Status as of November 12, 2026: the 2027 rates described here are proposed, not final. L&I held public hearings in late October and is expected to adopt final rates by the end of November, to take effect January 1, 2027. We will update this article when the final rates are published.
Each fall, the Washington State Department of Labor & Industries (L&I) proposes workers' compensation rates for the coming year. For 2027, the proposal is a 4.9% increase in the average hourly rate. That headline number is a statewide average. What your business pays next year depends on the work your employees do and on your own claims record, and those are the parts you can influence.
What L&I has proposed
L&I says the increase helps the system keep up with the rising cost of wage replacement and medical care for injured workers. The agency has also said it is not passing along the full projected cost. It plans to draw on the workers' compensation contingency reserve to cover the gap between what the new rates collect and what claims are expected to cost. The same average increase, 4.9%, was adopted for 2026.
Why Washington works differently
Washington is one of a small number of states where most employers buy workers' compensation from a state fund and not from private insurers. Three features of the system matter when you budget:
Rates are per hour worked
Most states charge per $100 of payroll. Washington charges for each hour an employee works in a given risk class, so a raise does not change your premium but added hours do.
Workers share the cost
Employers pay roughly three-quarters of the premium and employees pay about one-quarter through payroll deduction.
Your history adjusts your rate
L&I applies an experience factor based on your past claims. A better record than your class average lowers your rate; a worse one raises it.
Why your change will not be exactly 4.9%
The average blends hundreds of risk classes. Each class gets its own base rate, set from the claims experience of every employer doing that kind of work. Some classes rise by more than the average and some by less. Your experience factor is then applied on top of the base rate, and it is recalculated every year.
That means two businesses in the same trade can see very different results. A contractor whose experience factor improves may pay less per hour in 2027 even though the class rate went up. A contractor with one costly time-loss claim in the rating window may see an increase well above the average.
| What drives your 2027 cost | Who sets it | Can you influence it? |
|---|---|---|
| Base rate for each risk class | L&I, from statewide class experience | No |
| Which classes your hours are reported in | L&I assigns; you report | Yes, by reporting accurately |
| Experience factor | L&I, from your own claims | Yes, over time |
| Hours worked | You | Yes |
Five steps to take before January
- Read your rate notice when it arrives. L&I sends each employer a notice with the new rate for every class on the account and the experience factor. Compare it with this year's notice line by line.
- Check your risk classes. Hours reported in the wrong class are a common and expensive error. Office and sales staff, for example, usually belong in a lower-rated class than field crews. Keep the records that support how you split hours. See our guide to premium audit preparation.
- Review open claims. Claims that stay open with time-loss payments weigh on your experience factor. Ask where each one stands and whether light-duty work could bring the employee back sooner.
- Put a return-to-work plan in writing. Washington's Stay at Work program reimburses employers for part of the wages paid to an injured worker on approved light duty. A written return-to-work program makes it far easier to use.
- Update your 2027 bids and budgets. If you price work by labor hour, build the new rates into estimates for jobs that will run past January 1.
What lowers your cost over time
You cannot change the base rate, but your experience factor responds to what happens in your workplace. The employers who pay the least per hour in their class tend to do the same few things well: they report injuries right away, stay in contact with injured employees, offer transitional work, and fix the hazard that caused the injury. Our article on lowering workers' comp premiums covers each of these, and understanding your experience modification rate explains how the factor is calculated.
Many Washington employers also join a retrospective rating (Retro) group through a trade association. Retro participants can earn partial refunds of premium when the group's claims come in better than expected, and they can be assessed when results are worse. It rewards the same habits described above.
Coverage L&I does not provide
The state fund pays medical and wage-replacement benefits to injured workers. It does not include employers liability coverage, which in other states comes built into a workers' compensation policy. Washington employers usually add it by endorsement to their general liability policy, where it is called stop gap coverage. If you have employees who work in other states, you may also need a separate workers' compensation policy for them. Whether a given situation is covered depends on the policy wording, so ask us to review it with you.
When to call a broker
Call us if your rate notice shows a change you cannot explain, if your experience factor rose, or if you are adding operations or employees outside Washington. We can read the notice with you, check your classes and stop gap coverage, and help you build the safety and return-to-work practices that bring the rate down. Learn more on our workers' compensation page.