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Mar. 12, 2007

‘Rate holiday’ will mean $315 million savings for employers, workers

TUMWATER — Gov. Chris Gregoire today announced that a partial “rate holiday” has been finalized by the Department of Labor & Industries (L&I). The rate holiday will save workers and employers about $315 million in workers’ compensation insurance premiums in the second half of this year.

Beginning July 1, employers and workers will not pay the Medical Aid Fund premium for work performed from that date through Dec. 31, 2007. On average, the savings will represent about 34 percent of total premiums paid into the workers’ compensation system for work performed in the second half of the year. Because employers and workers pay equally into the Medical Aid Fund, both will benefit equally.

Combined with this year’s overall 2 percent decrease in workers’ compensation rates, which L&I adopted in December, employers and workers will pay about $346 million less in premiums in 2007. The rate holiday is temporary and will end Jan. 1, 2008.

“In the global economy, we need to do everything we can to create and retain family-wage jobs by recruiting businesses to our state and helping existing businesses to expand,” said Gov. Gregoire. “The rate holiday will help businesses, and will also put money into the pockets of workers.”

L&I Director Judy Schurke said a number of factors made the rate holiday possible.

“Our investment returns are higher than we expected, and we have had good success at controlling health-care costs,” Schurke said. “In addition, employers and workers continue to improve workplace safety, which reduces what we pay out in benefits to injured workers. All this means we can use some of the money to reduce premiums for our customers.”

The following examples are an approximate average of what workers in these industries will save. The savings for employers will be the dollar figure times the number of full-time-equivalent employees. Actual savings may be higher or lower, based on the employer’s history of workers’ compensation claims:

  • Wood-products manufacturer    $232 per worker
  • Concrete contractor                  $291 per worker
  • Orchardist                                $113 per worker
  • Fruit and vegetable packing      $142 per worker
  • Wood-frame construction          $440 per worker
  • Machine shop                           $176 per worker
  • Nursing homes                         $177 per worker

The rate holiday L&I adopted is slightly different than what was proposed in November. In response to concerns from some business groups and employers who participate in L&I’s retrospective rating program, the agency made some adjustments to ensure those programs continued to receive adequate revenues to cover their administrative costs, including the money they invest in workplace-safety programs.

As a result of that change, employers who don’t participate in the retrospective rating program between July 1 and Dec. 31 of this year will receive a small dividend in 2008.

L&I’s retrospective rating program offers employers a chance to lower their workers’ compensation costs by banding together to promote safety and reduce workplace injuries. Groups are organized by industry and receive a refund on the premiums they pay if they meet their safety goals. A portion of the refund is spent to promote safety.

For example, the Washington Health Care Association, which represents skilled nursing and assisted-living facilities, uses a portion of its refund to give its members up to $2,500 to purchase such things as patient lifts and adjustable beds. Costly back injuries are frequent in nursing homes where patients are moved without the benefit of lifting equipment.

L&I manages a workers’ compensation system that provides coverage for about 2.4 million workers and 165,000 employers.

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For media information: Robert T. Nelson, 360-902-6043 or nelq235@LNI.wa.gov

For more information on the rate holiday, expected savings by industry and to view the State Fund’s financial reports, go to www.RateHoliday.LNI.wa.gov.

Broadcast version
Governor Chris Gregoire today announced that a partial “rate holiday” has been finalized by the Department of Labor & Industries (L&I). The rate holiday will save workers and employers about $315 million in workers’ compensation insurance premiums in the second half of this year.

Gregoire said the rate holiday is just one of the ways the state is attracting new businesses and retaining the ones already here.

L&I Director Judy Schurke said employers and workers will stop paying the portion of the premium that pays for health-care benefits for injured workers for work performed from July 1 through Dec. 31 of this year. She said the rate holiday is possible because of higher-than-expected investment earnings and L&I’s success at managing health-care costs.

The rate holiday comes on top of an overall 2 percent decrease in workers’ compensation rates that L&I adopted in December. That average rate decrease will save employers another $31 million.

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