Originally published: Dec. 16, 2021
Updated: August 20, 2025
Each year, the Washington State Department of Labor and Industries (L&I) updates workers compensation insurance rates for all Washington businesses. These changes mean that payroll withholding amounts, including employee withholding, change every year.
Some third-party payroll services do not anticipate these changes, so it is crucial that you notify them to avoid an account balance with L&I. You can simply forward your rate notice – which should look something like this – to your payroll provider to inform them of this change. Letters notifying individual businesses of the rate changes are typically sent in the final months of the calendar year.
Businesses with a difference in withholding and actual rates can lead to account balances with L&I, which may result in interest being charged on unpaid balances or additional penalties. It can even affect Retro participation.
The Washington Hospitality Association’s WorkSafe team’s goal is to save operators money. Avoiding balances with L&I is an easy way to do that. The team would also like to remind you to make sure your provider knows that withholding a portion from the employee is allowed in Washington state. Doing so can save business owners, on average, 27% in premium costs. Finally, the WorkSafe team encourages businesses to do an audit of their L&I account at least once per year, to ensure proper reporting of hours/premiums and address any issues timely.
According to L&I, the average rate increase for employers for 2025 is 3.8%, which is driven by cost-of-living adjustments for pensions that were triggered by an increase in the state’s average wage. You can learn more about what your premium pays for, and how that is unique to Washington state, on L&I’s website here.
