WSLC Reports Today
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TUESDAY, MAY 22, 2007
L&I's "rate holiday" means money in workers' pockets 

In March, Gov. Chris Gregoire announced that a partial “rate holiday” had been finalized by the state Department of Labor and Industries, which will save workers and employers about $315 million in workers’ compensation insurance premiums in the second half of this year.

Beginning July 1, employers and workers will not pay the Medical Aid Fund premium for work performed from that date through Dec. 31, 2007. On average, the savings will represent about 34% of total premiums paid into the workers’ comp system for work performed in the second half of the year. Because employers and workers pay equally into the Medical Aid Fund, both will benefit equally.

Combined with this year’s overall 2% decrease in workers’ compensation rates, which L&I adopted in December, employers and workers will pay about $346 million less in premiums in 2007.

Not all of the estimated 2.4 million workers who gets workers' comp coverage through L&I will benefit from the rate holiday. State law directs employers to deduct half of the Medical Aid Fund rate from their employees' paychecks. Many employers do that, but some pay the premiums themselves. In those cases, the employees won't see a change in their deductions. The rate holiday also only applies to workers and companies insured by L&I. Large, self-insured employers such as Boeing and Weyerhaeuser, and their workers, don't pay premiums into the Medical Aid Fund.

If you are among the workers who have a L&I Medical Aid Fund deduction from your paychecks -- check with your employer if you aren't sure -- no Medical Aid deduction should occur for work performed July 1 through Dec. 31 of this year. (There will still be a small deduction for the Supplemental Pension Fund.) The rate holiday is temporary and will end Jan. 1, 2008.

For more information, or if you have questions about the rate holiday, click here.

L&I takes care of employer retro groups

The rate holiday L&I adopted is slightly different than what was originally proposed last November. Some business groups and employers who participate in L&I’s retrospective rating program complained because the rate holiday will reduce the refunds they receive -- and in the business associations' case, it would reduce the fees they withhold from those refunds.

In response to their complaints, L&I "made some adjustments to ensure those programs continued to receive adequate revenues to cover their administrative costs, including the money they invest in workplace-safety programs," according to an L&I news release. As a result of that change, employers who don’t participate in the retrospective rating program between July 1 and Dec. 31 of this year will receive a small dividend in 2008.

L&I’s retrospective rating program offers employers a chance to lower their workers’ compensation costs by banding together to promote safety and reduce workplace injuries. Groups are organized by industry -- although that requirement is loosely enforced (see 2004 WSLC press release) -- and receive a refund on the premiums they pay if they meet their safety goals. The employer association that administers the program receives the refund from the state, deducts its fee and forwards the remainder of the refund to member employers.

Some business lobbying associations have been criticized for extracting as much as 20% of their member employers retro refunds -- far more than their administrative costs -- to fund activities not related to worker safety, including partisan political activities. 

For example, the Building Industry Association of Washington skimmed a record $6.4 million from its members' retro refunds in 2006 and freely admits that much of that money was spent on its notoriously aggressive political activities -- like gathering much of the evidence used in the unsuccessful legal effort to overturn Gov. Gregoire's 2004 election and funneling nearly $1 million into the 2006 State Supreme Court races.