Washington Workers’ Compensation pays for medical care for work-related injuries or illnesses and also provides wage replacement benefits to certain eligible workers.
Here is everything employers need to know about Washington Workers’ Compensation:
Washington Workers’ Compensation Overview
Washington workers’ compensation coverage protects both workers and employers from the financial impact of a work-related injury or occupational illness. Most employers in Washington must provide workers’ compensation coverage for employees and other eligible workers.
Most companies participate in the state’s workers’ compensation program. However, companies with at least $25 million in assets, as well as some governmental entities, choose to self-insure.
The Washington Department of Labor & Industries (L&I) is responsible for managing claims, paying benefits, and is also where employers can purchase coverage.
Exempt Employees
Employers do not need to provide workers’ compensation coverage for the following types of workers:
- A domestic worker in a private home
- However, if two or more are employed regularly for 40 or more hours a week, all must be covered.
- A person employed to do gardening, maintenance, repair, or similar work at an employer’s private home.
- This does not include an individual hired to do home improvements or upgrades.
- A person that is not a regular employee of the trade, business, or profession of the employer and is not working at the employer’s private home.
- This exclusion refers to a person hired to perform a personal errand or chore that benefits the employer as an individual, but not the business.
- For example, a professional golfer would need to provide coverage for a golf caddy, but a recreational golfer would not.
- A person working only in return for aid or sustenance from a religious or charitable organization.
- A child under age 18 employed by a parent in agricultural activities on the family farm.
- Jockeys participating in or preparing horses for race meets licensed by the WA Horse Racing Commission.
- Musicians or entertainers, if:
- The primary business is not entertainment.
- He or she also does not work for the primary business.
- He or she does not perform on a regular and ongoing basis for the employer.
- Newspaper carriers or vendors distributing newspapers to residences, businesses, or on the street, and freelance journalists or photojournalists are being paid solely by piece work and use his or her own equipment.
- An insurance producer.
- A cosmetologist, beautician, or barber that rents or leases booth space.
- For-hire-vehicle operators that own or lease the for-hire vehicle, chauffeurs that own or lease the limousine, and operators of taxicabs that own or lease the taxicab.
Individuals with ownership and control of any type of business are generally excluded from mandatory workers’ compensation coverage as well. There are also special considerations for family farms, out-of-state workers, independent contractors, trucking, athletic teams, minors, volunteers, unpaid students, and unpaid student interns.
Employers should also note that these types of workers may still access workers’ compensation coverage through what is known as “elective” coverage. To apply for “elective” coverage, the employer must complete and return an Application for Elective Coverage form.
How to Obtain Workers’ Compensation Insurance in Washington State
Employers must open an account by completing and returning a Business License Application in order to obtain coverage through the Washington State Fund. The form is available online as well as from the offices of the Department of Revenue or Labor & Industries.
Existing businesses getting ready to hire the first employee must re-file the Business License Application, indicating that the business is hiring.
Washington Workers’ Compensation Fund Tax
The premium for workers’ compensation coverage is dependent on the risk classification or classifications assigned to the business, of which there are about 300. Rates are also impacted by experience ratings, which are calculated using the result of the workers’ hours or units (exposure) and claims (losses) occurring during a specific period.
Once employers open an account with the Washington Department of Labor & Industries, a Workers’ Compensation Rate Notice should be received by January 1st of each year. Notices are also sent out when there is an adjustment made to the employer’s premium rates.
This notice details the rate that will be paid per worker, per hour / unit for each risk classification assigned to the business. These are referred to as “composite rates” because they are a combination of the following funds / programs:
- Accident Fund
- Medical Aid Fund
- Stay at Work Program
- Supplemental Pension Fund
The notice breaks down the rates from each of these funds / programs. Each fund is funded through specific premiums, and each provides specific benefits. Employee contributions can only be up to one-half of each fund’s rate and must be collected by the employer. This is typically done via payroll deductions.
Accident Fund
Accident Fund premiums are paid only by the employer.
This fund provides funding for medical claim costs such as wage replacement, most vocational services, permanent disability benefits, and survivor benefits.
Medical Aid Fund
The Medical Aid premium is paid by both the employer and the employee.
This fund provides funding for medical care and related services essential to an injured worker’s recovery, including some vocational services.
Stay at Work Program
This premium is paid by both the employer and the employee.
It partially reimburses employers for wages and other expenses when injured workers are brought back to light-duty or transitional jobs.
Supplemental Pension Fund
The Supplemental Pension premium is paid by both the employer and the employee.
This fund provides funding for cost-of-living increases to injured workers with extended disabilities.
The Supplemental-Pension assessment is not impacted by experience rating.
Claim-Free Discount
Employers can qualify for a claim-free discount after three years without a “compensable” claim (a claim involving time-loss or permanent disability payments).
The discount depends on the size of the business, as well as the industry, and can be anywhere from 10%-40%.
Filing Quarterly Reports for Workers’ Compensation
Employers can file a quarterly report and pay insurance premiums through L&I’s online quarterly report quick filing or by using the My L&I portal, both of which automatically calculate premiums.
Even if there are no employees or payroll hours to report, employers must file a report if an open account exists.
Washington State Workers’ Compensation Reporting Process
If a workplace injury or illness occurs, there are responsibilities for reporting for both the employee and the employer, as well as the health care provider.
In the event of an incident, the employee must:
- Report the injury or exposure and how it happened to a supervisor as soon as possible
- If medical attention is required, tell the treating healthcare provider the injury is job-related. The provider will help the worker complete a Report of Accident Form
- The Report of Accident Form must be filed with L&I within one year of the date of injury
- For occupational diseases or illnesses, such as carpal tunnel syndrome, noise-induced hearing loss, occupational dermatitis, and occupational asthma, the Report of Accident Form must be filed with L&I within two years of receiving written notice from a doctor that the condition exists and is work-related
- File a claim online
The employer must:
- Make sure the employee immediately obtains required medical care from the doctor or hospital of his or her choice
- Provide transportation or emergency ambulance service, if needed
- Report workplace fatalities or inpatient hospitalizations of any employee within 8 hours of the incident
- Report non-hospitalized amputation or loss of an eye(s) within 24 hours of the incident
- Complete and return the requested information or documentation to Washington L&I as soon as possible
- Answer all questions completely and correctly, as well as correct any information that is wrong
- In the case an employer questions the validity of a claim, it must be stated on the form and explain why
Additionally, it is up to the healthcare provider to
- Fill in the required section of the Report of Accident Form
- Healthcare providers must supply the diagnosis, treatment given, and provide an estimate of how many days an employee will be unable to work
Washington Workers’ Compensation Benefits
Washington employees can access a variety of benefits through workers’ compensation insurance, depending on the circumstances.
Employee benefits include:
- Medical Services - L&I pays for all approved health care providers, hospital, surgical, pharmacy, and other health care services necessary for the treatment of the employee’s workplace injury or occupational illness
- Travel Expenses - L&I can reimburse pre-approved out-of-pocket travel expenses when the injured worker must travel more than 15 miles from home to receive adequate health care services, vocational training, or fitting for a prosthetic device
- Time-Loss Compensation Payments - Employees receive a percentage of his or her regular wages if unable to work because of a work-related injury or illness
- Vocational Rehabilitation - L&I may assign a vocational counselor to help an injured worker and employer explore return-to-work opportunities
- Permanent Partial Disability Awards - If an employee’s work-related injury or occupational disease caused permanent loss of bodily function, a permanent partial disability award will be received
- Pension Awards - These lifetime pensions are granted to an employee with an injury or illness resulting in permanent inability to work
- Survivor Benefits - In the event of an employee's death, the surviving spouse and legally dependent children shall receive a monthly pension
Employer benefits include:
- Stay at Work Program - This program provides financial incentives to encourage employers to bring injured workers back to light-duty or transitional work quickly and safely by reimbursing the worker for a portion of his or her costs
- Other Return-to-Work Help - Washington L&I can also contribute up to $5,000 to help an employer modify a job to fit a recovering employee’s needs
Washington Workers’ Compensation Audits
Washington L&I may choose to audit the employer’s employment records in order to verify that the reported payroll and hours are accurate.
Auditors will also ensure that hours and claims associated with the account are in the appropriate risk classification.
Workers’ Compensation Posting Requirements
Employers must obtain a certificate of insurance coverage, which must then be posted in an easily accessible and viewable place in the workplace. Individual certificates are required for each business location operated in.
Certificates are issued once an account is opened with Washington L&I.
Required Posters
Employers are also required to display three posters to inform employees of his or her rights and responsibilities. The posters are:
- Notice to Employees — If a Job Injury Occurs (F242-191-909)
- Job Safety and Health Law (F416-081-909)
- Your Rights as a Worker (F700-074-909)
Many companies handle these types of required postings with a labor law poster subscription service, allowing employers to stay up-to-date and compliant with current labor law legislation.
Workers’ Compensation Recordkeeping Requirements
Employers are required to keep records that will allow Washington L&I to calculate premiums. These records must be made accessible to the department.
Employers should keep records of the following to be able to properly file quarterly reports:
- Employee name, address, and Social Security number
- Date hired (and terminated, if applicable)
- Job title and type of work performed
- Type of compensation (hourly, salary, commission, etc.)
- Pay period
- Actual hours worked each day (hourly or piecework)
- Number of units earned or produced required for piecework employee hours
- Salaried or outside commissioned employee hours are optional
- Gross pay
- Deductions from earnings and the purpose of each deduction
- Net pay
- Check number for checks issued
Employers are also required to keep the following tax records on file for at least three years:
- Unemployment tax returns from the Employment Security Department
- State excise tax returns from the Department of Revenue
- Internal Revenue Service forms and tax returns. For example, W-2 statements, Form 941 (quarterly report), Form 1099 (miscellaneous income), Form 1065 (partnership return), and Form 1040 (Schedule C Corporate return)
Lastly, employers must keep records of all accidents, even minor ones. These records include:
- The injured worker’s Report of Accident
- The supervisor’s Report of Accident
- Industrial insurance claim log
- Claim date record
- OSHA 300 log (if an employer has 10 or more employees at all times during the calendar year at every business location combined)
Penalties of Non-Compliance for Washington Workers’ Compensation
If an employer fails to file a quarterly report, Washington L&I will estimate the premiums due and take steps to collect the premiums owed. The minimum penalty is $10.
The longer an employer takes to correct a late filing, the larger the penalty. Interest is assessed on all delinquent accounts at a rate of 1% per month on the premium owed.
Other penalties may also be assessed for non-payment of premiums, misrepresentations, excessive deductions from employees, failure to keep adequate timesheets and payroll records, or other violations.
Management of Washington Workers’ Compensation Law
If you are struggling with managing workers’ compensation requirements or the collection of employee premium contributions, it may be time to reach out to a Washington Payroll Company for help.
To get connected with a provider in Washington, contact us today.
Guest Author: Lori Brown
Lori Brown, CEO of PayNW, a leading Washington payroll and HR services company, took the reins in September 2021 from founder Mike Anderson. Growing PayNW from $500K to $13M in annual revenue, Lori has maintained a 96% client retention rate, year over year. She is a talented leader with extensive experience in payroll, Human Capital Management, Employee Retention Credit (ERC) efforts, and more. Lori was elected to the board of the Independent Payroll Processors Association in 2021 and is a Puget Sound Business Journal 40 Under 40 honoree. She is a mom of three and has been happily married for the past 24 years.