Could a Washington town pay for employees’ group disability income insurance and deduct premiums for a group under 25?

Plain-English summary

The Washington Attorney General concluded in 1964 that a fourth-class city or town could pay all or part of the cost of disability monthly income coverage for employees when the coverage was purchased as group insurance. The opinion read RCW 35.23.460 as allowing group insurance without limiting the kinds of coverage to a listed set of benefits. It contrasted that authority with a separate law concerning group hospitalization and medical aid policies.

The AG also concluded that a town with fewer than 25 employees could make payroll deductions for group health and accident disability coverage. The employee authorization and approval process in RCW 41.04.020 applied. Under RCW 41.04.030, the 25-person threshold made the warrant issuance mandatory for qualifying groups; it did not bar deductions for smaller groups.

Currency note

This opinion was issued in 1964. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could a town pay employees’ disability income premiums?
A: The AG said yes, in whole or in part, if the disability income coverage was obtained on a group insurance basis under RCW 35.23.460.

Q: Did a town need 25 employees to deduct insurance premiums from payroll?
A: No. The opinion treated deductions for smaller groups as authorized but optional. It read the 25-person provision as a threshold for required warrant issuance, not for permission to deduct.

Q: Did the opinion allow a town to buy individual disability policies?
A: It did not address individual policies. Its affirmative answer was expressly conditioned on group insurance.

Background and statutory framework

RCW 35.23.460 was the basis for the town’s ability to contract for group insurance and contribute revenue toward employer premiums. RCW 41.04.020 addressed employee authorization and official approval of payroll deductions; RCW 41.04.030 governed issuing the payment warrants. The AG relied on an earlier opinion for its reading of the smaller-group provision.

Citations and references

The opinion discusses RCW 35.23.460, RCW 41.04.020, and RCW 41.04.030.

Source

• Landing page: https://www.atg.wa.gov/ago-opinions/cities-and-towns-fourth-class-employees-disability-monthly-income-coverage-payroll

Original opinion text

Attorney General John J. O'Connell

CITIES AND TOWNS ‑- FOURTH CLASS ‑- EMPLOYEES ‑- DISABILITY MONTHLY INCOME COVERAGE ‑- PAYROLL DEDUCTIONS.

(1) A city of the fourth class utilizing the provisions of RCW 35.23.460 may pay all or a part of the costs of disability monthly income coverage for its employees if the coverage is obtained on a group insurance basis.

(2) A city of the fourth class having less than twenty-five employees is authorized but not required to make payroll deductions for purposes of paying the costs of group health and accident disability coverage.

December 8, 1964

Honorable John A. Petrich
State Senator, 26th District
806 Washington Building
Tacoma, Washington

Cite as: AGO 63-64 No. 128

Dear Sir:

By letter previously acknowledged you have requested an opinion of this office on two questions which we paraphrase as follows:

1. May a city of the fourth class (town) pay all or part of the cost of "disability monthly income coverage" for its employees?

2. May a city of the fourth class (town) having less than twenty-five employees make payroll deductions for the purpose of paying the cost of group health and accident disability coverage?

We answer your first question in the affirmative subject to the qualification set forth in our analysis. We answer your second question in the affirmative.

ANALYSIS

Our affirmative answer to your first question is based upon RCW 35.23.460, which provides:

"Any city of the second or third class [[Orig. Op. Page 2]] or town may contract with an insurance company authorized to do business in this state to provide group insurance for its employees including group false arrest insurance for its law enforcement personnel, and pursuant thereto may use a portion of its revenues to pay an employer's portion of the premium for such insurance, and may make deductions from the payrolls of employees for the amount of the employees' contribution and may apply the amount deducted in payment of the employees' portion of the premium." (Emphasis supplied.)

Unlike the recently enacted RCW 41.04.180 (§ 1, chapter 75, Laws of 1963), which relates only to the expenditure of public funds for the purchase of grouphospitalization and medical aid policies, RCW 35.23.460, supra, does not limit by specific enumeration the type or types ofgroup insurance which may be procured. Accordingly, it is our opinion that a city of the fourth class (town), utilizing this particular statutory authority, may pay all or part of the cost of disability monthly income coverage for its employees if the coverage is obtained on a group insurance basis.

The statutes governing your second question are RCW 41.04.020 and 41.04.030. They provide, respectively:

"Any employee or group of employees of the state of Washington or any of its political subdivisions, or of any institution supported, in whole or in part, by the state or any of its political subdivisions, may authorize the deduction from his or their salaries or wages, the amount or amounts of his or their subscription payments or contributions to any person, firm or corporation furnishing or providing medical, surgical and hospital care or either of them, or life insurance or accident and health disability insurance: Provided, That such authorization by said employee or group of employees, shall be first approved by the head of the department, division office or institution of the state or any political subdivision thereof, employing such person or group of persons, and filed [[Orig. Op. Page 3]] with the state auditor; or in the case of political subdivisions of the state of Washington, with the auditor of such political subdivision or the person authorized by law to draw warrants against the funds of said political subdivision."

"Upon being authorized by any employee or group of employees so to do under the provisions of RCW 41.04.020, the auditor or other person authorized to draw warrants against the funds involved is authorized, and if such medical, surgical, and hospital care or either of them, or life insurance or accident and health disability insurance is to be provided on a group basis for groups each of not less than twenty-five individuals such auditor or other person is hereby required, to draw and issue a proper warrant or warrants directly to and in favor of the person, firm, or corporation, or organization named in the authorization for the total amount authorized to be deducted from the payroll of any such office, department, division, or institution."

The reference in the second of these two sections to groups consisting of not less than twenty-five individuals means, merely, that payroll deductions cannot becompelled in the case of smaller groups. See, AGO 57-58 No. 172 [[to Prosecuting Attorney, Klickitat County on March 14, 1958]], a copy of which is enclosed. However, thepermissive aspect of the statute is not so limited.

We trust that the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

PHILIP H. AUSTIN
Assistant Attorney General