A legal challenge to a Washington law that will require workers to contribute $.58 of every $100 they earn toward a long-term care insurance fund fell flat when a federal judge in the state said he lacked jurisdiction to hear the case.
The WA Cares Fund, the first state program of its kind slated to fund long-term care benefits through worker premiums, constitutes a tax under state law and can’t be reviewed in federal court under the Tax Injunction Act, Judge Thomas S. Zilly of the U.S. District Court for the Western District of Washington said.
Taxpayers can challenge the law through the state’s administrative and judicial systems, so their federal lawsuit fails for lack of jurisdiction, Zilly said in an opinion docketed Monday.
Zilly also found that he lacked jurisdiction under the federal Employee Retirement Income Security Act. In so ruling, he rejected the central premise of the lawsuit—that the WA Cares program is preempted by ERISA.
“WA Cares is a creation of the Washington Legislature, which, in this context, is neither an employer nor an employee organization as defined by ERISA,” Zilly said. “Because WA Cares is not ‘established or maintained’ by an employer and/or employee organization, it is not an ‘employee benefit plan’ and it is not governed by ERISA.”
WA Cares, which was signed into law in 2019 by Gov. Jay Inslee (D), requires workers to contribute 0.58% of their earnings toward an insurance fund that’s slated to begin paying benefits to eligible individuals in 2026.
Beginning in July 2023, the law requires that employers collect premiums from non-exempt employees through payroll deductions and submit those amounts to the state.
This lawsuit, filed by restaurant operator Pacific Bells LLC on behalf of proposed classes of employers and employees in the state, argued the program is preempted by ERISA because it’s a state mandate for employers to provide long-term care benefits that “can only be satisfied with an ERISA-covered plan.”
Davis Wright Tremaine LLP represents Pacific Bells. The Washington State Attorney General’s Office represents the state.
The case is Pac. Bells, LLC v. Inslee, 2022 BL 142044, W.D. Wash., No. 2:21-cv-01515, decision docketed 4/25/22.