Between minimum wage hikes, mandatory sick-leave policies, and heightened regulations, organizations are facing more issues just by being employers, says Jim DeWalt, president and CEO of Spokane-based Associated Industries of the Inland Northwest. 

AI provides employer consulting services and training, most notably legal and human resources counsel throughout Washington state. It also offers a health insurance to its members and announced this week that it will roll out financial services.

We sat down with DeWalt recently to talk about current employment issues and trends within the organization. 

Journal: What are some of the more pressing employment issues your organization is addressing currently? 

DeWalt: We’ve seen a significant growth in agency oversight, most notably with the Department of Labor, with rules and regulations as well as the enforcement—audits if you will. The Washington state Department of Labor & Industries is aggressive on a number of issues. We have had significant growth in our HR services that we offer because of it. It’s a full menu of services that we offer. 

The area where we see the greatest demand is in the area of compliance. With yesterday’s vote, the minimum wage and how that’s going to be implemented becomes an issue. Part-time and seasonal employment, what constitutes that? Those are all big issues for small businesses. 

The penalties are substantial to small businesses. Not a lot of small businesses are aware of the degree to which they are subject to these rules and regulations and how they are interpreted by the various agencies. 

For example, they recently passed a law in the state of Washington that said all businesses have to have a safety plan. That comes as a big surprise to a lot of people. “Well, I only employ five people.” Well, it says all.

The chances of you being audited by the state are relatively small, frankly. But if you are and you aren’t in compliance, it could result in a significant penalty. That’s a big concern. 

Drug testing. What’s your drug policy? What does your handbook say? You might say, “Handbook? We don’t need no stinking handbook.” Well, you might need one. 

Journal: So, what I’m hearing is that a lot of HR issues are becoming more formalized in ways that employers might not be aware of. 

DeWalt: Absolutely. And what’s driving so much of it is that small business is very concerned about making a mistake. 

The wage and hour rules are complex. Minimum wage is going to be a big deal. 

We’re understanding that agencies are looking at noncompete regulations. We had one employer who is in a sales-type business. They had an employee who was with them for years, fully trusted, who downloaded the information, took it to another employer, and used that as a sales-call sheet. How do you protect yourself against that? There are a number of things going on in that area. 

Journal: It’s my impression that we’ve seen an increase in employer-related regulations in the last three to five years. Is that a correct assumption?

DeWalt: I would say that’s definitely true. And that begs the question of why. Well, a lot of what we’ve seen and what we attribute it to is the ineffectiveness of the legislative branch. Just look at our recent election. How many referendum items were on the ballot? Where’s the legislature on those issues?

At the federal level, the Department of Labor is interpreting the laws and applying them because there are no guidelines. The effect of that is the issue of who provides oversight. The only avenue I’m aware of, if you get into a dispute with an agency, is through the courts. And that is terribly time consuming. It detracts from your business, and it is unbelievably expensive. 

We have gone through that as an association, defending things that we have done and programs that we’ve offered. That’s fine, but they go on interminably and cost huge amounts of money. 

Journal: Tell us about your membership base.

DeWalt: Right now, we have approximately 1,000 members across the state of Washington. We have about 500 members here, and another 500 are spread throughout the state of Washington. 

We expanded statewide about 10 years ago with the association’s health plan. At one time, we had that insuring about 25,000 lives across the state. 

As far as industries are concerned, it’s technology, general business, construction, health care. It’s across the spectrum. The things we’re talking about are really general and apply across the board. 

We work with municipalities. We’re developing a much more expanded relationship with GSI (Greater Spokane Incorporated). We’re offering co-branding and co-offering of programs, which allows them to expand their offerings and us to do the same. We’re not looking at it as competition. We’re looking at as we complement each other. And that’s very positive.

Journal: In terms of size of organizations that you serve, how would you break it down?

DeWalt: Small is as few as two. Large is several hundred. Our main thrust is at the small business owner. I would categorize it as fewer than 100 employees. 

Back in the regulatory world for a moment. If you have 49 employees, you’re subject to a set of laws. If you have 50, your world changes. There are a number of compliance issues that apply to you that didn’t apply at 49 employees. That’s a big deal. That’s where we find we’re the most relevant. 

But we do a significant amount of training for Avista, for example. We’ve been working with Spokane County as they’ve changed and evolved. It’s a very diverse membership. 

We provide the medical benefit for the chamber of commerce of Vancouver, (Wash.), as an example. 

Journal: The health-insurance component is a big part for your organization. How has that changed over the last five years or so?

DeWalt: (laughs) I would say there’s nothing that’s changed more than health care, and nothing that will change more. Because of the results of last night (the presidential election), what does health care look like? If anybody tells you that they know, I would avoid them. 

It’s been a real challenge. Back in 2007, we had a disagreement with our insurance commissioner and went through the court system. In that case, we were joined by the Association of Washington Business as co-plaintiffs. 

Journal: At that time, the state’s argument against association plans was what?

DeWalt: They were discriminatory. Again, it was an interpretation by a regulator. There was no working with that office, so we had no choice but to defend our position through the courts. It took a lot of time and money.

The way our insurance commissioner interpreted the Affordable Care Act is different from any other state in the country. We’ve had to deal with that, as has every other association in the state of Washington that offers an association health plan. 

Those plans were allowed for in 1995 by a bipartisan piece of legislation through the state legislation. They’ve got an issue with it. They’ve said publicly that they don’t like association health plans, but we’re not breaking the law. We’re providing necessary health care coverage to literally hundreds of thousands within the associations that are doing it. 

It’s interesting to me that in the national dialogue, the ACA was required for those who aren’t covered by an employer’s health plan. Why would you discourage something like this that has worked for so long and so well? 

Journal: What has been your trend in enrollment in health care? 

DeWalt: It’s been up and down over the years, because of the competitive nature. We’re a sponsoring organization. We look at the various carriers, and we make a determination as to which program is in the best interest of our membership. We’ve been with Premera, United Healthcare, Moda, and we’re now with Regence. We’ve got pretty broad experience. 

But we’ve seen our numbers go up and down. We’ve seen our numbers as low as 2,000 and as high as 25,000. It’s an interesting business to be involved with. I’m not an insurance guy by background or by interest, but I’ve had to acquaint myself with the business. 

Journal: Associated Industries made an acquisition last year. Could you take me through that and what that acquisition did for you? 

DeWalt: The name of the company was Red & Associates. You’ll remember when it was determined that it wasn’t good for accounting firms to have human resources components of their practices. So with that came the creation of Red & Associates by Angi Shamblin and Pam DeCounter. They operated a very successful HR consulting business in the Valley for a number of years. 

I was looking to expand our HR services. We looked at it and thought, do we want to grow organically and hire onesies and twosies, or do we look for someone who might want to become one of us?

Red & Associates was, I felt, the No. 1 HR company in the area. We talked back and forth, and it was a great process. They became a part of Associated Industries last fall, and it’s gone terrific.

Journal: Do you have any other areas of expansion that you’re looking at?

DeWalt: We have formed a partnership with Boeing Employees Credit Union. Now, we’ll be able to offer financial services to small employers through the association and BECU. 

I hope that this will demonstrate that we are creative. We are flexible, and we are interested in maintaining our relevance with our members. 

Journal: With AI Bright Promise, that’s an initiative that you started seven or eight years ago. Take me through what that is and how it’s evolved over the last seven or eight years. 

DeWalt: That’s a real passion point for me. If I could do nothing else, I’d do Bright Promise. 

I think there are a lot of scholarship opportunities for really smart kids. There’s a lot of opportunity for economically challenged students. It’s that middle section that needs it. 

Having lived here and worked here for a long time, I looked at it, and the majority of the people hired here were graduates or attendees of Eastern and graduates or attendees of the community colleges. Those were the two relevant institutions I looked at. 

I wanted to start Bright Promise to do something with our membership, to do something for our local students, and give back to the community in a way nobody else was doing from a business standpoint. 

We pay half tuition, and they must attend the community college first, then transfer to Eastern. 

I added a nontraditional aspect to it, so we end up giving scholarships to a lot of single moms and a lot of students didn’t do well in high school. 

So far, we’ve given out 180 half-tuition scholarships. These are funds from our community, reinvested in the community through education.