The average cost of workers’ compensation insurance in Washington will go up about 3.8% in 2025, the Washington State Department of Labor & Industries (L&I) announced Nov. 26.

This means that employers and workers together will pay, on average, roughly $1 more per week for each full-time position effective Jan. 1, 2025. Workers will pay about $.25 cents per week — roughly one quarter of the premium, which is similar to last year, according to the state.

The 3.8% increase is an average across all industries. The base rate for specific industries could be higher or lower depending on their recent claims history. Rates for specific industries can be found on the agency’s web site.

The increased premiums, according to agency officials, will bring in slightly less than what L&I expects to pay out for 2025 claims and expenses. The agency will make up the difference by tapping into the workers’ comp contingency reserve.

Each fall, L&I determines workers’ comp rates for the following year by looking at factors including the expected workers’ comp benefits costs, size of the contingency reserve, wage and benefit inflation, operational costs, investment income and other financial indicators.

Most states charge rates as a percentage of payroll, so when employee wages and payrolls go up, more premiums are automatically collected. In Washington, however, employers are charged an hourly rate. When wages go up in, it costs L&I more to provide workers’ comp benefits. Rate increases are one way the state covers the increase in the cost of providing coverage.

As administrators of the state’s workers’ compensation system, L&I is similar to a large insurance company, providing medical and limited wage-replacement coverage to workers who suffer job-related injuries and illness.

The agency also provides rules and enforcement programs to also help ensure workers get paid what they are owed, that children’s and teens’ work hours are limited and that consumers are protected from unsound building practices. L&I workers’ comp insurance covers roughly 2.8 million workers and more than 201,000 employers in Washington.

And while L & I premiums are slated to increase, so is the state’s minimum wage, which is scheduled to jump $16.66 an hour, or 2.35% more over 2024. The change goes into effect on Jan. 1.

The state minimum wage applies to workers age 16 and older. Under state law, employers can pay 85 percent of the minimum wage to workers ages 14-15. For 2025, the wage for younger workers will be $14.16 per hour.

In 2024, Washington state had the highest state-level minimum wage in the nation. The federal minimum wage remains set at $7.25 an hour.

State law directs L&I to calculate the minimum wage for the coming year using the federal Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). To make the calculation, L&I compares the CPI-W from August of the previous year to August of the current year.

According to the bureau, housing and food costs increased over the last 12 months, leading to the increase in the CPI-W.

Cities can set minimum wages higher than the state. Seattle, SeaTac, Tukwila, Renton, Bellingham, and Burien all will have higher wages in 2025.

For 2025, small employers with up 50 employees must pay overtime exempt workers at least two times the minimum wage. That means an exempt employee will have to earn at least $1,332.80 a week, or $69,305.60 a year. For large employers, with 51 or more employees, overtime exempt workers must make at least 2.25 times the minimum wage. That means an exempt employee for one of these larger employers must earn at least $1,499.40 a week, or $77,968.80 a year.

The minimum pay for rideshare drivers will also go up in 2025. For trips within Seattle, drivers will earn $.68 cents per passenger platform minute and $1.59 per passenger platform mile, or $5.95, whichever is greater. For trips outside of Seattle in 2025, drivers will earn $.39 cents per passenger platform minute and $1.34 per passenger platform mile, or $3.45, whichever is greater.