Washington Labor and Industries (L&I)
Explore Washington's L&I worker’s compensation program and learn how to manage premium rates effectively.
Overview
The Washington State Department of Labor and Industries (L&I) administers a worker’s compensation program that provides benefits to employees who suffer work-related injuries. Employers and employees participate in this program by paying premiums, in the form of a payroll tax.
At a high level, this tax works as follows:
- Base Rates: Every year in December, the Washington State Department of Labor & Industries publishes a set of base rates, which are hourly premium rates assigned to different risk class codes of work. Higher risk work (e.g., roofing) will have a higher base rate than lower risk work (e.g., a desk job). You can find the latest base rates from the agency website.
- Risk Class Codes: Every Washington employer is assigned a set of risk class codes, which is meant to cover all of the various type of work that their employees perform.
- Experience Factor: Every employer is also assigned an experience factor, which is a multiple on top of the base rate, based on the employer’s claims history. This is assigned for employers after 18 months of operation (i.e., newly incorporated employers have a multiple of 1). Employers who make frequent claims should expect that their experience factor will increase, meaning their overall premium rates will also increase.
- Unlike most payroll taxes, which are calculated on an employee’s earnings, WA L&I is calculated on the number of hours that an employee spent working. Intuitively, this is so the amount of premiums paid is correlated with the risk exposure for the employee.
Employers can access their risk class codes and experience factor from the WA L&I employer portal (SecureAccess). Employers will also receive an annual rate notice (sample) which contains the same information.
Setup parameters for Washington Labor and Industries
Check collects the following setup parameters to correctly calculate and file for Washington Labor and Industries:
Company setup parameters:
- Washington State Labor & Industries Account Identification Number
- Washington State Labor & Industries Participant Activation Code (PAC) Number
- Washington State L&I Experience Factor
Employee setup parameters:
- Washington State Labor & Industries Employee Withholding (Yes / No)
- By default, a portion of Washington Labor and Industries premiums is withheld from employees’ paychecks. Employers have the option with this parameter to pay employees' premiums on their behalf.
- Washington L&I Employee Risk Class Code
- This is the default risk code against which the employee’s Washington L&I premiums will be calculated and reported. This can be overridden on a per-payroll run basis, as discussed below under “Can an employee work across multiple risk codes?”
How does Check calculate and manage premium rates?
Check automatically calculates the premium rates for Washington L&I based on the experience factor provided for the company, the employee’s risk code, and the base rates published by the agency. Premium rates are calculated based on the formula provided by the agency.
Check updates the base rates for Washington L&I every year, when the Washington Department of Labor and Industries publishes the new base rates for the following calendar year, and payrolls with paydays in the next calendar year will begin using the updated base rates automatically.
It is the employer’s responsibility to ensure that their experience factor and employees’ risk codes are up to date, to ensure that premium rates are calculated and reported correctly.
Can an employee work across multiple risk codes?
Yes — Check supports the ability to set risk codes on a per-earning level using the Earning Code API. If partners’ platforms are not yet integrated with Earning Code API, this will require some development work to integrate and make available to end users.
By default, all of an employee’s earnings on a given payroll run will be calculated under the risk class code that was set as an employee setup parameter, above. However, if any earnings have an earning code with a different risk class code, then hours for those earnings will instead be calculated and reported under that risk code.
Below is an example of how you might override a subset of an employee’s earnings to the risk code 1802-01:
{
"id": "erc_pz0fmJeuVcaPb99N0nw9",
"company": "com_omSihPyKgr68wxFQ0xTn",
"type": "hourly",
"name": "Dishwasher",
"calculation_overrides": {
"wa_risk_class_code": "1802-01"
},
"metadata": {}
}This enables an employee to work hours under multiple different risk class codes on a single payroll run.