Long term care payroll tax delay up for early action

Jan 13, 2022
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Written by WR Communications
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Inside Washington Retail

In 2019, the Legislature passed HB 1087 to implement a new Long-Term Care Program funded by a 0.58% tax (called “premiums”) on employee earnings. The new payroll tax took effect on January 1, 2022, and funds the Washington Cares Fund, which will provide financial assistance for long-term care. Under the original legislation, workers had the option to opt out of the program at any time. However, in 2021, the law was amended to require all workers to contribute into the program unless they could show proof of private long-term care insurance by November 1, 2021. Over the past year, unions, and employers, including the Washington Retail Association, communicated about several significant issues over eligibility requirements to collect benefits and the new payroll tax.

Before the Legislature convened on January 10, Speaker of the House Laurie Jinkins and Senate Majority Leader Andy Billig committed to moving swiftly moving legislation to delay implementation of the Long-Term Care program for 18 months (until July 2023). Although several bills to reform the long-term care program have been introduced, HB 1732 and HB 1733 were heard in the House Appropriations Committee on Tuesday and are scheduled for Executive Action by the end of the week. HB 1732 delays implementation of the program, including the $0.58% payroll tax, until July 2023 and allows for a pro-rated benefit for employees that are at least 54 years of age and retire within ten years.

Additionally, HB 1732 requires any employer that withheld the payroll tax beginning January 1 to remit the withheld amount back to their employees within 120 days. If the employer had remitted the payroll tax to the Employment Security Department (ESD), then ESD is required to remit the amount back to the employer within 120 days

HB 1733 adds new exemptions for disabled veterans, military family members, immigrants, and non-state residents working in Washington State.

According to House Leadership, they plan to pass HB 1732 to the Senate in the next week. Senate Majority Leader Billig has indicated swift action on the bill in the Senate. Both the House and Senate are ensuring that the issue does not bypass the appropriate Committees and hearing processes before final action. Further, their focus is on delaying program implementation and establishing a process to develop changes necessary in the program before 2023 implementation. Accordingly, it is unclear if the exemptions contained in HB 1733 will move this session or become part of a longer-term, interim review.

Employment Law Issues “Off and Running”

As expected, the House and Senate Labor Committees are holding public hearings on a number of bills of keen interest, and concern, to the Washington Retail Association. Hearings this week have included technical corrections to Washington’s Paid Family and Medical Leave program (HB 1613) and possible benefit extensions for those with stillborn or postnatal fatality situations.

Independent Medical Examinations (IME’s) Again Under Fire

The Washington Retail Association (WR) manages one of Washington’s longest operating retrospective rating programs on behalf of its members. WR strives to meet the following goals:

  • Make safety culture a priority and provide ongoing workplace safety resources for employees working in retail businesses across Washington State. Retail employees are the heart and soul of our member’s businesses, and their safety and well-being are our member’s highest priority
  • When needed, provide claims management support to ensure the injured worker receives timely and effective care so that they can return to work and engage in their personal activities as quickly as medically possible

Independent Medical Exams (IMEs) contribute to the care of injured workers by allowing for an independent objective opinion of treatments, review of workers’ recovery, and ability to return to work. IMEs also allow for more efficient care of injured workers by ensuring the proper progress of claims. They are a vital tool to ensure retail workers receive the timely quality care that they deserve.

In 2020, the Legislature formed a task force of business and labor to examine a number of issues over the use of IMEs. The task force developed a number of “common sense” recommendations to improve the use of IMEs, and prevent abuse of this important tool to support progress on workers’ recovery.

HB 1763, which will be heard in the House Labor and Workforce Safety Committee on Friday, deviates from the IME Task Force recommendations by authorizing audio and/or videotaping independent medical examinations and allow for a third-party observer to be present during an examination. Both ideas were rejected by the task force because they interfered with the confidentiality of medical examinations. Washington Retail Association is also concerned that medical providers will be reluctant to provide IME services under these conditions. Accordingly, we will be testifying in opposition at Friday’s hearing.