With state collection of the long-term care tax suspended until at least April, it appears that the tax may still be deducted from many workers’ paychecks in the meantime.

In making the announcement last week, Gov. Inslee said that “employers will not be subject to penalties and interest for not withholding fees from employees’ wages during this transition.” And Sen. Billig and Speaker Jinkins noted, “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.”

The mechanism for the delay is that under current law, collections are not due from employers until April (even though employers must deduct the tax from employee paychecks beginning in January). The state is essentially buying time to officially delay the tax via legislation during the regular legislative session. But because this was not done legislatively, it is a very gray area for employers. Should they not collect premiums, as encouraged by Gov. Inslee, Sen. Billig, and Speaker Jinkins? Or should they follow the letter of the law?

The Office of Financial Management, in its capacity as human resources for state employees, has posted this statement on its page on the long-term care program (see number 14):

The governor has instructed ESD not to accept quarterly payments from all employers to give the legislature time to work on modifications to the program. However, the law remains in place and the law still requires employers, public and private, to collect the premiums from employees’ wages starting Jan. 1. The governor does not have the power to change this legal requirement on his own – it will require legislative action to change the underlying law. Legislators have committed to doing that in January and they have encouraged employers to take them at their word and forgo collections based on that commitment. There will not be penalties or interest collected on employers who do not collect.

However, the state as an employer will follow the law until it is changed. The only way to prevent collections from being legally required in January would be to change the underlying law before then.

(Jason Mercier of the Washington Policy Center noted today that a similar message was sent out to state employees.)

If the state itself will be collecting the tax from its employees in January, many private employers may not feel confident in delaying collections. The uncertainty will remain until the Legislature acts to officially delay the tax.