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Lawsuits & Litigation

Washington Faces Class Action Against “WA Cares Fund” Payroll Tax

— November 9, 2021

The “WA Cares Fund” is intended to provide financial assistance to residents who need help paying long-term care expenses.

Washington is facing a class action, after a coalition of businesses and individual activists filed a lawsuit against a new payroll tax to fund the state’s long-term care program.

According to The Associated Press, the lawsuit was filed in federal court for the Western District of Washington. The complaint was brought by three Washington-based businesses and a half-dozen individuals.

None of the individual plaintiffs, notes The Associated Press, purchased a private, long-term insurance plan before November 1st, the deadline to qualify for an exemption to the tax.

The program—called the “WA Cares Fund”—will require non-exempt workers to pay .58% of every paycheck. The A.P. observes that an employee with a salary of $50,000 would thus pay $290 per year.

The WA Cares tax is expected to take effect in early January.

After January 1st, 2025, anyone who needs assistance with “activities of daily living”—such as bathing, dressing, or the administration of medication—can avail the fund, either to pay the costs of assisted-living-type labor, or to cover expenses such as the construction of a home wheelchair ramp.

Employees who already have a long-term insurance plan do not need to pay into the fund.

By the beginning of November, the Employment Security Department received 334,000 applications for exemptions, and has so far approved 140,000.

A gavel. Image via Wikimedia Commons via Flickr/user: Brian Turner. (CCA-BY-2.0).

While Washingtonians have until the end of next year to apply for an exemption, they must have purchased a policy by November 1st, 2021, to qualify.

Richard Birmingham, an attorney and partner at Davis Wright Tremaine LLP, said that Washington does not have the requisite authority to mandate this sort of program.

“The state simply does not have the power to mandate an employee benefit,” Birmingham said in a statement announcing the lawsuit, which was partially reprinted by The Associated Press.

Melissa Johnson, one of the non-business plaintiffs, lives in Eagle Point, WA, but works in Vancouver, across the Canada border.

Johnson issued a written statement asserting that, although she lives in Washington now, she has no plans to retire in the state.

“And yet the state is requiring that I buy a long-term care insurance product that can only be used if I retire in Washington—it just doesn’t make any sense,” Johnson said.

The Associated Press reports that the class claims that the WA Cares Fund violates federal law prohibiting states from passing any law which requires employees to participate in a plan providing sickness or medical benefits.

The lawsuit also notes that many people who work in Washington are not Washington residents, and therefore will not be eligible for WA Cares Funds; others are already nearing retirement age, but will not be able to receive WA Cares Funds by the time they have left the workforce.


Lawsuit filed against Washington’s long-term care program, WA Cares Fund

Opt-out option for Washington’s long-term care tax begins Oct. 1

Washington lawmakers look at long-term care program as frustration builds over benefits and payroll tax

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