Good news from the Governor’s office: Christine Gregoire has announced that the unemployment tax and workers’ compensation reform bills from last legislative session will help businesses weather the continuing economic slump by lowering next year’s unemployment tax rates and holding workers’ compensation rates flat through 2012. The steady rates through the Department of Labor and Industries will save businesses an estimated $150 million.
Earlier this year, the Department of Labor & Industries projected a double-digit increase for workers compensation rates in 2012. Yet Gregoire’s reforms, along with improving trends in L&I claims indicating lower future cost, have resulted in overall workers’ compensation rates remaining flat. L&I projects that the governor’s reform will save $1.1 billion over the next four years.
Judy Schurke, Director of the Department of Labor and Industries, stated that “During the public hearing process we heard that we need to do all we can to reduce or hold the line on the cost of providing a job. That’s why this flat rate is so important.”
While there will be no general rate increase, individual employers may see rates go up or down, depending on their recent claims history, and changes in the frequency and cost of claims in their industry. For example, a 3% increase is slated for the construction industry, while the retail sector will experience a 3% drop.
Gregoire commented that the news “couldn’t come at a better time for Washington businesses and workers. Thanks to the reforms we passed earlier this year and the hard work of our state employees, businesses will have more money to hire and get Washingtonians working again.”
The Employment Security Division originally estimated that February’s unemployment tax reform bill would save businesses more than $300 million in 2011. Less than a year later, the effectiveness of these reforms seems to have surpassed initial expectations:
• Updated estimates indicate that businesses will save more than $500 million in the two-year period — $300 million in 2011 and $207 million in 2012.
• 88% of Washington’s employers will pay lower unemployment tax rates in 2012 than what they pay now.
• The overall average unemployment tax rate will drop by 13%.
• For the 77,338 employers that have had no layoffs in the past four years, the tax rate will decrease by 71%.
Employment Security Commissioner Paul Trause has been unreserved in expressing pride for this outcome: “The stability of our unemployment benefits fund and tax system is the envy of many other states. No other state has been able to reduce taxes and provide temporary benefit increases in this economy.”
New workers’ compensation and unemployment tax rates will both take effect January 2012.