Washington State proposes 3.8% hike in workers' comp rates for 2025

The Washington State Department of Labor & Industries (L&I) has proposed a 3.8 percent increase in workers' compensation insurance rates for 2025.

If adopted, the proposal would raise the average hourly rate employers and workers pay for workers' compensation insurance by approximately one dollar per week for each full-time employee within a business.

L&I Director Joel Sacks explained the rationale behind the proposed increase, stating, "The workers' compensation system is important to millions of workers and employers in our state, and we work hard to make sure it's working effectively. The proposed increase reflects the fact that the costs of replacing injured workers' wages and covering their medical care have increased."

The proposed rate hike is slightly below the expected payout for 2025 claims. To bridge this gap, L&I plans to utilize funds from the workers' compensation contingency reserve, a strategy the agency has employed in recent years to mitigate larger premium increases for employers and workers.

"This relatively modest change aligns with our efforts over the years to keep rates steady and predictable, maintain an appropriate reserve to pay claims, and continue to improve our system," Sacks added.

The agency's decision to tap into the contingency reserve is part of a broader effort to maintain rate stability. Without this measure, L&I would need to implement a nearly 5.5 percent increase in average rates to collect sufficient premiums for expected new claims in 2025.

Washington state's unique approach to workers' compensation premiums, which are based on hours worked rather than a percentage of payroll, necessitates periodic rate adjustments to account for wage increases and rising costs. The Washington Economic Revenue Forecast Council projects a 3.8 percent increase in the average wage of Washington state workers for 2025.

Public hearings on the rate proposal are scheduled for October 28 and 29. The first hearing, on October 28 at 10 a.m., will be held in a hybrid format, allowing both in-person and virtual attendance. The in-person portion will take place at L&I headquarters in Tumwater, located at 7273 Linderson Way SW. Virtual participants can join via Zoom or phone.

A second, in-person-only hearing is scheduled for October 29 at 10 a.m. at the CenterPlace Event Center in Spokane Valley, at 2426 Discover Place.

L&I is accepting written comments until 5 p.m. on October 30. The agency is expected to adopt the final rates on November 26, with the new rates taking effect on January 1, 2025.

The proposed changes would impact approximately 2.78 million workers and 203,000 employers covered by L&I workers' compensation insurance in Washington state.