Workers compensation in Washington is priced differently from almost every other state: you are billed by the hour each worker works in their job category, not as a percentage of payroll, and you buy only from the state fund at the Department of Labor and Industries (L&I). Because the rate is a set amount per hour for each kind of work, a raise does not raise your premium, and part-time hours cost less than full-time hours. By law you also split the cost with your workers, deducting about a quarter of the premium from their pay while you cover the rest. As a rough anchor, a small, low-risk employer such as an office often pays a few hundred to about 2,000 dollars a year, while a higher-risk trade like roofing can run several thousand, because the bill is by the hour in each job category.
Who this is for: Washington owners trying to understand what drives their workers comp cost and how to keep it accurate.
The short version
- Premium is charged per hour worked in each job category, not on payroll.
- As a rough anchor, a small low-risk office runs a few hundred to a couple thousand dollars a year; a higher-risk trade like roofing runs several thousand.
- A pay raise does not raise premium, and fewer hours means lower cost.
- By law you can deduct about a quarter of the premium from the worker's pay.
- L&I sets the rates by rule for more than 300 job categories; there is no shopping on price.
- L&I adopted an average 4.9 percent rate increase for 2026, with construction rising less at about 3 percent.
What drives your cost
Three things mostly decide your bill. The first is the job category each worker falls into, because the per-hour rate for risky work like roofing is far higher than for office work, and getting a worker into the correct category is where most pricing mistakes happen. The second is the hours your workers actually work, which you report to L&I each quarter, so your cost tracks real activity rather than a payroll estimate. The third is the state rate itself, which L&I sets by rule each year. For 2026 L&I adopted an average increase of 4.9 percent, about 1.37 dollars more per week for a full-time worker, with the construction average lower at around 3 percent. Your own change can differ because it depends on your categories and hours.
How hours-based pricing plays out
| Situation | Effect on your premium |
|---|---|
| You give a worker a raise | No change, because premium is by the hour, not by pay |
| A worker shifts from full-time to part-time | Lower, because fewer hours are reported |
| A worker is in a higher-risk job category | Higher per-hour rate for those hours |
| You deduct the worker share | Your net cost drops by roughly a quarter of the premium |
Keeping the bill accurate
Because you cannot shop the price, the savings in Washington come from accuracy. Make sure each worker is reported in the right job category, since a wrong category can mean paying a roofing rate for office hours or the reverse. Report hours carefully so you are not overbilled, and keep clean records in case of an audit. Take the worker deduction the law allows, since skipping it means you are absorbing a cost you were entitled to share. And budget separately for stop-gap employers liability, because the state fund does not defend lawsuits and that coverage is bought from a private insurer as an add-on to your general liability policy.
A Tacoma example
Illustrative, not a quote. A Tacoma HVAC company reports its installers in the correct trade category and its office staff in a low-rate clerical category. When it promotes an installer with a raise, the premium does not move, because the bill is by the hour, not by pay. During a slow winter month with fewer field hours, the premium drops. The owner deducts the worker share each pay period and budgets separately for stop-gap employers liability. See our workers comp for HVAC contractors page.
Real questions Washington owners ask
How is workers comp priced in Washington?
By the hour each worker works in their job category, not as a percentage of payroll. You report hours to the state fund each quarter, so your cost tracks the hours your workers actually put in.
Does giving a raise increase my workers comp premium?
No. Because Washington bills by the hour worked rather than by pay, a raise does not change your premium. That is different from most states, where higher payroll means higher premium.
Do my workers really pay part of the cost?
Yes. Washington law lets you deduct about a quarter of the premium from a worker's pay while you cover the rest. Most states put the full cost on the employer, so this split is unusual.
Can I shop around for a lower rate?
No. Coverage is sold only by the state fund at Labor and Industries, which sets the rates by rule for more than 300 job categories. Savings come from accurate categories and hours, not from comparing carriers.
How much are rates going up for 2026?
Labor and Industries adopted an average increase of about 4.9 percent for 2026, roughly 1.37 dollars more per week for a full-time worker, with the construction average lower at about 3 percent. Your own change varies.
What makes my rate higher or lower?
The biggest factor is the job category each worker falls into, since risky work carries a much higher per-hour rate than office work. Reporting workers in the correct category is the main way to avoid overpaying.
Is stop-gap employers liability part of the state cost?
No. The state fund does not defend lawsuits, so stop-gap employers liability is a separate cost bought from a private insurer, usually as an add-on to your general liability policy. Budget for it separately.
Why Washington owners choose Morrow
- We shop the right market for you. In Washington, workers' compensation is sold only through the state fund at the Department of Labor and Industries (L&I), with no private carriers to shop, so we help you open and run your L&I account correctly and place the stop-gap employers liability and other business coverages the state fund does not include.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Washington guides
Every Washington business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Washington (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- What workers comp does not cover
- Hiring your first employee: what changes
- Washington HVAC workers comp
This guide is general information, not legal advice. Washington rules and penalty amounts can change, so verify current requirements with the Washington State Department of Labor and Industries (L&I) or a licensed advisor before you rely on them. Last updated: July 2026.