Adding to the sea of troubles that employers faced in the year just gone by, the status of Washington State’s new long-term care payroll tax is now up in the air. Employers in the Evergreen State are now faced with a dilemma when it comes to the WA Cares Act: to collect or not deduct this tax from your employees’ wage starting with the first payroll period in 2022. This Insight provides a quick background and provides factors you should take into account before making a decision as to which road to take.
What Dreams May Come
Touted as the first law of its kind, the WA Cares Act seeks to establish an insurance fund to help Washington residents pay for certain long-term care services, such as assisted living facilities, after retirement. The Act requires that employees to pay for the insurance through mandatory wage withholding premiums, which employers must deduct from employee wages beginning January 2022.
Is Something Rotten in the State of Washington?
Since it passed, the Act has been under fire from employers, employees, and legal commentators. Many believe that the maximum benefit seems inadequate, some workers will pay into the fund with no ability to receive benefits (e.g. older residents will pay the tax yet not be eligible for the benefit, and retirees must live in Washington to access benefits), and the opt-out mechanism is extremely narrow and limited. Many legal commentators also believe the federal Employee Retirement Income Security Act (ERISA) preempts (and...
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