A slow year for HR & labor relations, but impact felt on pensions

The 2026 legislative session saw a lot of bills relating to HR and labor relations but was ultimately a quieter year. However, legislation on pensions was more active than last year.

HR & labor relations

Several agency-requested bills aimed to update existing laws that regulate agency programs.

AWC tracked and engaged on key pieces of HR legislation and successfully ensured the interests of city employers were represented and integrated. HB 2105, known as the Immigrant Workers Protection Act, was a large topic of conversation and a top HR issue to watch going into session. The interest of city employers was quickly incorporated into the bill, which requires employers to notify employees of upcoming federal audits of I-9 forms.

Legislation also was proposed to include correctional facility workers in coverage for presumptive occupational diseases for post-traumatic stress disorder and binding interest arbitration in collective bargaining. While the bills didn’t advance this year, we do expect them to be brought forward again in 2027.

There was some movement on proposals requiring public employers to bargain over the business decision to use AI and restricting electronic monitoring of employees for performance evaluation purposes. While both were concerning, neither passed.

Pensions

As for pensions, work that began last session crossed the finish line this year, though some 2025 proposals came back in new forms.

Of note, the Legislature passed HB 2034, which restates the Law Enforcement Officers’ and Fire Fighters’ Retirement System Plan 1 (LEOFF 1), maintaining existing benefits with 110% funded capacity while sweeping $3.3 billion in surplus funds into a new account and transferring $880 million to the budget stabilization account. The bill does call for a study to explore transferring local retiree medical benefit obligations to the state. This is something that will need to be worked on in 2027 to be in place by 2029 when the changes to LEOFF 1 are slated to occur. SB 5862 enacts an ad hoc 3% cost-of-living adjustment (COLA) for Public Employees’ Retirement System Plan 1 (PERS 1) beneficiaries’ monthly benefit. Though this one-time COLA will only go to PERS 1 retirees, as PERS employers, cities will contribute to these COLAs through an increase in the benefit enhancement Unfunded Actuarial Accrued Liability surcharge. This increase is estimated to collectively cost cities nearly $3 million over the next five years. There is some intent to cover the cost for COLA increases fully out of the surplus funds from the LEOFF 1 restatement, but that will be determined in future budgets.