The five things employers need to know to comply with this mandatory regulation
That it’s a new, state-required program only employees contribute to is of little comfort to a lot of small-business owners—because guess who is required to do the paperwork.
In fact, the first of the five things the state Employment Security Department (ESD), which oversees the WA Cares Fund, wants everyone to know is that “Businesses will need to collect WA Cares premiums for all employees whose work is localized in Washington (unless they have provided you with an approved exemption letter).”
What is the WA Cares Fund?
According to ESD, “The WA Cares Fund is a state-run long-term care benefit program. If people meet eligibility criteria, they can use the program to access a lifetime benefit to pay for a wide range of services and support. The maximum benefit is adjusted annually for inflation and is currently capped at $36,500. Beginning July 1, 2023, workers will contribute $0.58 per $100 of earnings through payroll deduction. Employers will submit deducted premiums to ESD for deposit into a dedicated trust fund. People who are self-employed and federally recognized tribes may elect coverage. The Department of Social and Human Services (DSHS) will begin accepting applications for benefits in July of 2026.” Read more about the fund here.
Why NFIB Opposed Creating WA Cares
House Bill 1732, creating WA Cares, began its legislative life as House Bill 1087 in 2019. On April 5 of that year, NFIB State Director Patrick Connor, notified the membership, “NFIB went on record today opposing HB 1087 in the Senate Ways & Means Committee, establishing a new payroll tax on workers to fund a benefit program that could be used for a variety of home-care, medical assistance, and other support services, primarily for the elderly. Additional concerns have since been raised about the bill. We heard from some whose employees reside in Oregon or Idaho. It appears you would be required to deduct the proposed payroll tax on those workers, but they would not be eligible to receive the benefits. These concerns, along with:
- “the House’s B&O tax surcharge, which would apply to many business-to-business services, multiple graduated REET proposals that would disproportionately impact commercial property,
- “and a House capital gains tax bill targeting small businesses while exempting large corporations, are forcing us back into opposing this bill as part of an onslaught of proposed new and increased taxes.
- “Moreover, an analysis of HB 1087 released by the Washington Policy Center shows workers will pay $30 billion in payroll taxes to “save” the state about $1.2 billion over 30 years.”
Then Came the Pandemic
Gov. Jay Inslee signed HB 1087 into law on May 13, 2019. Shortly later the COVID-19 pandemic struck the world, and state lawmakers had no appetite for handicapping employers with yet another regulation. Hence, House Bill 1732 emerged that delayed implementation of WA Cares (HB 1087), which Gov. Inslee signed into law Jan. 27, 2022.
That delay is now over, and compliance with the new law began July 1, 2023. If you haven’t already done so, NFIB encourages its members to acquaint themselves with it.
