On November 30, the Washington State Department of Labor & Industries (L&I) announced that the average premium for workers’ compensation coverage would rise by only 0.7% in 2017. L&I covers about 2.6 million workers and determines rates for about 170,000 employers. Those rates, effective January 1, 2017, are based on several financial considerations such as total claim costs, the size of L&I’s reserve funds, and the state’s average wage.
Both employers and workers pay into the workers’ comp system to cover medical costs and time missed from work due to work-related injury and illness. Worker premium payments are unique to Washington State and reduce premium costs for employers.
Unlike other state workers’ comp systems, Washington doesn’t automatically raise premiums when wages increase. This 0.7% increase is minimal and far less than increases to employers in other states whose premiums are based on wage increases. Employers expected premium increases up to 5.5% for 2017 so the actual increase is far less than what businesses anticipated. Even so, some business groups are critical of the increase. The Association of Washington Business argues that this poses an unnecessary tax on employers.
In an article in The Stand, Stand Editor David Groves stated: “By some measures, Washington state has among the highest benefit levels provided to injured workers. But in terms of the costs paid by employers and workers, Washington… actually ranks 38th, with only 12 states offering lower rates. ”
He speculated that in the coming year, employers will take advantage of 2011 legislation that allowed structured buyouts of injured workers’ claims. The proposal, which has been “aggressively” opposed by organized labor, gives workers less money than they would otherwise receive on their claims. Workers choose settlements to resolve short-term financial difficulties over long-term financial security.
Currently, these buyouts are highly regulated: they are only legal for workers age 50 and over and must be in the workers’ “best interests.” However, in the wake of the recent tiny workers’ comp premium increase, business lobbying groups may fight to extend these “settlements” to younger and younger workers.
Despite the employer backlash to this announcement, Washington ranks high among states for offering good benefits to injured workers while offering the lowest rates for employers. These benefits ensure that workers receive life-saving disability payments without it being too costly for employers.