News for Small Business - June 7, 2007

Special Edition

Workers' compensation 'rate holiday' starts July 1

Washington’s workers’ compensation system has more money than will be needed to pay injured-worker benefits, so L&I will be giving a considerable chunk of money back to employers and workers this year.

L&I is returning the money through a six-month break on workers’ compensation premiums. The reduction will average about 34 percent, split evenly between employers and their workers. From July 1 through December 31, employers pay reduced rates for workers’ compensation and must reduce the amount they take from employees through payroll deductions.

The first change for employers is the payroll deduction, which begins July 1.

The payroll deduction rate for July 1 through December 31 is simple:

  • For all risk classes, with the exception of the six listed below, the hourly payroll deduction rate will be $0.03340.
  • For risk classes 0540, 0541, 0550, 0551 (drywall installers), the per-square-foot payroll deduction rate will be $0.00025.
  • For risk classes 6901 and 6906 (volunteers), the hourly deduction will be $0.0000.

Each employer will receive an updated rate notice in mid-June that provides the information you need for the second change employers will need to address -- that is, the reduced employer portion of the workers’ compensation premium during the second half of the year.  The reduced rate will be the rate you will pay in your third-quarter workers' compensation reporting form when it arrives in September and again when the fourth-quarter reporting form arrives in December.  The rate holiday payroll deduction rates will also appear in the new rate notice and the third- and fourth-quarter reporting forms.  They will be the same three rates listed in this article.

Please remember: The “rate holiday” ends on January 1, 2008. You will receive the notice for 2008 rates in mid-December, and those rates will be used for all hours worked by your employees starting on January 1, 2008.

For more information on the rate holiday, please go to the L&I web site at: And, if you have questions, please feel free to contact your workers’ compensation account manager. You can find their phone number on your rate notice or quarterly report.

The rate holiday is made possible by a number of positive things that are happening in the workers’ compensation system.

  • Washington’s robust economy has boosted the number of hours worked and premiums paid. And those premiums, invested through the State Investment Board, have grown substantially.
  • Employers and workers continue to do an effective job of promoting workplace safety. Between 1990 and 2006, for example, workplace injuries in which the worker missed more than three days of work declined by 46 percent.
  • And, L&I has done a good job of controlling health-care costs. Annually, L&I’s medical inflation rate is less than 6 percent, compared with a 7.7 percent average for all other workers’ comp insurers.

For employers in L&I’s popular “retrospective rating” program, please know that L&I worked closely with groups offering this program to craft the rate holiday in a way that wouldn’t diminish the fees they collect to administer such things as workplace-safety programs. L&I also is working with the Workers' Compensation Finance Committee to determine the appropriate range for its contingency reserve.

L&I Small Business Contact:

Ron Langley
Small Business Liaison
Phone: 360-902-4205
Fax: 360-902-5420

Want to subscribe to L&I News for Small Business? Contact Ron via the contact information listed above.

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