases for certain employers. However, the anticipated improvement in Medicaid service payments is expected to benefit healthcare providers by making it more viable to treat Medicaid patients, particularly in critical areas like primary care and mental health.
SB 5493 – Hospital Price Transparency Enforcement
Effective July 27, 2025; full compliance by July 1, 2027
SB 5493 mandates that Washington hospitals publish detailed price lists, linking compliance to their ability to collect on unpaid bills.
Why it matters: This law intensifies the push for price transparency in healthcare, aiming to empower patients with information and prevent hospitals from pursuing collections on services not publicly priced. It’s a significant move towards demystifying healthcare costs and enhancing consumer protection.
The big picture: By requiring hospitals to post prices and submit them for state compilation and public access, the law seeks to foster a more competitive and transparent healthcare market. This could lead to more informed decisions by consumers and potentially lower healthcare costs.
By the numbers: Hospitals must disclose prices for all services and at least 300 shoppable services by July 2027, with annual reporting to the Department of Health. Non-compliance could lead to a ban on collections for undisclosed services, including legal and financial penalties.
Business implications: Hospitals face significant operational and financial risks if they fail to comply. The requirement to publish prices and the potential for lost revenue from non-compliance underscore the need for hospitals to prioritize transparency or face severe penalties.
Quality of Life & Community
HB 1258 – Funding for Regional 911 Dispatch (Spokane County)
Effective July 27, 2025, Revenue Transfers Begin January 1, 2026
HB 1258 mandates Spokane County to share 911 excise-tax revenue with cities like Spokane that run their own emergency dispatch centers, starting in 2026.
Why it matters: This legislation aims to resolve longstanding financial disputes over 911 dispatch funding, ensuring that cities operating independent dispatch centers receive a fair share of tax revenue. It’s a crucial step toward equitable funding for emergency services, directly impacting response times and public safety.
The big picture: By redistributing 911 excise-tax revenue, the law seeks to foster a more collaborative and efficient emergency response system across Spokane County. This could set a precedent for how counties and cities across the state, and potentially the nation, manage and fund their emergency services.
Business implications: Spokane County will need to adjust its budget to accommodate revenue sharing, which could strain its regional dispatch operations. The requirement for equitable distribution also opens the door for potential legal challenges over how funds are allocated, emphasizing the need for clear intergovernmental agreements.
HB 2015 – Public Safety Funding (Law Enforcement Grants & Local Tax Authority)
Effective 2025-26
HB 2015 introduces a dual approach to enhance public safety funding, offering $100 million in grants for police hiring and allowing counties to raise sales taxes for criminal justice without a public vote.
Why it matters: This legislation marks a significant investment in local law enforcement and public safety infrastructure, aiming to strengthen community security and response capabilities. By providing financial resources for additional police officers and supporting criminal justice services, the bill seeks to address rising concerns over crime and safety.
The big picture: The move to empower counties with the option to increase sales taxes for public safety purposes reflects a broader trend of seeking local solutions to fund essential services. This approach could lead to more robust and responsive criminal justice systems across the state.
Business implications: Businesses in counties that opt to increase sales taxes will need to navigate the administrative changes required for tax collection, potentially facing a slight increase in operational costs. However, the anticipated improvements in public safety and criminal justice services could yield long-term benefits for the business community, including a safer operating environment and enhanced public trust.
