The following was originally published by The Center Square.
(The Center Square) – After leaders of the executive and legislative branches of Washington state announced in a joint statement that the WA Cares payroll tax would be “paused,” Gov. Jay Inslee sent out another press release that has fueled more confusion for employers and workers.
“As an employer, the state of Washington is following the law and will have to begin collecting money from state employee paychecks as of January 1st,” Inslee said in the Dec. 23 statement. “We know that many other private employers are doing the same, and others are hoping that the Legislature will change the law.”
“However,” the governor warned, “if the Legislature fails to do so, employers will still be legally obligated to pay the full amount owed to state [Employment Security Department] to begin the long-term care program.”
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Click for more informationInslee did indicate that there is some time for the legislature to remedy this and perhaps make the fix retroactive.
“The Legislature has committed to changing the law in January 2022, including delaying the premium collection timelines,” Inslee said. “As I stated clearly earlier this week, I do have the ability to order the state Employment Security Department to refrain from collecting from those premiums from employers at this time, and I have done that.”
The collection statement has Bruce Beckett, a lobbyist who works with the Association of Washington Business (AWB), confused.
“This was Speaker [Laurie] Jinkins’s bill in 2019,” said Beckett to The Center Square Monday, and the premiums were supposed to be collected according to the “paid medical and family leave collections process.”
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Click for more informationThat already-established process would have meant that employers didn’t have to give the funds to the government for a few months but would have to begin collecting them from the first minute the new tax kicks in on Jan. 1, 2022.
Following Inslee’s lead with government employees, many employers will still collect the tax, which amounts to 58 cents for every $100 of payroll income, until the legislature potentially repeals it.
“We’re not giving legal advice,” said Beckett, but “the law says these taxes will begin to be collected on Jan. 1.”
“If you’re an employer, why would you not follow the law?” he asked.
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Click for more informationInslee’s clarifying statement indicated that businesses would be liable if the legislature could not reach some agreement.
For their part of Dec. 17’s “pause” announcement, state Senate Majority Leader Andy Billig, D-Spokane, and state House Speaker Jinkins, D-Tacoma, said they “support employers pausing premium collections from employees in Washington so lawmakers can take necessary action.”
The two added, “While we cannot direct employers not to collect, we strongly encourage them to pause on collecting premiums from employees, giving us time to pass legislation extending implementation dates until next year.”
However, that statement did not do anything to change the law, with a Jan. 1 deadline looming for new tax collections. Neither the governor nor legislative leaders called a special session to head the tax off at the pass.
“That’s created an enormous amount of confusion out there,” Beckett said of the suggestion by the state’s two highest-ranking legislative leaders that businesses not collect a tax that they passed in the first place.
AWB is currently advising members to “check with your legal advisor if you want to consider options,” Beckett said.
