The rule (Chapter 296-17A WAC) defines risk classifications that describe business operations in Washington, the workers' compensation classification plan. Each classification has an assigned rate that is used to calculate an employer's workers' compensation premium.
The rule (Chapter 296-17 WAC) explains how employers report workers and hours for calculating their workers' compensation premium. These rules are the workers' compensation classification system.
The law (RCW 51.16.035) requires L&I to classify all occupations or industries by their degree of hazard, in accordance with standard insurance principles.
The insurance principles followed by the classification plan are described in rule (WAC 296-17-31029). The principles require our classifications to follow these guidelines:
Administrative ease: Wherever possible, we want to classify by type of business instead of individual occupation. This reduces the recordkeeping and tracking required for paying premiums.
Statistical credibility: Each classification should apply to a large enough pool of workers to ensure the data used for calculating rates is reliable and the rates are stable.
Homogeneity: By classifying similar businesses together by type of industry, classification rates will continue to reflect the appropriate level of hazard, even if a specific industry practice changes.
Equity: Appropriately designed classifications will ensure that rates fairly reflect the amount of hazard in the work place.
Safety: When rates appropriately reflect the level of hazard for employers, industries that use safety practices will see lower rates.
Updates to risk classification & reporting rules
As industries continue to evolve and change, older methods and practices disappear and new enterprises develop. This continual renewal means some classifications may eventually:
- No longer clearly describe the industries assigned to them.
- Combine industries that no longer are similar to each other.
- Have so few workers reported in them that the classification is less aligned with the insurance principles.
When this happens, rates may no longer accurately reflect the amount of hazard in the workplace and the classification plan needs to be updated to ensure our rates remain fair and equitable.
Rule changes must comply with the Administrative Procedure Act (Chapter 34.05 RCW), which normally requires us to complete 3 filings with the State Registrar's Office. For details, see Rulemaking Activity.