TUMWATER, Wash. (Sept. 21, 2023) — The Washington State Department of Labor & Industries (L&I) announced Tuesday that it is proposing a 4.9 percent increase in the average hourly rate employers and workers will pay for workers’ compensation insurance next year.
If adopted, the increase would mean employers and workers on average would jointly pay an additional $65 a year for each full-time employee within a business. A typical worker pays about a quarter of the premium, so the proposed increase means employees would pay about $11 more on average in 2024.
In part, the rate increase is needed because Washington has had higher-than-normal increases in the state’s average wage in recent years.
“It’s good for workers that wages are rising, but that means the cost of replacing wages when a worker gets hurt goes up too,” L&I Director Joel Sacks said.
The proposed increase is below what L&I expects to pay for 2024 claims, so for the fourth straight year, the agency will augment the premiums with funds from the workers’ compensation contingency reserve. If the agency did not tap into the reserve, it would need to raise average rates nearly 10 percent to collect enough premiums to cover new claims in 2024.
“L&I has spent 12 years engaging labor and employer stakeholders to develop strategies to make rates stable and predictable while ensuring workers’ compensation accounts carry a healthy reserve,” said Joe Kendo, Chief of Staff of the Washington State Labor Council, AFL-CIO. “As a result, the department has been able to propose rates that largely absorbed increased claims costs driven by wage growth. This has meant lower premiums paid by workers and employers, and more stability within the system for workers and their employers during the pandemic.”
“While the WSLC applauds the wisdom reflected in this strategy,” Kendo added, “in future years, the department will need to ensure that rate subsidies do not draw down the contingency reserve so much that it threatens the financial well-being of the safety net for Washington’s injured workers.”
How we compare with other states
Employers and workers pay into the workers’ compensation system to fund wage and disability benefits and medical coverage for work-related injuries and illnesses.
Most states charge rates as a percentage of payroll, so when employee wages go up and system costs rise, those states automatically collect more premiums without raising their rates. Washington charges workers’ compensation rates as an amount per hours worked, so when wages go up, the rate must increase to keep pace with higher costs.
L&I’s proposed 4.9 percent rate increase for 2024, measured as a percentage of $100 of payroll, represents a 0.7 percent increase (see chart above).
Public hearings planned
The following public hearings are scheduled to take input on the rate proposal before a final decision is made.
THURSDAY, OCT. 26 in TUMWATER — 10 a.m. at L&I Headquarters (Rooms S117, S118, S119), 7273 Linderson Way SW; or join electronically: https://lni-wa-gov.zoom.us/j/84682562930 Meeting ID: 846 8256 2930 Passcode: Oct2623!; or join by phone (audio only): 253-215-8782 US (Tacoma) Meeting ID: 428 348 2697
FRIDAY, OCT. 27 in SPOKANE — 9 a.m. at CenterPlace Event Center Auditorium, 2426 Discover Pl. in Spokane Valley
TUESDAY, OCT. 31 in YAKIMA — 10 a.m. at the Yakima Convention & Event Center, Room B, 10 North 8th St.
Comments in writing can be submitted to: Jo Anne Attwood, administrative regulations analyst, P.O. Box 41448, Olympia, WA 98504-4148; or via email to JoAnne.Attwood@Lni.wa.gov. All comments must be received by 5 p.m. on Oct. 31.
Final rates will be adopted on Nov. 30 and go into effect Jan. 1, 2024.