Tumwater, WA – For the first time in two decades, Washington workers’ compensation rates have dropped or stayed steady for four years in a row. The state Department of Labor & Industries (L&I) today announced that there will be no increase for the average premium rate in 2021.
“We’ve managed the workers’ compensation system closely, improving services, and reducing disability. That’s why we have the funds for existing claims and contingency reserves to help during tough times, like today,” said L&I Director Joel Sacks. “Because we know how tough the pandemic has been on businesses and workers, we’re keeping rates steady in 2021 even though our projections for next year’s claims indicate rate increases are needed.”
While L&I has made small reductions to rates in recent years during better times, the agency did not approve large cuts to prepare for a future downturn like we’re in now. Last year, there was a 0.8 percent decrease in the average amount employers paid for the coverage. L&I cut rates by 5 percent in 2019 and 2.5 percent in 2018.
Public hearings for the proposed 2021 rates were held via Zoom in October. A small number of people testified and submitted written comments during the rules process.
While there won’t be an overall rate change for 2021, individual employers may see their rates go up or down, depending on their recent claims history and changes in the frequency and cost of claims in their industry risk classes.
L&I has been taking steps to help businesses struggling to pay workers’ compensation premiums by offering a grace period for premium payments, along with payment plans for employers facing financial difficulties during the pandemic. The program has helped thousands of businesses. Also, L&I is not including losses from claims for COVID-19 exposure when calculating an employer’s premium rates.
New risk class proposals
As part of the 2021 rates process, L&I considered creating new risk classes, which are used to help determine workers’ compensation rates.
One proposal involved operations known as fulfillment centers, which include businesses that sell products online and provide third-party sellers with an automated platform to fill customers’ orders. Currently, these facilities are grouped in with warehouses for determining their workers’ compensations rates.
Concerns from businesses in the warehouse classification prompted L&I to review the classification, determining that fulfillment centers have higher hazard operations compared to the rest of the industry class. As a result, L&I has decided to place fulfillment centers under their own classification, separate from general warehouses, starting on Jan. 1, 2021.
L&I has extended the timeline on a proposal to change the risk classification and rating system for Department of Energy (DOE) contractors performing work on the Hanford site. The public input period on this proposal has been extended to Feb. 1, 2021.
Keeping Washington Safe and Working
Employers and workers pay into the workers’ compensation system to help cover the cost of providing wage and disability benefits for injured workers, as well as medical treatment of injuries and illnesses.
Every fall, L&I determines the proposed workers’ compensation rate for the following year by looking closely at several factors, including: expected workers’ compensation payouts, the size of the contingency reserve, wage inflation and other financial indicators. Workers pay on average about a quarter of the premium.
L&I’s goal is to keep rates steady and predictable by helping prevent work-related injuries and illness, and helping injured workers heal and return to work by supporting recovery and providing vocational services early in the claims process.
More information about 2021 workers’ compensation rates is available at Lni.wa.gov/Rates.
Source: WA L&I