WA Long Term Care Tax Not Preempted By ERISA, Says Federal Court

We previously blogged about the questions whether the Washington State Long Term Care Act is preempted by ERISA. On April 25, 2022, the U.S. District Court for the Western District of Washington dismissed a lawsuit challenging the law on the basis of, among other things, ERISA preemption. The federal court held the law is not preempted by ERISA.

Most Washingtonians are by now familiar with the Washington State Long Term Care Act. The law deducts a percentage of employees’ wages to pay for future state long-term care benefits. The question at issue in the lawsuit was whether this arrangement violates ERISA, which generally prevents states from regulating employee benefit plans.

The court ruled that it does not. The ruling emphasizes that ERISA applies only to benefits “established or maintained” by employers. But the law “is a creation of the Washington Legislature, which, in this context, is neither an employer nor an employee organization as defined by ERISA” according to the court.

After finding ERISA did not apply, the court remanded the case to the Washington State courts to decide the plaintiffs’ other challenges to the law because, with ERISA off the table, there was no basis for the lawsuit to be in federal court.

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