Is SEIU 775 Holding Up A Budget Deal?

Is SEIU 775 Holding Up A Budget Deal?
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Is SEIU 775 Holding Up A Budget Deal?

Many observers were cautiously optimistic that, after budget negotiations took three special sessions to complete last year, the Washington State Legislature would approve a supplemental budget this year without going into overtime.

Such optimism proved to be unrealistic, as the second week of the first special legislative session of 2016 drags on with no budget deal in sight. Since the public is not privy to the details of the budget negotiations between the Democrat-controlled House and the Republican-led Senate, it’s difficult to know the sticking points. The lack of specifics makes it impossible to blame anything other than those unhelpful generalities, political polarization and gridlock.

Behind the scenes, specific legislators are standing up for or against certain specific interests and proposals. The question is, which ones? 

While the issue has garnered little, if any, coverage, recent events indicate that SEIU 775 — one of the largest and most politically aggressive labor unions in the state — could be behind the prolonged budget negotiations.  

SEIU 775 represents the approximately 35,000 state-paid individual provider home care aides (IPs) who serve the state’s Medicaid-eligible disabled and elderly.

In 2013, the U.S. Department of Labor (DOL) issued a regulation re-interpreting the Fair Labor Standards Act (FLSA) and eliminating the longstanding exemption from minimum wage and overtime requirements for home care workers. The regulation was challenged in court by the Home Care Association of America, but was eventually upheld in October 2015, giving the regulation an effective date of January 1, 2016.

Though IPs in Washington are technically employed by their clients, the state of Washington is considered a third-party employer and, as payor, must now begin paying time-and-a-half to IPs working more than 40 hours per week.

The problem is many home care aides are live-in providers taking care of family members. As such, they work far more than 40 hours per week, which means the overtime requirement generates a pretty hefty bill for the state.

At the request of the Washington State Department of Social and Health Services (DSHS), Rep. Eileen Cody (D-34th District) introduced HB 1725 in 2015, which sought to give DSHS broad authority to regulate the number of hours IPs can work so the department could manage the amount of overtime the state had to pay. IPs’ hours are currently set by their clients alone, up to the total monthly hours DSHS assesses in the client’s care plan.

The bill was heard before the House Labor Committee on Feb. 9, 2015. SEIU 775 did not testify. At the time, the DOL rule change was still being litigated and the ultimate outcome was uncertain. HB 1725 passed the committee 4-3. 

On Feb. 25, 2015, the bill was heard before the House Appropriations Committee, which adopted a substitute making DSHSs’ authority to manage IPs’ hours contingent upon eventual implementation of the DOL rule. Again, SEIU 775 did not testify, and the bill passed 30-2.

The bill subsequently passed the House unanimously in the third special session but was not acted on by the Senate.

Fast forward to the start of the 2016 legislative session. The DOL rule change had been upheld in court and the state was facing the prospect of having to begin paying IPs overtime if it did not adopt regulations to limit their hours.

The House Appropriations Committee held another hearing on HB 1725 on Jan. 20. This time, SEIU 775 lobbyist Lani Todd testified publicly on the legislation. Todd took no firm position on the bill either way (she signed in “other” rather than “pro” or “con”), noting,

“(SEIU) 775 has always taken the position that these workers, like all workers, should be paid overtime. However, we have also taken the position that the state should have some ability to control overtime and its costs.”

The committee passed the bill unanimously, as did the full House on Feb. 15.

Once in the Senate, the bill was heard before the Ways and Means Committee on March 2. While no SEIU 775 representative testified, Todd indicated the union’s support for the legislation by signing in “pro.” The committee amended the bill to cap the hours IPs can work at 40 and directed DSHS to develop rules allowing IPs to work overtime if necessary to ensure “consumers are not at increased risk institutionalization” and to provide for consumers’ access to care:

  • “…when there is a limited number of providers within the geographic region of the consumer;”
  • “…when there is a limited number of providers available to support a consumer with complex medical and behavioral needs;” and,
  • when emergencies “pose a health and safety risk for consumers.”

The amended bill passed the committee with no opposition. Even Sen. Steve Conway (D-Tacoma) and Sen. Karen Keiser (D-Kent), both former labor officials, voted to advance the bill with a “do pass” recommendation. Only Sen. Bob Hasegawa (D-Seattle) voted to advance the bill “without recommendation.”

With no visible union opposition and near unanimous legislative support, the bill should have been well on its way to being approved. But it wasn’t.

So what happened?

At some point toward the end of the regular session and start of the special session, SEIU 775 changed its tune, came out against capping IPs’ overtime and launched a campaign to get its members to contact budget negotiators in opposition to the legislation.

A page on the union’s website reads:

Negotiators in Olympia are near a final budget deal, but some legislators are still proposing to cap home care workers hours at 40/week, which will cause havoc for vulnerable clients and could reduce pay for several thousand caregivers.

Call and email budget negotiators NOW and tell them not to cap home care workers at 40 hours a week. Tell them caregivers can’t afford an hours cut and clients won’t be able to find other caregivers.

If the union’s change of heart caused labor-friendly legislators to reconsider their support for HB 1725, the consequences for the state budget would be significant.

Passed as amended by the Senate Ways and Means committee (hours capped at 40 with certain exceptions), the Office of Financial Management (OFM) estimates the cost of the new overtime at $71 million for the remainder of the 2015-2017 biennium and $86 million in the 2017-19 biennium.

Gov. Jay Inslee’s budget included funding for unregulated overtime for IPs working up to 45 hours per week and DSHS-regulated overtime beyond the 45-hour limit. OFM estimates the cost of the governor’s plan to be $78 million for the rest of the 2015-17 biennium and $90 million in the 2017-19 biennium.  

If, however, DSHS is not permitted to cap IPs’ hours and must pay all overtime without restriction, OFM estimates the cost to the state would reach $313 million for the remainder of the 2015-17 biennium and $511 million in the complete 2017-19 biennium.

Thus, after signaling for the past year it would accept limits on IPs’ hours, SEIU 775 has suddenly adopted the position that no limits on overtime are acceptable. It’s hard to know for sure, but it is certainly within the realm of possibility that the union’s change of heart may have jeopardized the legislative consensus on how to address the issue and effectively blown more than a $300 million dollar hole in the budget negotiations.

Director of Research and Government Affairs
mnelsen@freedomfoundation.com
As the Freedom Foundation’s Director of Research and Government Affairs, Maxford Nelsen leads the team working to advance the Freedom Foundation’s mission through strategic research, public policy advocacy, and labor relations. Max regularly testifies on labor issues before legislative bodies and his research has formed the basis of several briefs submitted to the U.S. Supreme Court. Max’s work has been published in local newspapers around the country and in national outlets like the Wall Street Journal, Forbes, The Hill, National Review, and the American Spectator. His work on labor policy issues has been featured in media outlets like the New York Times, Fox News, and PBS News Hour. He is a frequent guest on local radio stations like 770 KTTH and 570 KVI. From 2019-21, Max was a presidential appointee to the Federal Service Impasses Panel within the Federal Labor Relations Authority, which resolves contract negotiation disputes between federal agencies and labor unions. Prior to joining the Freedom Foundation in 2013, Max worked for WashingtonVotes.org and the Washington Policy Center and interned with the Heritage Foundation. Max holds a labor relations certificate from the University of Wisconsin-Madison and graduated magna cum laude from Whitworth University with a bachelor’s degree in political science. A Washington native, he lives in Olympia with his wife and sons.