How does workers' comp work in Washington?

In Washington, workers' compensation insurance is referred to as industrial insurance and is one of the oldest workers compensation systems in the country. The insurance is designed to protect both employees and employers from the financial impact of a work-related injury, accident, or disease.

Coverage is mandatory, and generally prevents an employee from being able to sue an employer for any damages. Coverage must be purchased though the Department of Labor and Industries (DL&I or L&I)). L&I manages all work comp claims and pays all employee benefits from the state pool known as the state fund.

The workers' compensation is a state regulated system and each state has their own laws and rules regarding coverage restrictions, rates, benefits, etc. Employers should always educate themselves regarding state laws on workers' compensation before doing work in or hiring employees from or other states.

Workers' Comp Rules & Information for Washington

Work Comp Coverage Exceptions in Washington

Employers are almost always required to provide state fund workers' comp to all employees except:

  • A child under age 18 employed by a parent in agricultural activities on the family farm
  • A student volunteer (K-12th grade)
  • A domestic servant in a private home unless you have two or more that are employed regularly for 40 or more hours each per week- then all must be covered
  • A person who is not a regular employee of the trade, business or profession of the employer and is not working at the employer's private home
  • A person employed to do gardening, maintenance, repair or similar work at an employer's private home
  • A person working only in return for aid or sustenance from a religious or charitable organization
  • A jockey who is participating in or preparing horses for a racing meet licensed by the Washington Horse Racing Commission
  • A musician or entertainer who is working at a specific engagement and performing no other duties, who is not regularly employed by the purchaser of such services
  • A newspaper carrier who sells or distributes papers on the street or from house to house
  • An insurance agent, broker or solicitor
  • A cosmetologist, beautician or barber who rents or leases booth space
  • An employee who gets workers' compensation benefits through the Federal Employees Compensation Act, Longshoremen's and Harbor Workers' Compensation Act, Jones Act, or Law Enforcement Officers and Fire Fighters Compensation Plan
  • Failing to Report or Pay Work Comp Premium

    If an employer fails to file a quarterly report, L&I will estimate the premiums due based on the best information they have on file and we will take steps to collect the premiums owed. They will also assess penalties on delinquent accounts. The longer the account is delinquent, the greater the penalty. The minimum penalty is $10. Employers must submit a report even if they report no hours/units and wages. A late report indicating “no hours/units” will be assessed a $10 penalty. Interest will be assessed on all delinquent accounts at a rate of 1% per month on the premium owed. We count the number of calendar days since the due date including the date we receive the report or payment. Other penalties may be assessed for nonpayment of premiums, misrepresentations, excessive deductions from employees, failure to keep adequate timesheets and payroll records or other violations.

    Experience Mod Rating Factors

    Experience rating is the result of an businesses workers’ exposure and actual claims, or losses, occurring during a period that we L&I refers to as the experience period .” The result will affect an employers workers’ compensation premium rates for a calendar year. Every eligible employer is experience rated in Washington on an annual basis. An eligible employer is an employer who reported worker hours or units during a given experience period. Businesses that have common majority ownership will generally be experience rated together on the same policy and share the experience factor with other commonly owned companies. In most cases, businesses that are sold and continue to perform the same operations in will have their experience rating factor transferred to the new business owners.

    Out of State Employers Working in Washington

    Out-of-State employers are permitted to bring workers into the state on a temporary basis (under 30 days) without paying premium to L&I under the following circumstances:

    Working in Other States

    L&I requires that employers pay premium to the state when employees travel out of state for fewer than 31 days in a calendar year regardless of whether or not premium was paid out of state or not. If employees are out of state more than 30 calendar days a year an employer can apply for out of state reporting. This allows them to only report and pay premium to the out-of-state insurance carrier.

  • Washington has a reciprocal agreement that assigns coverage to workers home state
  • No reciprocal agreement, but employer insures worker in home state and the work in Washington does not require contractor registration or licensing in Washington.
  • Who Pays for Work Comp Coverage in Washington

    Generally the employer always pays for workers compensation. Washington is the only state that allows the employers to deduct a portion of the cost of workers' compensation from the employees' wages. The employer can deduct up to half of the cost of the premium portion that pays the medical benefits and the portion of the premium that pays the cost of living increases for the injured workers drawing life-time compensation benefits or pensions. Employers must pay the entire portion of the premium that is used to pay loss time compensation and pensions. Overall, employees pay approximately 27% of the total work comp premium to the state.

    Domestic Partners in Washington

    Washington state law requires registered domestic partners to be treated in the same manner as married spouses for coverage.

    State Insurance Directives Regarding Covid-19

    P&C Insurers must provide grace periods for nonpayment of premium and waive other applicable charges and fees associated with nonpayment of premium (e.g., late fees; reinstatement fees). P&C insurers are prohibited from canceling a policy due to nonpayment of premium from March 25 to May 9, unless specifically directed to cancel by the insured. FAQs Guidance: 1) No policy can be canceled during the grace period, even if the notice of cancellation was sent prior to the effective date of the order. 2) The order covers all policies under the authority of the WA DOI. This includes policies that cover property or activity located in WA, but have a mailing address outside of WA 3) The order may apply to policies that have a WA mailing address but cover only locations outside of WA. It depends on whether any of the insurance transaction (e.g., solicitation, negotiation, execution of contract) occurred in WA or if the policy covers risk at least in part in WA or is to be performed in WA.

    Mandatory law and order in effect from 03/13/2020 until further 05/09/2020.

    State Orders Regarding Insurance Claims Related to Coronavirus

    No current state orders.

    Specialized Programs for Select Industries

    We work with our national insurance partners to develop targeted programs with easier underwriting requirements and lower rates. We offer a broad range of business class codes that help streamline the quote process so you get the lowest price for coverage.

    Knowing the Washington workers comp requirements can help lower the cost of coverage.

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    Washington Work Comp Information

    Contractors and Sub-Contractors

    Contractors who enter into an agreement with sub-contractors who does not have employees may be required to provide coverage for the subcontractor.

    An exception to this rule exists when the sub-contractor supplies major equipment to the contractor for work purposes.

    Notice- All information posted on this site is intended for informational purposes only and not intended to be legal advice.

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    Workers' Comp Includes Employers Liability Insurance?

    Employers liability insurance is an additional layer of coverage included as part of a workers' compensation insurance policy. Employers Liability is known as Part 2 of the policy. It adds two additional coverages for employers:

    Employers Legal Liability and Legal Defense Costs

    In today's world, there are a variety of reasons employees and third-parties sue employers for damages. Here a some common types covered by employers liability insurance:

    Third Party Lawsuits

    Your employee sues another party that may have contributed to the injury, In turn, the third party sues your business.

    Consequential Bodily Injury

    Another party or individual is injured while providing care for the injured employee.

    Dual Capacity Legal Action

    An employee files a claim but also attempts to sue the employer for being responsible in other ways outside of the employment relationship.

    Loss of Consortium

    A spouse sues for damages caused by the loss of companionship or relations.

    Employers Liability coverage is not included with coverage in the four monopolistic states. Employers in these states can endorse this coverage onto their General Liability policy. That coverage is commonly known as Stop Gap Coverage.

    Workers' Comp Covers WA Employers from Injury Related Expenses & Lawsuits
    Employers liability insurance is included under a workers' comp policy in most states.
    • Employers liability coverage is not included in all monopolistic states.
    • All NCCI and most other states' coverage includes employers liability insurance.
    Visit NCCI for more resources and information about workers' compensation class codes. Visit United States Department of Labor for more information about government agencies managing workers compensation insurance rates.

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