Rate changes for 2021
Each fall, L&I announces its proposed rates for the upcoming year. The big headline this year is that average rates for 2021 are unchanged – on average, workers’ comp rates in Washington state will be the same as last year for both employers and employees.
However, it’s important to understand that your company’s rates will probably change! Here’s why:
two factors that directly impact what your company will pay in 2021
- The average amounts for each industry and risk class have all changed.
Food processing rates are down 2 percent, but agriculture rates are up 2 percent.
The average is a 0 percent change, but each industry is seeing its rates go up or down.
- Each company’s rates are calculated individually, so the amount you pay can still go up or down
If the average rate in your risk class went from $1.00 to 95 cents, that’s a 5 percent savings. But if your rates are calculated to be 110 percent of average, your company will still pay about $1.05 next year. You’ve benefited from the rate drop, even though your rates went up in the end.
Rates for our Retro industries
You can find the full table of 2021 rates on the L&I website. At Approach, we represent employers in five industries. Here’s a look at what’s happening with rates in each for next year:
Average rates for 2021 are unchanged, but it’s important to understand that your company’s rates will probably change!
Construction firms pay some of the highest workers’ comp rates in the state, so small changes can add up to big savings. On average, rates will drop by 3 percent, or about $62 per employee, but a few risk-classes, such as roofing, will see savings of $300 or more for each full-time employee in 2021. Interior painting will be one of the few risk classes to go up next year, with a 6 percent increase.
Most transportation risk classes are in line for a small decrease in 2021, but freight handlers get a 7 percent cut, while certain warehouses will see a big 20 percent drop, worth more than $600 per employee!
On the whole, manufacturing rates will be pretty close to their 2020, with a few risk classes seeing larger decreases worth $50, $100, or more. Electronic products manufacturing will go up 6 percent, but most other increases are at 5 percent or less.
Retail and Wholesale
Retail has seen its world turned upside-down in 2020, but the pandemic started after the point at which it could have affected worker’ comp rates. (L&I has also said it won’t factor COVID-19 claims into future rate or retro calculations.)
Retailers and wholesalers will largely see average rates about the same as in 2020. No risk classes have changed more than 6 percent up or down, with most changing only 1 or 2 percent.
As we mentioned at the start, Food Processing rates are down 2 percent on average, but Agriculture rates are up 2 percent. This shows why risk classes and your company’s own performance are so key — industry averages are a good guideline, but what you pay will be down to your own company’s situation. Greenhouses are the winner in agriculture for 2021, with a 10% reduction in average rates.
Cheaper workers’ comp rates
You can’t shop around for workers’ comp in Washington state. The key to lower rates here is safer work practices, which brings down the injury rates and lowers the cost of claims. You can also join a Retro program to earn refunds on the premiums that you do pay.
The best news is that you have a lot of control over the actual rates paid by your company. A general rule is that your rates cannot increase or decrease by more than 25 percent per year.
Each year, the actual rates your company pays are decided by a) the type of work performed by your employees (risk classes) and b) the cost of your workers’ comp claims in recent years (Experience Modification Rate or EMR).
At Approach, our focus is helping you keep your EMR as low as possible, because average rates get multiplied by this number to set the premium rate for your company.
Each employer should have a notification from L&I regarding the 2021 rates. Contact your Approach retro coordinator if you have questions about your rates or how to read the notification.