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Gregoire’s reforms cause unemployment tax rate to drop, 2012 workers’ comp. rates to stay flat

For Immediate Release: December 1, 2011

OLYMPIA – Gov. Chris Gregoire’s unemployment tax and workers’ compensation reform bills from last legislative session continue to help businesses through a down economy by causing next year’s unemployment tax rates to drop and keeping workers’ compensation rates flat into 2012.

Eighty-eight percent of Washington’s businesses will pay a lower unemployment tax rate in 2012 than they pay today. This decrease will save businesses an estimated $207 million in 2012 – in addition to $300 million in 2011 savings. Overall workers’ compensation insurance rates will not increase, which will save businesses an estimated $150 million in 2012.

“This couldn’t come at a better time for Washington businesses and workers,” Gregoire said. “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.”

When Gregoire signed her unemployment tax reform bill in February 2011, the Employment Security Division estimated that businesses would save more than $300 million in 2011. Today, it was clear that her reform’s effectiveness far 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 percent 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 percent.
• For the 77,338 employers that have had no layoffs in the past four years, the tax rate will plummet by 71 percent.

“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,” said Employment Security Commissioner Paul Trause.

ESD attributed the tax savings to the governor’s request legislation and the state’s healthy unemployment trust fund.

Earlier this year, the Department of Labor & Industries estimated that businesses would face a double-digit rate increase. However, a combination of Gregoire’s reform, improving claim trends resulting in lower future costs means overall workers’ compensation rates will stay flat, saving businesses $150 million. L&I expected the governor’s reform to save $1.1 billion over four years.

“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,” said L&I Director Judy Schurke.

While there will be no general rate increase, individual employers could see their rates go up or down, depending on their recent claims history, and changes in the frequency and cost of claims in their industry.

New workers’ compensation and unemployment tax rates will both take effect January 2012.

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