The Department of Labor & Industries (L&I) is continuing its rulemaking development process for “good faith” rules for self-insured cities. L&I hopes to have a formal proposal soon that can begin the formal rulemaking process later this January.
We last wrote in October about the rulemaking process underway to draft new “good faith and fair dealing” rules for municipal self-insured employers in response to last session’s HB 1521. Over the fall, the L&I held several listening sessions with stakeholders and presented several draft rules for discussion. In November, L&I presented an initial draft for stakeholder comments and presented an updated draft proposal with amendments in December. You can read the proposed draft rules here.
AWC provided comments on those drafts, including:
- Acknowledging clarifying changes that inadvertent and minor mistakes do not constitute a violation of good faith and fair dealing,
- Raising the need to further address the self-insured employer’s fiduciary duty to the employer’s own interests, cities’ concerns about frivolous claims, and
- Raising concerns about the proposed requirement for cities to obtain a surety bond before they even have enough violations to be stripped of their self-insured status.
L&I also hosted a separate discussion specifically about the surety requirement issue. We’ve since learned that L&I now plans to drop the surety language entirely from the next draft of proposed rules and will likely ask the legislature to clarify the issue in statute in 2025.
L&I hopes to have a formal proposal to begin the rulemaking process by January 20. AWC will continue to engage in the rulemaking process and keep self-insured cities informed of any updates.