5 Takeaways as Washington Legislature Orders Employers Not to Deduct WA CARES Act Premiums | Fisher Phillips

Responding to the question Fisher Phillips recently posed to Washington employers – to deduct or not to deduct – Governor Inslee signed into law on January 26 the bills quickly passed by the Legislature that delay the collection of employee bonuses under the WA CARES law until July 1, 2023. What are the five key next steps and additional provisions of this new list of laws that employers in Washington should be aware of?

  1. Stop the detentions. Employers should at once stop all WA CARES payroll deductions and postpone for 18 months. Starting July 2023, employees will pay $0.58 per $100 of earnings into the WA CARES fund through mandatory payroll deduction.
  2. Refund of premiums. Employers who collected bonuses from employees with the first paychecks of 2022 under the then-current version of the law have 120 days to fully refund those bonuses to employees.
  3. Maintain exemption approvals. Employers should retain copies of all exemption approval letters for employees who have purchased their own insurance and obtained exemptions approved by the Employment Security Department (ESD), the agency responsible for administration of the program. The bills do not specify whether the ESD will reopen the period in which employees can obtain private insurance and apply for this exemption.
  4. Prepare for partial benefits for near-retirees. Due to the gap between the first required premium collections and the first date of benefits available, the previous version of the law was criticized for requiring employees close to retirement age to contribute to the fund without being able to claim benefits. From now on, employees born before 1968 who contribute to the fund are entitled to 10% of the maximum benefit for each full year of contributions.
  5. Be aware of the new exemptions. The governor signed a second law that creates new voluntary exemptions from premium collection for certain populations unlikely to benefit from the law. These include some veterans receiving VA benefits, military spouses, non-Washington residents working in the state, and employees working on non-immigrant temporary worker visas. Employees who believe they may qualify for these exemptions will need to seek ESD’s approval.

Stay tuned

There may be further amendments to the law in the coming months, and the lawsuit filed last fall challenging the law remains active. Some lawmakers still favor a complete repeal of the law, and not all criticisms have been resolved by these changes.

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