An explosion at a hydroelectric dam on Washington's Columbia River on October 9, 2015 injured six workers. The utility workers were injured at the Priest Rapids Dam near the central Washington city of Mattawa. Luckily, no one was killed, but some of the injuries were severe.
Workplace accidents can happen any time of the day or night, and without the proper workers’ compensation policy in place, your business can be on the wrong side of a very expensive lawsuit.
In this particular case, a workers' compensation policy would cover all medical expenses, including physical therapy if necessary, for the injured workers, and would also cover their lost wages while they recovered. It would also protect your business from an expensive employee lawsuit, regardless of who was at fault for the accident.
Workers’ compensation insurance is required in Washington State. It ensures that your employees are protected and their medical bills are paid if they are injured on the job. It also protects you against employee lawsuits, which can be pricey.
Washington requires all employers, regardless of the number of employees they have, to carry a workers’ compensation policy.
Washington State does have a number of exclusions when it comes to employees who must be covered by a workers’ compensation policy. The full list can be viewed in the Employers’ Guide to Workers’ Compensation Insurance in Washington State, but here are a few exceptions:
Washington is one of only four states in the country that doesn’t allow private insurers to write workers’ comp policies. All workers’ compensation policies are sold and managed by The Washington State Department of Labor and Industries. It runs the Washington State Fund, which is a state-run insurance pool. All benefits and claims are paid out of this fund.
The Department of Labor and Industries sets all premium rates for workers’ compensation policies.
Washington does allow companies that have at least $25 million in assets to self-insure. Companies that wish to self-insure must provide proof that they have the financial wherewithal to cover all employee claims.
Like most states, workers’ compensation insurance in Washington is a no-fault system. This means that employees are guaranteed benefits regardless of who is at fault when an accident or injury occurs. In exchange for guaranteed benefits, employees forfeit the right to sue, offering employers protection from expensive lawsuits.
What Is Covered?
Your workers’ compensation policy will pay out benefits to any of your employees who are injured on the job. It protects against sudden accidents like trips and falls, as well as injuries that occur over a longer period , such as back and neck injuries, as well as issues like repetitive stress injuries.
A workers’ compensation policy will also cover illnesses that are caused by the working conditions at your business; this includes things such as cancer and other workplace-related illnesses.
Workers’ compensation insurance covers the cost of medical procedures as well as lost wages and any other expenses related to the injury. This includes physical therapy, and even job retraining if necessary. A death benefit will be paid if a worker is killed on the job, and lump sum payments are available if the employee is permanently disfigured due to a work-related accident.
Who Is Covered?
All employees are covered except those listed on the exception. This includes a people working only in return for aid or sustenance from a religious or charitable organization, children under age 18 employed by parents in agricultural activities on family farms, and cosmetologists, beauticians or barbers who rent or lease booth space.
A workers’ compensation policy protects your employees regardless of where they are when the accident happens. This means that employees who are traveling for work, working offsite at a client site, or even at an after-hours networking event are covered if they are injured.
Where Can Businesses Buy it?
Washington is one of only four monopoly states left in the country. Private insurers are not allowed to sell workers’ compensation policies. Employers in Washington must purchase a policy through The Washington State Fund or self-insure if they are approved by the state.
The Department of Labor and Industries sets all premium rates and they are reviewed on an annual basis, so your workers’ compensation costs will fluctuate from year to year.
Washington is an independent monopoly state so, it doesn’t use the employee classification system developed by the National Council on Compensation Insurance (NCCI).
The Department of Labor and Industries sets classification codes as well as premium rates. Base premium rates are set to reflect how dangerous the job is, meaning that more accident-prone industries will have higher base rates than jobs that are considered safer.
You can lower your premium rates by keeping accidents to a minimum and maintaining a safe work environment.
Class codes identify the various classes of workers and set the base rates for their workers’ compensation premium. Class codes can change, and rates are typically reviewed on a yearly basis.
Here is a quick example of how class codes and base rates are used to calculate your workers’ compensation premium:
Washington Classification Code: 0302 Masonry Construction
Base Rate: $5.54
Employer Payroll: Example: $100,000
Premium Calculation: $5.54 per $100 or 5.54% of payroll
Estimated Annual Premium: $5,540
It’s important to remember that the majority of businesses have more than one class of employee. This mason may work for a construction company that also employs accountants, office staff, heavy machinery drivers and others. In order to calculate the whole workers’ compensation premium for this business, the various class codes and premiums would have to be totaled.
The Washington State Fund does offer a discount for staying claim-free. According to the Washington Employers’ Guide to Workers’ Compensation Insurance, employers can qualify for the discount if they go three years without a “compensable” claim (a claim involving time-loss or permanent disability payments). Most discounts start at 10% off the base rate for the industry. As you hire more employees and your business grows, so can your discount rate. Some businesses earn discounts of up to 40%.
Here are just a few base rate examples for different class codes for 2016.
0308 Lawn Care Maintenance $1.5028
0606 Vending Machine Installation, Service and Repair $1.4778
0301 Landscape Construction and Renovation $2.0319
0607 Store Display Service by Contractor $1.8550
0513 Interior Finish Carpentry $2.2137
0608 Telephone and Electrical Alarm System Installation $0.8678
0521 Painting: Buildings - Interior Work $1.2993
0601 Electrical Wiring: Buildings and Structures $1.3153
These premium rates are applied to every $100 of wages for each employee.
Washington State offers experience modifiers, also known as e-mods, that can lower or raise your premiums, based on your accident and claim record. The e-mod program is designed to make safety a top priority. The program rewards employers with great safety records with a lower premium and penalizes businesses that have a lot of claims and accidents with a higher premium.
E-mods work like this: If you business has a higher claim and accident rate than other businesses in your industry that are roughly the same size, you will be issued a debit e-mod, which will raise your workers’ compensation premium. On the other hand, if you run a safe workplace and manage to avoid any claims or accidents, you will be issued an e-mod credit, which lowers your premium.
New businesses are given an e-mod rating of 1.00, which is a neutral rating. If you have a number of claims and accidents, your rating will go above 1.00, resulting in a debit. An accident-free and claim-free year will result in an e-mod below 1.00, so you will be getting a credit on your premium.
After your e-mod has been established, your total workers’ comp premium is calculated by multiplying the base rate by your experience modifier and then the total payroll.
Remember, your e-mod is one factor that you can control when it comes your workers’ compensation premium. Implementing safety programs can help prevent accidents and result in an e-mod credit. When it comes to e-mods, one large claim will usually have less affect than numerous small claims.
Washington State doesn’t allow private insurers to write workers' compensation policies, so you must purchase coverage through the Washington State Fund or self-insure if your business qualifies.
While a Trusted Choice® agent cannot sell worker's compensation insurance in Washington, they are more than happy to advise you on your options and what factors to consider when looking for a policy. They can also answer any questions you may have about workers' compensation coverage in Washington. Talk to a Trusted Choice agent about your options today.