You may recall Washington State passed a long-term care law requiring employers to withhold a payroll tax to fund the program, see April Benefit Beat article here. The required withholding is to have begun January 1, 2022.
On November 9, 2021, a class-action lawsuit was filed challenging the law on the grounds of ERISA preemption among other things, see December Benefit Beat article here.
On December 17, 2021, Washington Governor Jay Inslee, Senate Majority Leader Andy Billig, and House Speaker Laurie Jinkins acknowledged the challenges with the law. It is generally thought that the state legislature will address the law and potentially make modifications when it returns to its session on January 10, 2022.
Governor Inslee has directed the state’s Employment Security Department to not collect premiums from the program until the legislature addresses some of the law’s issues. The proverbial $64,000 question is: Should employers proceed with withholding the tax knowing that it will need to be refunded fairly immediately if in fact the law is changed or should the employer not withhold the tax knowing that it will be responsible to submit the tax should the law remain in effect as is? Whichever route the employer chooses to follow, it will want to communicate its position to its employees after consultation with its tax and legal advisors.
The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.