A busy year for HR & labor relations legislation, a slow one for pensions

2025 was an active year for HR and labor relations issues, though ultimately a quieter one on pensions.

HR & labor relations

Cities were engaged on several HR & labor relations bills all throughout the 2025 session, including some that garnered quite a bit of attention as session progressed.

Some major pieces of legislation that passed are aimed at both public and private sector workers and employers.

SB 5041 permits workers on an extended strike to access up to 6 weeks of unemployment benefits. While public sector workers cannot legally strike, there are examples of public employee strikes. AWC opposed the bill because it requires cities to go through expensive litigation to avoid being on the hook for striking workers’ unemployment benefits. While city worker strikes have been rare in the past, cities should be prepared to take immediate legal action in the event of a public employee strike to avoid this new liability. The bill originally included 12 weeks of benefits but was pared down in negotiations between the House and Senate to six weeks.

HB 1213 makes major changes to the state’s Paid Family & Medical Leave (PFML) program, by expanding the PFML law’s job protection provisions to more employees (including employees of many smaller employers) and allowing those protections to start at 180 days of employment. The bill also makes it easier for employers to require state PFML and federal FMLA leaves to run concurrently – reducing the likelihood of “stacking” leave to extend absences. AWC worked hard on amendments to help lessen the impact of job protections on small employers.

Other legislation was aimed specifically at public sector labor relations.

Cities were successful in opposing HB 1622, which would have made the management decision to use artificial intelligence tools a mandatory subject of bargaining for public sector employers, not just the impacts. AWC joined a coalition of other public sector employers and tech companies to oppose the bill, and ultimately it failed to advance – though we do expect the issue to be raised again in 2026.

The Legislature passed SB 5040, which eliminates a nearly 30-year-old population threshold that exempting law enforcement from the state’s smallest cities and towns from interest arbitration in the event of collective bargaining disputes. Now law enforcement at all cities and towns regardless of population size will be eligible for interest arbitration, which will result in higher costs for small cities to negotiate contracts and resolve disputes.

SB 5503 also passed the Legislature in 2025, which contains a provision that will discourage cities from settling grievance arbitration cases by preventing settlements from restricting future suits. Cities opposed that provision, but ultimately it remained part of the final bill.

HR & labor relations bills

Pensions

On the pensions front, only one bill of note passed Legislature – SB 5357, which reset public employer contribution rates lower than what the Pension Funding Council originally recommended in 2024 due to public pensions closing in on or exceeding full funding status. The bill is projected to save local governments over $200 million in pension costs over the next two biennia, though in the long run may cost local governments more over the next 25 years.

The Legislature punted on deciding between two different methods to utilize the LEOFF 1 system’s estimated $3.5 billion surplus, and instead included a proviso in the budget for the Select Committee on Pension Policy (SCPP) to study and make recommendations between either merging the Plans 1 systems into a single retirement system and using the LEOFF 1 surplus to fund an ongoing COLA for PERS 1 and TRS 1 retirees (SB 5085), or sweeping the surplus into the state general fund (HB 2034). The SCPP will make its recommendations by the start of the 2026 Legislative session.

Pension bills