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The information in this publication is current as of the publication date. Every attempt is made to keep the information up to date. Changes that occur periodically as a result of new legislation, administrative rule changes or court hearings will be included in subsequent printings. Note: We use the following terms interchangeably in this publication: Industrial insurance and workers™ compensation. Employee and worker. Department of Labor & Industries, Labor & Industries, and L&I. Note: Washington State law requires registered domestic partners to be treated the same as married spouses under state law. References in this publication to spouse, marriage, marriage certi˜cate, divorce, divorce decree and other terms related to legal marriage also apply to registered domestic partnerships.
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Table of Contents Chapter 1: What Is Workers™ Compensation Insurance? .1Chapter 2: Coverage and Exclusions ..2Mandatory Coverage 2Excluded Employment ..2Optional (Elective) Coverage ..3Insuring Minors ..3Out-of-State Workers ..4Independent Contractors ..4Trucking ..5Professional and Semi-Professional Athletic Teams ..5Self-Insured Businesses 5Chapter 3: Opening an Account 6Employer Classi˜cations ..6Premium Rates ..6Payroll Deduction 7Experience Rating ..7Chapter 4: Reporting and Recordkeeping 9How to File Quarterly Reports .9Determining Reportable Worker Hours/Units .10Splitting Worker Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11If You Fail to File Your Reports or Pay Premiums .11Recordkeeping .12Accident Records ..13Audits 13Posting Requirements .13Chapter 5: Employee Bene˜ts .14 Types of Bene˜ts ..14Gross Income 16 Chapter 6: If an Injury or Illness Occurs .17Filing an Accident Report .17Con˜dentiality: It™s the Law ..18
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Table of Contents Get Involved in Your Claims ..19Available Resources for Employers .20Know Your Protest and Appeal Rights .20Discrimination Against Workers .20Financial Protections for Employers 20Chapter 7: Prevent Injuries and Control Your Costs ..23Focus on Safety 23Manage Claims .24Consider Retrospective Rating ..24Chapter 8: If You Disagree with an L&I Decision ..25Protest/Reconsideration .25Appeal 25Appendix A ..26De˜nition of an Employer .26De˜nition of a Worker .26Appendix B ..27Out-of-State Workers .27Appendix C ..29Responsibility for Independent Contractors ..29Liability for Unpaid Workers™ Compensation Premiums . . . . . . . . . . . . . 30Appendix D ..31Certi˜cate of Coverage 31Workers™ Compensation Rate Notice ..32Workers™ Compensation Employer™s Quarterly Report ..33Sign up for My L&I to get online access to your account and claims information .34L&I Web Addresses 35L&I Service Locations .35Toll-free Numbers ..35
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1Chapter 1: What Is Workers™ Compensation Insurance? Workers™ compensation (industrial insurance) coverage protects both workers and employers from the ˜nancial impact of a work-related injury or occupational disease. It pays for an injured worker™s approved medical, hospital and related services that are essential to their treatment and recovery. An injured worker who is temporarily unable to work also receives partial wage replacement payments. As an employer or prospective employer, you must provide workers™ compensation insurance coverage for any worker who doesn™t meet the rules for exemption. Coverage is mandatory. In return, your worker ordinarily cannot sue you for damages when a work-related injury or illness occurs. Employers purchase coverage through the Department of Labor & Industries (L&I). L&I manages all claims and pays bene˜ts out of an insurance pool called the Washington State Fund. The fund is ˜nanced by premiums paid by employers and employees, not by general revenue taxes. However, employers may qualify for self-insurance if they demonstrate they have suf˜cient ˜nancial stability, an effective accident prevention program, and an effective administrative organization for a workers™ compensation program. (See Page 5.) This publication is a general guide that explains Washington State™s workers™ compensation program. It is not a legal interpretation of workers™ compensation law, but it will help you understand employers™ basic legal requirements and suggest ways to minimize your workers™ compensation insurance costs.
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2Chapter 2: Coverage and Exclusions Mandatory Coverage Generally employers must provide workers™ compensation (industrial insurance) coverage for their employees and other eligible workers. There are two ways to provide this coverage depending on the ˜nancial resources of your business. State fund: Most businesses participate in the state™s workers™ compensation program. Self insurance: Companies with at least $25 million in assets, and some governmental entities, may qualify. The Department of Labor & Industries, Insurance Services Division, manages the Washington State Fund. This fund derives its income solely from premiums paid by you and your employees. The fund receives no money from general tax revenues. The de˜nitions of fiemployerfl and fiworkerfl used for workers™ compensation purposes are located in Appendix A. All Washington workers must be covered through the State Fund or by a certi˜ed self-insured employer, unless they are subject to an exclusion listed in the next section. Excluded Employment The information provided in this section is a summary. For a complete description of excluded employment, please see RCW 51.12.020. Workers not covered You are not required to provide coverage for the following workers: 1. 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. 2. 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. 3. 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. This exclusion refers to a person hired to perform a personal errand or chore that bene˜ts 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. 4. A person working only in return for aid or sustenance from a religious or charitable organization. 5. A child under age 18 employed by a parent in agricultural activities on the family farm. 6. Jockeys participating in or preparing horses for race meets licensed by the WA Horse Racing Commission. 7. Musicians or entertainers, if: Your primary business is other than entertainment. They don™t also work for your primary business. They don™t perform on a regular and ongoing basis for you.
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Chapter 2 4In addition to the administrative requirements for hiring minors, you are responsible for knowing the limits on their hours of work and which speci˜c work activities are prohibited. You can be assessed civil penalties or be subject to criminal penalties for violating child labor laws. For more information: On the web at www.Lni.wa.gov/TeenWorkers . Telephone: 360-902-5315 or 1-866-219-7321. Email: TeenSafety@Lni.wa.gov .Out-of-State Workers If you send Washington workers to work temporarily in another state or you bring workers from another state to work in Washington, please see Appendix B for more detailed information. Appendix B de˜nes when a worker is considered a Washington worker or an out-of-state worker, and it explains reciprocal agreements and lists the states with which Washington has reciprocal agreements for workers™ compensation coverage. Paying premiums for out-of-state Washington workers Premiums must be paid to L&I when you have Washington workers in another state or province for fewer than 31 days in a calendar year, even if you are also required to pay premiums to the other state or province. WAC 296-17-35203(8) allows for supplemental out-of-state reporting in certain circumstances. If your Washington workers are in another state for more than 30 days, then you may apply for out-of- state reporting if: There is no reciprocal agreement directing you to report these workers to Washington. You can prove you™re paying premiums for these workers to an out-of-state workers™ compensation insurer. Out-of-state reporting allows you to report out-of-state hours and wages without paying premiums to L&I. If you are bringing out-of-state workers temporarily into Washington, you do not need to pay premiums to L&I if: There is a reciprocal agreement that assigns coverage to the worker™s home state. There is no reciprocal agreement, but you insure the worker for workers™ compensation in their home state and the temporary work performed in Washington doesn™t require registration as a contractor or an electrical license to perform. Note: The home state insurer must be willing to cover all claim costs incurred in Washington. If not, you may be subject to premium assessment, penalties for not reporting, interest on unpaid premiums and a penalty of between 50% and 100% of the cost of a claim. Even if the homestate insurer provides coverage, you could be held responsible for any bene˜ts not offset by the out-of-state insurer and paid by L&I. You can always choose to cover your out-of-state workers in Washington while working temporarily in Washington. Employers bringing out-of-state workers temporarily into Washington, who are required to or choose to pay premiums in Washington, can apply for coverage at www.dor.wa.gov . On the business license application indicate you are hiring employees. For more information, please see www.Lni.wa.gov/OutOfState .Or call 360-902-4817. Independent Contractors Generally, you are not required to provide coverage for independent contractors who are appropriately licensed to engage in business if the contract is outside your normal course of business. Example: A restaurant owner hiring someone with current required licenses to provide architectural services to others does not need to report this work for workers™ compensation coverage. However, if the contract is for the same services or product your business normally provides, you may need to purchase coverage for independent
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Chapter 2 5contractors who don™t meet the rules for exemption. Example: An architectural ˜rm hiring an individual licensed to provide architectural services to work at the ˜rm would need to provide workers™ compensation coverage. Please see Appendix C for more information on independent contractors and to ˜nd out how to protect your business from liability if subcontractors fail to pay required workers™ compensation premiums for their workers. You may also refer to Independent Contractor Guide: A Step-by-Step Guide to Hiring Independent Contractors in Washington State on the web at www.Lni.wa.gov/go/F101-063-000 or contact the Employer Services Help Line at 360-902-4817. Appendix C also explains how you can protect your business from liability if subcontractors fail to pay required workers™ compensation premiums for their workers. Trucking Trucking industry employers are required to cover their drivers for workers™ compensation regardless of how they pay their drivers. However, they never need to report more than 520 hours a quarter for a driver. Intrastate trucking ˜rms must cover their Washington drivers in Washington. Trucking ˜rms engaged exclusively in interstate or foreign commerce must provide workers™ compensation coverage for their drivers, but it can be either through Washington or under the laws of another state. An independent contractor for trucking must either own and operate their truck, or: Be in a leased agreement to purchase the truck. Make regular and scheduled payments for the truck. Be responsible for all maintenance, insurance, fuel costs without reimbursement. Be able to purchase the truck at the end of the lease. Be responsible for all licensing and taxes. Be able to hire any driver the leasee chooses. Professional and Semi- Professional Athletic Teams All professional and semi-professional athletes playing for a Washington-domiciled sports team are under mandatory Washington coverage. Exception: The team regularly plays scheduled games in another state, and: The athlete and the league or team complete a Sport Player Coverage Agreement designating that another state will provide coverage. The league or team and their insurance carrier submit a completed Sport Team Coverage Agreement con˜rming the players will be covered in the other state. Note: Amateur athletes are not covered by Washington™s workers™ compensation laws. If you have questions, please contact the Employer Services Help Line at 360-902-4817. Self-Insured Businesses Employers with substantial resources and an effective accident-prevention program may qualify to provide workers™ compensation insurance coverage for their employees through self-insurance. To qualify, an employer must meet certain criteria as outlined in Washington Administrative Code (WAC) 296-15-021. A self-insured employer assumes all risks and costs of workers™ compensation coverage. Self-insured employers manage all aspects of their workers™ compensation claims, including authorizing bene˜ts according to Title 51 RCW and paying all bene˜ts out of company funds. L&I must certify self-insured employers. Reporting and recordkeeping for self-insured employers vary from those of employers covered by L&I. If you are interested in applying for self- insurance, please see the Employers™ Guide to Self-Insurance in Washington State at www.Lni.wa.gov/go/F207-079-000 .
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6Chapter 3: Opening an Account To obtain workers™ compensation coverage through the Washington State Fund, you must open an account by completing and returning a Business License Application. This form is available online at www.dor.wa.gov or from of˜ces of the Department of Revenue or Labor & Industries. If you own an existing business and will be hiring employees, please re-˜le the Business License Application, indicating you are hiring. Once you open an account, you will be assigned an L&I account manager who can answer questions speci˜c to your company. Employer Classi˜cations The basic premium for your workers™ compensation coverage depends on the risk classi˜cation or classi˜cations assigned to your business. There are approximately 300 classi˜cations. Each refers to a type, or several types, of business activity and has its own basic insurance rate. This rate re˚ects the risk of workplace injury or disease in the industry as a whole or industry activity. Generally, it is the nature of business of the employer that is classi˜ed, not the separate occupations or operations of individual employees within the employer™s business. When you apply for an industrial insurance account, State Fund underwriters will assign one or more risk classi˜cations based on the nature of business described on your application. If the classi˜cations assigned to your business do not appear to be correct, or the nature of your business changes, a change in your risk classi˜cation may be required. Example: If you are a painting contractor and you begin doing drywall work as well, a new risk classi˜cation will need to be assigned to your business. To request a change, or for more information on employer risk classi˜cations, contact the Employer Services Help Line at 360-902-4817. Premium Rates Soon after you open your workers™ compensation account with L&I, you will receive a Workers™ Compensation Rate Notice . You also will receive a new rate notice whenever L&I adjusts premium rates or when your individual experience factor rating is recalculated. This is usually mailed to you in December, with any changes effective January 1. This rate notice tells you the rate you will pay per worker, per hour/unit for each risk classi˜cation assigned to your business. We refer to these hourly/unit rates as ficomposite ratesfl because they are a combination of four separate components: the accident fund, medical aid fund, Stay at Work program, and the supplemental pension fund. The rate notice also shows these four elements individually. Four state funds: Accident-Fund premium. Only employers pay this premium. It provides money to pay non- medical claim costs such as wage-replacement, most vocational services, permanent disability bene˜ts and survivor bene˜ts. Medical-Aid premium. Employers and employees pay this premium. It pays for medical care and
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Chapter 3 7related services essential to an injured worker™s recovery, including some vocational services. Stay-at-Work premium. Employers and employees pay this premium. It partially reimburses employers for wages and other expenses when they bring their injured workers back to light-duty or transitional jobs. Supplemental-Pension assessment. Employers and employees pay this assessment. It provides cost-of-living increases to injured workers with extended disabilities. The Supplemental-Pension assessment is not experience rated. Payroll Deduction Under state law, a portion of the premium due, equal to one-half of the Medical Aid Fund rate, Stay at Work rate, and Supplemental Pension Fund assessment, may be paid by employee contribution. L&I does not collect each worker™s share directly. Instead, employers have the option to collect their employees™ portion through payroll deductions. The maximum payroll deduction rate for each risk classi˜cation assigned to your business is shown on your rate notice. It is illegal to withhold more than the authorized amount. Each pay period, calculate the amount you withhold by multiplying the payroll deduction rate (found on your Workers™ Compensation Rate Notice ) times the actual number of hours/units each employee worked. Some businesses choose not to make employee payroll deductions. These businesses are still responsible for paying the total premium due. Experience Rating What is experience rating? It is the result of your workers™ hours or units (exposure) and claims (losses) occurring during a period that we call the fiexperience period.fl This result will affect your workers™ compensation premium rates for a calendar year. Every eligible employer is experience rated on an annual basis. An eligible employer, as de˜ned by Washington Administrative Code, is an employer who reported experience (worker hours or units) during a given experience period. Businesses that have common majority ownership will be experience rated together on the same policy and share the experience factor. In most cases, businesses that are sold and continue to perform the same operations in Washington will have their experience transferred to the new ownership. What is the experience period? The experience period is the oldest three of the four ˜scal years preceding the effective date of premium rates. (Fiscal year = July 1 through June 30.) The premium rates are effective on January 1 of each year. L&I calculates your experience factor by comparing your workers™ compensation claim costs to the expected costs for companies having the same reported hours and risk classi˜cations as your business. A business with an experience factor greater than 1.0 will be assessed accident fund, medical aid fund, and stay at work rates higher than the base rates. Businesses with factors lower than 1.0 will be assessed less than the accident fund, medical aid fund, and stay at work base rates. New businesses start out with a factor of 1.0 until they become experience rated. If an employer buys an existing business and continues to perform the same operations in Washington, in most cases the business™s existing experience rating will be transferred to the new owner (successor). Claims with a date of injury (DOI) and worker hours/units reported within the experience period will be used in calculating the experience factor for a given calendar year.
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