S-0803.2
SENATE BILL 5662
State of Washington 68th Legislature 2023 Regular Session
By Senators Saldaña and Nguyen
Read first time 02/01/23. Referred to Committee on Labor & Commerce.
1 AN ACT Relating to creating the cannabis employee job retention
2 act; adding a new chapter to Title 49 RCW; and prescribing penalties.
3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
4 NEW SECTION. Sec. 1. (1) Washington voters legalized
5 recreational cannabis just 10 years ago through the passage of
6 Initiative Measure No. 502, and in many ways the industry is still
7 nascent. The state has taken modest steps to ensure better equity in
8 the industry to mitigate harms done to communities that were
9 disproportionately impacted by the war on drugs, but the state still
10 has more work to do. Studies by respected industry publications state
11 that a majority of frontline cannabis workers are women and people of
12 color.
13 (2) The liquor and cannabis board sets the number of licenses and
14 manages the process when a retail establishment changes their
15 licensure status through a change in ownership or a change in
16 business location. Of the 463 active retail licenses, 143 (31
17 percent) have undergone some kind of change in ownership, many of
18 them more than once. This high turnover in ownership fosters job
19 insecurity in what is already a challenging industry.
20 (3) The legislature finds that, given the uniqueness of an
21 industry where the number of retail licenses are fixed by statute,
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1 where jobs are limited to those establishments with a state license,
2 and where the ownership of those licenses has a high degree of
3 turnover, it is necessary to ensure job retention in a continually
4 changing industry.
5 NEW SECTION. Sec. 2. The definitions in this section apply
6 throughout this chapter unless the context clearly requires
7 otherwise.
8 (1) "Adverse action" means denying a job or promotion, demoting,
9 terminating, failing to rehire after a seasonal interruption of work,
10 threatening, penalizing, engaging in unfair immigration-related
11 practices, filing a false report with a government agency, changing
12 an employee's status to a nonemployee, or otherwise discriminating
13 against any person for any reason prohibited by this chapter. Adverse
14 action for an employee may involve any aspect of employment,
15 including pay, work hours, responsibilities, or other material change
16 in the terms and conditions of employment.
17 (2) "Aggrieved party" means an employee or other person who
18 suffers tangible or intangible harm due to an employer or other
19 person's violation of this chapter.
20 (3) "Cannabis business" means an organization licensed and
21 regulated or required to be licensed and regulated by the liquor and
22 cannabis board under chapter 69.50 RCW.
23 (4) "Change in control" means any sale, assignment, transfer,
24 contribution, or other disposition of all or substantially all of the
25 assets used in the operation of a cannabis business or a discrete
26 portion of the cannabis business that continues in operation as a
27 cannabis business of the same business type, or a controlling
28 interest (including by consolidation, merger, or reorganization) of
29 the outgoing cannabis employer or any person who controls the
30 outgoing cannabis employer.
31 (5) "Compensation" means payment owed to an employee by reason of
32 employment including, but not limited to, salaries, wages, tips,
33 overtime, commissions, piece rate, bonuses, rest breaks, promised or
34 legislatively required pay or paid leave, and reimbursement for
35 employer expenses. For reimbursement for employer expenses, an
36 employer shall indemnify the employee for all necessary expenditures
37 or losses incurred by the employee in direct consequence of the
38 discharge of the employee's duties, or of the employee's obedience to
39 the directions of the employer, even though unlawful, unless the
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 1 employee, at the time of obeying the directions, believed them to be
2 unlawful.
3 (6) "Department" means the department of labor and industries.
4 (7) "Director" means the director of the department of labor and
5 industries.
6 (8) "Employ" means to suffer or permit to work.
7 (9) "Employee" means any individual employed by an employer,
8 including but not limited to full-time employees, part-time
9 employees, and temporary workers.
10 (10) "Employer" means any individual, partnership, association,
11 corporation, business trust, or any entity, person or group of
12 persons, or a successor thereof, that employs another person and
13 includes any such entity or person acting directly or indirectly in
14 the interest of the employer in relation to the employee. More than
15 one entity may be the employer if employment by one employer is not
16 completely disassociated from employment by any other employer.
17 (11) "Employment commencement date" means the date on which an
18 employee retained by the incoming cannabis employer pursuant to this
19 chapter commences work for the incoming cannabis employer in exchange
20 for benefits and compensation under the terms and conditions
21 established by the incoming cannabis employer or as required by law.
22 (12) "Incoming cannabis employer" means an employer that owns,
23 controls, or operates a cannabis business that is subject to a change
24 in control after the change in control.
25 (13) "Outgoing cannabis employer" means an employer that owns,
26 controls, or operates a cannabis business that is subject to a change
27 in control prior to the change in control.
28 (14) "Preferential hiring list" means a list of the names,
29 addresses, dates of hire, and job classifications for all employees
30 that worked in the state for the outgoing cannabis employer for at
31 least 30 calendar days within the last 180 days prior to the
32 execution of a transfer document.
33 (15) "Rate of inflation" means 100 percent of the annual average
34 growth rate of the bimonthly Seattle-Tacoma-Bellevue Area consumer
35 price index for urban wage earners and clerical workers, termed CPI-
36 W, for the 12-month period ending in August, provided that the
37 percentage increase may not be less than zero.
38 (16) "Reactivating cannabis employer" means any employer that
39 recommences operations within nine months after ceasing to be fully
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 1 operational and hires additional nonmanagerial employees within 180
2 calendar days of recommencing operations.
3 (17) "Respondent" means an employer or any person who is alleged
4 to have committed a violation of this chapter.
5 (18) "Successor" means any person to whom an employer quitting,
6 selling out, exchanging, or disposing of a business sells or
7 otherwise conveys in bulk and not in the ordinary course of the
8 employer's business, a major part of the property, whether real or
9 personal, tangible or intangible, of the employer's business. For
10 purposes of this subsection, "person" means any individual, receiver,
11 administrator, executor, assignee, trustee in bankruptcy, trust,
12 estate, firm, corporation, business trust, partnership, limited
13 liability partnership, company, joint stock company, limited
14 liability company, association, joint venture, or any other legal or
15 commercial entity.
16 (19) "Transfer document" means the purchase agreement or other
17 document(s) creating a binding agreement to effect a change in
18 control.
19 NEW SECTION. Sec. 3. (1) Employees covered under this chapter
20 are limited to those who have worked in the state for an outgoing
21 cannabis employer for at least 30 calendar days within the last 180
22 days prior to the execution of a transfer document.
23 (2) Regarding whether an individual is an employee, the employer
24 bears the burden of proof that the individual is, as a matter of
25 economic reality, in business for oneself rather than dependent upon
26 the alleged employer.
27 NEW SECTION. Sec. 4. (1) Except as provided in subsection (3)
28 of this section, employers covered under this chapter are limited to
29 those who own, control, or operate a cannabis business in the state,
30 including but not limited to integrated enterprises.
31 (2) Separate entities that form an integrated enterprise will be
32 considered a single employer under this chapter. Separate entities
33 will be considered an integrated enterprise and a single employer
34 under this chapter where a separate entity controls the operation of
35 another entity. The factors to consider include but are not limited
36 to:
37 (a) Degree of interrelation between the operations of multiple
38 entities;
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 1 (b) Degree to which the entities share common management;
2 (c) Centralized control of labor relations;
3 (d) Degree of common ownership or financial control over the
4 entities; and
5 (e) Use of a common brand, trade, business, or operating name.
6 (3) An employer holding a cannabis retail license issued by the
7 liquor and cannabis board under the social equity program established
8 in RCW 69.50.335 is not covered under this chapter until January 1,
9 2030, if the employer did not previously hold a cannabis retail
10 license issued under chapter 69.50 RCW.
11 NEW SECTION. Sec. 5. (1) When a cannabis business undergoes a
12 change in control, the outgoing cannabis employer shall, within 15
13 calendar days after the execution of a transfer document, provide a
14 preferential hiring list to the incoming cannabis employer.
15 (2)(a) The outgoing cannabis employer shall post written notice
16 of the change in control at the affected business within five
17 business days following the execution of the transfer document.
18 Notice must be posted in a conspicuous place so as to be readily
19 viewed by employees and applicants for employment.
20 (b) Notice must include, but not be limited to, the name of the
21 outgoing cannabis employer and its contact information, the name of
22 the incoming cannabis employer and its contact information, the
23 effective date of the change in control, and the name and any trade
24 ("doing business as") names used by any associated integrated
25 enterprise.
26 NEW SECTION. Sec. 6. (1) The incoming cannabis employer shall
27 keep the notice required by section 5 of this act posted during any
28 closure of the cannabis business and for 180 calendar days after the
29 cannabis business is open to the public under its control.
30 (2) The incoming cannabis employer shall:
31 (a) Maintain the preferential hiring list provided by the
32 outgoing cannabis employer; and
33 (b) Hire from that preferential hiring list for a period
34 beginning upon the execution of the transfer document and continuing
35 for 180 calendar days after the cannabis business is open to the
36 public under the incoming cannabis employer. The incoming cannabis
37 employer must hire by seniority within each job classification to the
38 extent that comparable job classifications exist.
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 1 (3) If the incoming cannabis employer extends an offer of
2 employment to an employee, the offer must be in writing and remain
3 open for at least 10 business days.
4 (4)(a) If the employee accepts the written job offer, the
5 incoming cannabis employer shall retain that employee for no fewer
6 than 90 calendar days following the employee's employment
7 commencement date.
8 (b) During the 90-day transition employment period, the employer
9 must employ the employee under the same terms and conditions,
10 including wages and benefits, established by the outgoing cannabis
11 employer, or as required by law.
12 (5) During the 90-day transition employment period established by
13 this section, the incoming cannabis employer may not:
14 (a) Lay off employees unless the incoming cannabis employer
15 determines that fewer cannabis employees were required than by the
16 outgoing cannabis employer. In this circumstance, the incoming
17 cannabis employer shall retain employees by seniority within each job
18 classification to the extent that comparable job classifications
19 exist; or
20 (b) Discharge an employee unless there is just cause for the
21 discharge.
22 (6)(a) At the end of the 90-day transition employment period, the
23 incoming cannabis employer shall provide a written performance
24 evaluation to each employee.
25 (b) If the employee's performance during the 90-day transition
26 employment period is satisfactory, the incoming cannabis employer
27 shall consider offering the employee continued employment under the
28 terms and conditions, including wages and benefits, established by
29 the outgoing cannabis employer, or as required by law.
30 (7) The requirements for incoming cannabis employers established
31 in this section and section 5 of this act apply to reactivating
32 cannabis employers.
33 NEW SECTION. Sec. 7. (1) The department shall create and make
34 available a poster that gives notice of the rights afforded by this
35 chapter. The department shall create the poster in English, Spanish,
36 and other languages the department determines is appropriate. The
37 poster must give notice of:
38 (a) The right to notice that the cannabis business is changing
39 ownership;
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 1 (b) The right to be offered a job with the incoming cannabis
2 employer;
3 (c) The right to just cause employment for the first 90 days of
4 employment;
5 (d) If layoff is required, the right to be laid off by seniority
6 within one's job classification for the first 90 days of employment;
7 (e) The right to a written performance evaluation after 90 days
8 of employment;
9 (f) The right to be protected from retaliation for exercising in
10 good faith the rights protected by this chapter; and
11 (g) The right to file a complaint with the department or bring a
12 civil action for violation of this chapter.
13 (2) Employers shall display the poster in a conspicuous and
14 accessible place at every workplace or jobsite where any of their
15 employees work. Employers shall display the poster in English and in
16 the primary language of the employee(s) at the particular workplace.
17 Employers shall make a good faith effort to determine the primary
18 languages of the employees at that particular workplace. If display
19 of the poster is not feasible, including situations when the employee
20 works remotely or does not have a regular workplace or jobsite,
21 employers may provide the poster on an individual basis in an
22 employee's primary language in physical or electronic format that is
23 reasonably conspicuous and accessible.
24 NEW SECTION. Sec. 8. (1) Each employer shall retain records
25 that document compliance with this chapter, including:
26 (a) A written copy of the preferential hiring list;
27 (b) Written verification of offers of employment extended to each
28 employee as required under section 6 of this act. The verification
29 must include the name, address, date of hire, and employment
30 occupation classification of each employee;
31 (c) Written records of the performance evaluations required under
32 section 6 of this act; and
33 (d) Pursuant to the department's rules, other records that are
34 material and necessary to effectuate the terms of this chapter.
35 (2) Records required by this section must be retained for a
36 period of three years.
37 (3) If the employer fails to retain adequate records required
38 under this section, a presumption is created, rebuttable by clear and
39 convincing evidence, that the employer violated this chapter for the
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 1 periods for which records were not retained for each employee for
2 whom records were not retained.
3 NEW SECTION. Sec. 9. (1) An employer or any other person may
4 not interfere with, restrain, deny, or attempt to deny the exercise
5 of any right protected under this section.
6 (2) An employer or any other person may not take any adverse
7 action against any person because the person has exercised in good
8 faith the rights protected under this section. Rights protected under
9 this section include but are not limited to the right to:
10 (a) Make inquiries about protected rights under this chapter;
11 (b) Inform others about their rights under this chapter;
12 (c) Inform the person's employer, the person's legal counsel, a
13 union or similar organization, or any other person about an alleged
14 violation of this chapter;
15 (d) File an oral or written complaint with the department or
16 bring a civil action for an alleged violation of this chapter;
17 (e) Cooperate with the department in its investigations of this
18 chapter;
19 (f) Testify in a proceeding under or related to this chapter;
20 (g) Refuse to participate in an activity that would result in a
21 violation of city, state, or fe