United States: Washington Employers Allowed To Delay January 2022 Start Date For Collecting "Washington Cares Act" Premiums From Employees

In a statement on Friday, December 17, 2021, Washington Governor Jay Inslee announced that employers may wait to begin collecting premiums from employees for the new Washington Cares Act (WA Cares), while legislation is under consideration to formalize this collection pause.  The governor does not have authority to formally relieve employers from the existing withholding obligation, but has directed that "employers will not be subject to penalties and interest for not withholding fees from employees during this transition."

As a brief reminder, not long ago in April 2021, Governor Inslee signed into effect the WA Cares Act, establishing a first-of-its-kind mandatory, public, state-run long-term care insurance program for Washington workers.¹  The WA Cares Act had a rapidly approaching start date of January 1, 2022—when Washington employers were to begin withholding mandatory employee premiums to fund the program. 

Now—just eight months later and two weeks before the start date—both Governor Inslee and legislators acknowledge that there are areas where the WA Cares Act needs to be changed, and say that the legislature will be working on such changes during the legislative session that opens in January 2022.  Some of the issues with the law as currently written that will likely be addressed are: the ability of employees to opt-out of the program; how the law impacts near retirees who would contribute but not vest in the program; and how the law impacts Washington-based employees who would not be eligible for the care benefit because they do not live in Washington or do not intend to remain in Washington long-term.

What does the governor's statement mean for employers?   Washington employers that choose not to begin withholding employee premiums starting January 1, 2022 will not be subject to penalties for the time being, but should stay tuned for developments.  The governor ordered the Employment Security Department (ESD) to not begin collecting premiums from employers before they come due in April 2022, but that order does not appear to change the normal due date for remitting premium withholdings from the first quarter of 2022.  Senate Majority Leader Andy Billig and House Speaker Laurie Jinkin stated:  "While we cannot direct employers not to collect [the premiums as required by existing law], we strongly encourage them to pause on collecting premiums from employees, giving us time to pass legislation extending implementation dates until next year."

Based on the governor's statement, the likelihood that the legislature will soon formalize the delay, and employee relations concerns with commencing premium collections under these circumstances, employers may want to consider pausing the upcoming withholding of WA Cares employee premiums. If employers elect to implement such a pause, they should communicate such change with those responsible for payroll as soon as possible so that such withholdings do not begin on January 1, 2022.  In addition, although not required, employers may wish to update employees on this recent change and let them know that this new withholding will no longer be coming out of their paycheck starting January 1, 2022, but that it may be reimplemented in the future.

Littler will continue to monitor this law and provide updates accordingly.

Footnotes 

¹ For additional background on the WA Cares Act, see our prior article.

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