If you are an employer in the state of Washington you might be wondering exactly how L&I calculates your premiums, or what goes into the base rates that you pay. Here is a quick summary on the basics of workers’ compensation class codes.
Your L&I premiums are based on the number of hours worked, and the type of work done by employees in your business. When a company is first set up, or adds a new business line, L&I will assign the appropriate workers’ compensation classification code, which will consist of one or more basic classification codes, based on the nature of the business. These codes are commonly referred to risk classification codes. There are approximately 300 classifications, and each one has its own basic insurance rate attached to it. The insurance rate represents the average of the hazards within the classification.
Not only are businesses assigned a basic class code or codes, but they may also be assigned a standard exception classification code, or a special exception classification. The standard exception classifications cover jobs that are administrative in nature, and may be common to many industries, and the general exception classifications cover operations that are exceptional, or unusual in nature.
Splitting hours between risk class codes can be tricky
There are some strict rules about splitting hours between risk class codes, so if you have questions, give us a call and let us help you wade through the workers’ comp laws surrounding the classification process.
Annually, you will receive a rate notice from L&I that will provide you with the composite rates for the upcoming year, based on your risk class codes and your current experience modification factor. The composite rate is what you will pay per hour for each of your employees, based on their specific workers’ compensation class code. Currently, the composite rate is made up of assessments used to fund the Accident fund, the Medical Aid fund, the Supplemental Pension Fund, and the Stay at Work Program fund.
You’ll also see a section on your rates notice that provides the maximum allowable amount for your employees’ contribution toward your L&I premiums. State law in Washington allows employers to collect the employee portion through payroll deductions and use those contributions to help pay annual L&I premiums.
Get help with risk class codes and more
Wondering whether you should collect a portion of your premiums from your employees? If you need help making an informed decision about the pros and cons of taking the deductions, or you’re trying to unravel the complex Washington classification code process, we can help. When you join the Vigilant Group Retro Program, you’ll have unlimited access to a workers’ comp claims manager who will learn the nature and challenges of your business and can help you make decisions based on your specific needs.