Thursday, December 1, 2011

State reforms lead to reduced business costs in 2012

Rep. Mike Sells
Thanks in part to legislation passed by the House and Senate last year, most businesses in Washington will see not only their workers' comp premium stay steady, but also a significant drop in unemployment insurance costs.

This would be the first time since 2007 that L&I rates have not increased, saving businesses $150 million next year. It is important to remember, however, that some businesses still might see premium increases based on their recent claims history and risk class. For example, restaurants and retail stores will see a 3% drop, but construction and forest products could see a slight increase due to the injury claims.

As far as unemployment insurance costs, most employers in the state will receive a lower tax rate in 2012, and all rate classes will drop. In fact, tax rates for employers that had no layoffs in the past four years will plummet by 71 percent, to an all-time low for that rate class (side fact: 91% of employers in rate-class 1 are small businesses with fewer than 5 employees).

In total, the tax-rate reductions will equal about $207 million, in addition to the $300 million in savings sponsored by Mike Sells, Chair of the House Labor & Workforce Development Committee, and passed by the Legislature last year. "Without the actions we took last year to bring relief to business owners still struggling through an economic slump, these rate reductions wouldn't have been possible," said Sells. "This news, combined with yesterday's 737 MAX announcement, show that the recent steps we've taken, and reforms we've implemented to respond to our businesses' needs, are paying off." 

Kris Tefft, AWB general counsel and government affairs director on employment law and workers’ compensation, agrees: “Today’s announcement reflects the value of the reform measures passed in 2011, without which employers would surely have seen rate increases next year. We’ve appreciated the opportunity to make our case that this is not the time for any sort of rate increase on business,” said Tefft.


Here's a handy fact sheet and FAQs from ESD's website on the adjusted rates.

To read this blog post in Spanish, go here.


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