Newsletter January 26, 2023

IN THIS ISSUE

POLICY

ON THE LOCAL FRONT

TRENDS

SAFETY

OSHA Injury Reporting for 2022 due Feb 1

State Supreme Court to hear arguments today

Nine state Supreme Court justices will hear oral arguments at 9:00am today over the legality of the recently imposed capital gains income tax legislation. The hearing will stream live on TVW.

If the court upholds the capital gains tax, it would be imposed as an income tax on all Washingtonians. This is the 11^th attempt to impose an income tax on our state’s residents, three of which were attempts at amending the state’s constitution. The recent state advisory vote in November 2021 made it clear that over 60% of Washington’s residents do not want a capital gains income tax.

Despite a $10 billion budget surplus, lawmakers used an emergency funding clause to pass the tax, denying voters the opportunity to repeal it. The income tax was essentially approved by the judicial branch and Supreme Court, avoiding an inevitable defeat by voters.

Proponents say the tax will affect only 0.2% of the state’s residents—while opening the door as a precursor to a broader income tax on all residents.

Call it what you want, but the IRS and the revenue departments of 49 states view this as an income tax.

A new proposal, SB 5335, would increase the overall capital gains tax rate and include real estate transactions.

WR CEO Renée Sunde joins AG Ferguson in Wenatchee to speak on public safety and retail crime

The Wenatchee Chamber of Commerce is hosting its Public Safety and Retail Theft Forum tomorrow at the Wenatchee Convention Center. Attorney General Ferguson and Renée Sunde, WR President and CEO, will speak on the timely topic of public safety, retail theft, and organized crime impacting businesses and the community.

“Communities across the state are facing a staggering increase in theft and crime. Safety concerns are growing at a time when the retail industry continues to recover from the impacts of the pandemic, high inflation, retail workforce shortages, and supply chain challenges,” says Sunde. “This requires the response of community leaders and policymakers alike.”

AG Bob Ferguson launched an Organized Retail Crime Task Force last year. Since its inception, the AG and his team have hosted two meetings, each with approximately 125 attending. Participants included WR team members, the Washington Organized Retail Crime Association leadership, local, state, and federal law enforcement, county prosecutors, loss prevention officers, retail crime investigators, and retail business owners.

AG Ferguson is seeking $3 million in biennial funding from the legislature to create an ORC unit within his office to hire prosecutors, investigators and a data analyst to support the unit’s program.

The Organized Retail Crimes Unit will have the capacity to assist with investigations, coordinating cases across multiple jurisdictions, and bring resources where they are most needed. The unit will also prosecute cases referred by county prosecutors.

“Washington law enforcement agencies have limited resources to tackle these sophisticated crimes,” Ferguson said. “A modest investment in a centralized statewide organized retail crimes unit will hold criminals accountable and deter crimes which cause significant economic harm to our state.”

Business owners, loss prevention professionals, law enforcement and elected officials are invited to attend as we discuss a muti-pronged approach to tackle this growing issue.

Register here for tomorrow’s catered luncheon. The $20 charge goes toward covering the venue and catered lunch. Registration is required to attend.

Legislative Update

Today marks the 17th day of the 105-day session, and WR is continuing to review bills closely. As of today, legislators have filed 1,617 bills, an increase of 248 in the past week.

HB 1155 and SB 5351 are purported to protect health data privacy relating to collecting, sharing, and selling consumer health data. WR has significant concerns about these bills as currently written because of the overly-broad definitions—especially as they define covered data. The bills are too broadly written, will likely lead to unintended and detrimental consequences, and will be challenging to comply with and enforce. A public hearing for HB 1155 was held on Tuesday but the Senate has yet to hold a hearing.

HB 1131 and SB 5154 would enact the Packaging Extended Producer Responsibility—also known as the WRAP Act—and create a beverage container reimbursement (BCR) program. WR appreciates the sponsors’ willingness to work with stakeholders to improve the legislation. In particular, the definition of who a producer will be key to retailers’ interest in the WRAP Act. Under the BCR program, WR supports the voluntary nature of the takeback sites. Both bills were heard yesterday and WR testified with suggested improvements. Public hearings for both bills have already taken place and additional meetings will be scheduled.

SB 5160 would increase the punishments for retail crimes that involve multiple accomplices, with increased penalties for cumulative values of involving multiple thefts over a 180-day period from one or more businesses. If the same person stole goods over several counties, each county could prosecute based on the cumulated rate. WR strongly supports this bill and thanks Sen. Nikki Torres (R-15-Pasco) for introducing it. The bill was heard on Monday.

SB 5217, referred to as the Ergonomics bill, would give the state the ability to regulate certain industries and risk classes and is purported to prevent musculoskeletal injuries. WR strongly opposes this bill. This issue failed to pass in the last session, but Sen. Dhingra has reintroduced a similar version. The bill would focus on industries where ergonomic claims are two times higher than the overall state workers’ claim rate. WR testified in opposition to this bill at a hearing on Tuesday of this week.

SB 5482 would replace the state’s Business & Operations (B&O) tax with a margins tax and is modeled on legislation passed in Texas. Sen. Noel Frame (D-36-Seattle) is the prime sponsor of the bill A margins tax would allow deductions, which the current B&O tax system does not. The sponsors believe this is a fairer system that would allow for more equitable payment and be revenue neutral.

As proposed, instead of a business paying tax on their gross revenue with no deductions, SB 5482 would give all businesses a deduction. Each year, Washington businesses can take one major deduction of their choosing, such as the cost of labor or the cost of goods sold. Businesses will pay a flat 30% or a flat $1 million. The tax would then be calculated on their remaining margin. The rate for all business activity in Washington state under this proposal is 3.1966%. Businesses with $5 million of revenue or less can opt instead to use the EZ rate of 1.75% and pay on gross receipts rather than their margin.

WR plans to testify with concerns at the hearing this afternoon.

Senate hearing seeks to revoke people’s initiative requiring state to follow federal ergonomics rules

SB 5217 would repeal initiative I-841 , which prohibits L&I from promulgating ergonomic rules unless the federal government adopts uniform standards on ergonomics at the workplace. This controversial bill, prime sponsored by Senator Manka Dhingra, would authorize L&I to begin promulgating rules to prevent musculoskeletal injuries. Rules would apply to individual workers’ compensation rates when claims are twice the average of all claims over a five-year period. Rulemaking is limited to one rate class, or sector, in any 12-month period.

Proponents argue that thirty percent of workers’ compensation costs are due to musculoskeletal injuries and that regulation would lower overall costs for all sectors. Business community witnesses cited data that musculoskeletal claims are on the decline, and the state shouldn’t initiate regulations when claims rates are moving in a positive direction.

WR testified in opposition to the bill because we believe the Legislature needs to invest in education and innovative ways to reduce the incidence of musculoskeletal injuries. WR pointed to its eight-year history working with L&I through their Safety and Health Innovative Program (SHIP) and Small Business Liaison’s contracts to bring technical assistance to businesses. When companies have the information and tools necessary to reduce injuries, outcomes are better compared to regulations. SB 5217’s regulatory approach will not provide assistance to businesses and will only lead to years of controversial rulemaking and, likely, litigation.

Labor unions called on the Committee to pass the bill, claiming, “future Washington workers are counting on you to act.”

However, in questions to L&I’s medical expert, Dr. Bonatto, Senator John Braun (R-20) was able to point out that any given sector includes a wide variety of employers, many, perhaps most, with exemplary safety records. Those businesses would be inappropriately impacted by any new rules. Additionally, Senator Braun pointed out that factors outside the workplace may be the actual source of injuries.

WR urged the Committee to refrain from adopting a regulatory approach and, instead, increase L&I’s ability to provide technical assistance and consultation to businesses.

WR expresses concerns with Health Data Privacy legislation

Tuesday, the House Civil Rights and Judiciary Committee heard House Bill 1155 – addressing the collection, sharing, and selling of consumer health data, prime sponsored by Representative Vandana Slatter (D-48-Bellevue).

WR expressed significant concerns with the overly broad definitions contained in the legislation as it relates to “consumer health data,” “consumer,” “collect,” and “health care services.” WR is concerned that this bill, as currently written, will lead to unintended and detrimental consequences for the consumers it purports to help. This is in addition to the difficulties, legal exposure, and challenges with compliance.

WR would prefer that this new and sweeping legislation be enforced solely by the Attorney General – instead of currently allowing for a private right of action, which will lead to costly and, in some cases, frivolous lawsuits and settlements. At a minimum, the bill should include a “right to cure” for unintended mistakes or errors, which will undoubtedly occur in this highly complex area of data privacy.

WR has long been a leader in supporting widespread and thorough control by consumers of their personal data. Our association and its members worked closely with former Senator Reuven Carlyle (D-36-Seattle) on the landmark, model, and all-encompassing data privacy legislation that has been replicated and adopted by several states and is under consideration in the U.S. Congress.

WR and its members have offered to the sponsors of this legislation carefully crafted language that protects consumers’ sensitive personal health data while ensuring they can continue to receive the same levels of shopping experiences, customer service, and high-quality product functionality they have come to expect.

Bills address the need to support law enforcement as part of multi-pronged approach

Public safety is the top concern for retailers during the 2023 session. Aggressively tackling these concerns and related retail crimes is part of WR’s multi-pronged approach to address the growing issues surrounding public safety, retail theft and organized retail crime (ORC). One priority is to support law enforcement while strengthening laws that discourage crime and place public p safety at risk.

In his testimony supporting SB 5361—a bill seeking to incentivize hiring law enforcement—WR Senior VP of Policy and Government Affairs Mark Johnson said, “We need more police out there to help us enforce these laws.”

Last year, Washington state retailers lost about $2.7 billion in theft—about $100 billion nationally.

“We are greatly concerned about the safety of our employees going to work and the safety of our customers in their stores. We see having more police … as a very good and positive step towards that,” Johnson added.

WR is also in strong support of legislation that will address police pursuits. (HB 1053, HB 1363, SB 5034, and SB 5352) The 2021 Police Reform legislation enacted to curtail police pursuits is said by many to have resulted in serious and unforeseen consequences. While injuries related to high-speed chases may have been an impetus for the change in law, some are pushing back, saying crime has increased because criminals know law enforcement can’t follow them.

Seattle Councilmember Kshama Sawant not seeking reelection

The longest-tenured member of the Seattle City Council announced that she will not run for reelection this year. A member of the Socialist Alternative Party, Kshama Sawant was first elected to the Council in 2013 as a citywide councilmember. Two years later, when the City adopted Council districts, she won the District 3 seat.

In her announcement, Sawant vowed to continue fighting for the working class. “The reason I am not running for office is because we believe that work needs to be continued in and outside of Seattle,” said Sawant.

And the Councilmember stayed true to form as she announced her decision to exit Seattle politics, blasting labor unions and progressives like Representatives Pramila Jayapal and Alexandria Ocasio-Cortez. Strangely, the only group she praised was the very conservative House Freedom Caucus, which Sawant lauded for knowing “how to use leverage to force establishment concessions.” As Danny Westneat of The Seattle Times recalled, “the very first thing she called for after getting elected in 2013 was for Boeing workers to rise up, “shut down Boeing’s profit-making machine” and physically take over the jet maker’s factories.”

Before her retirement announcement, Sawant had already drawn a potentially strong challenger, small business owner Joy Hollingsworth, whose grandmother was a prominent civil rights and education leader in Seattle.

As employers leave downtown Seattle, tourism brings new optimism

Many large businesses have closed or are in the process of closing their downtown Seattle operations, including the Nike store. Other companies such as Facebook , Microsoft, and Amazon are actively vacating their office spaces. The departures are directly contributing to a decline in foot traffic and the bustling presence of shoppers and restaurant goers. But there is some good news.

With the Seattle Convention Center expansion officially opening yesterday, there is renewed hope for an increased number of events that will bring an infusion of dollars to the downtown area and its businesses.

The expansion is 14 stories high and has ten football fields worth of added square footage, totaling over a half-million square feet. Half of the first floor will have restaurants and retail shops.

Retailers are tripping over themselves for Millennial and Gen Z shoppers. But not this one

By Parija Kavilanz, CNN

Most retailers are tripping over themselves to stay relevant by courting younger Millennial and Gen Z shoppers. Not Lands’ End.

As it looks to grow its customer base, Lands’ End is bucking the trend by purposely embracing the “forgotten generation,” Gen Xers.

They are the generation of consumers sandwiched between Baby Boomers, born in the years after World War II, and their children, Millennials, with the earliest born in the 1980s.

“There was a strategy at a point in time where we were going to bring in Millennials,” Lands’ End CEO Jerome Griffith, who is retiring at the end of January, said at the ICR conference last week. “It didn’t fly with our customers.”

In a rush to grab the attention of younger consumers, the retailer stumbled and made fashion missteps. Sales tumbled as its core older shoppers were put off by stylish dresses and high-heeled party shoes showing up next to the comfort clothing embraced by moms and dads.

“So we said, you know what, we have this neat generation of customers right behind baby boomers, the Gen Xers. As we go out to look for new consumers, let’s go after them,” he said.

Read the rest of the article at CNN.

Content marketing trends

As retail advertising and marketing professionals know, the only certain outcome of an ad campaign is uncertainty. What worked last year, even six months ago, may not be as effective today. The one constant, however, is Americans' thirst for content.

Brick-and-mortar retailers know that getting customers to touch and feel a physical product is an integral part of the sales process. Online, shoppers can see photos and read reviews, but nothing beats seeing a product up close and personal. But how does a business get the potential buyer into their store or entice them enough to add the product to their virtual shopping cart? Perhaps the secret lies in marrying digital content with an incentive to buy.

Retailers can grab the attention of buyers by integrating compelling videos into their websites and posting them on social media. Top sites for content distribution include Facebook, YouTube, Instagram, and TikTok. If you are among the millions of digital content consumers, you know it’s the videos that are interesting, funny, quirky, and sentimental that grab your attention. Make your message compelling. It will go a long way toward growing your business.

For more video marketing ideas, see SproutSocial’s website.

OSHA Injury Reporting for 2022 due Feb 1

Employers with ten or more employees must maintain annual accident logs for the prior year, including most large WR retail and automotive members. However, the Occupational Safety & Health Administration (OSHA) exempts some businesses from this reporting requirement, depending on their NAICS (North American Industry Classification System) code.

OSHA maintains an exemption list for businesses to determine if their company is not required to report. For businesses unsure of their NAICS code, WR produced a video guide with instructions on how to find it. It is important to note that there may be times when an exempt business is required to report. In those instances, the Bureau of Labor Statistics (BLS) will notify the company in writing.

Companies required to report their OSHA 300 forms must include recordable incidents for the 2022 calendar year. The OSHA 2022 log (form 300) totals must then be transferred onto the OSHA Summary sheet (300A). This summary sheet must be posted on the company safety bulletin board for all employees to review between February 1, 2023, and April 30, 2023. These forms can be found here. Businesses are required to keep these forms on file for five years. Forms from 2017 and older may be securely disposed of.

OSHA’s recordkeeping requirements encourage employers to identify and correct hazards that cause or contribute to reportable injuries and illnesses as they implement effective safety and health programs.

Our safety team is available to help members with safety plans and topics for safety meetings. Contact us at 360-943-9198 x118, or safety@waretailservices.com

WR diversity statement

WR is committed to the principles of justice, equity, diversity, and inclusion. We strive to create a safe, welcoming environment in which these principles can thrive.

We value all people regardless of race, ethnicity, gender, religion, age, identity, sexual orientation, nationality, or disability, and that is the foundation of our commitment to those we serve.