Evergreen Reporter

The Washington State Legislature's 2025 session is underway, and the National Federation of Independent Business (NFIB) is closely monitoring proposals that could increase business costs or facilitate lawsuits against small business owners. According to Novian & Novian law firm, "On average, it costs employers around $75,000 to work with an employment lawyer to settle a claim before it reaches trial. However, if the case progresses to court, the expenses can skyrocket, with pre-trial defense costs easily exceeding $125,000."

A key concern for NFIB Washington is legislation containing the phrase "Private Right of Action." This legal provision allows employees to sue employers directly rather than going through state agencies. It also permits other parties to file lawsuits on behalf of employees.

California's experience with its Private Attorneys General Act (PAGA), enacted 21 years ago, serves as a cautionary tale. Intended to expedite employee complaints against employers, PAGA has become lucrative for lawyers while providing little benefit to workers. Last year, California's legal industry agreed to amend PAGA in exchange for withdrawing a ballot initiative aimed at repealing the law.

Washington implemented a pay-transparency law in 2022 that includes a private right of action mechanism. Since its enforcement began in January 2023, over 215 class action lawsuits have been filed against employers under this law. These cases put businesses at risk for up to $500 million in potential liability.

Businesses often opt for settlements in these cases to avoid financial ruin despite high costs impacting liability insurance rates and consumer prices.

In NFIB’s latest Small Business Problems & Priorities report, lawsuit-related concerns ranked No. 72 out of 75 issues facing Main Street enterprises—a slight drop from No. 69 in 2020’s report. This ranking reflects NFIB members' efforts in addressing state and federal issues.

The NFIB Small Business Legal Center offers resources on compliance and avoiding litigation. The center provides guidance on employee classification, ADA website accessibility compliance, labor poster obligations, and more.