Title
Transition of Workers Compensation from Self-Insured to Washington State Labor & Industries Status Briefing
Recommended Action
Committee Recommendation:
Not referred to a Committee
City Manager Recommendation:
Receive a briefing on the Status of the Transition of Workers Compensation from Self-Insured to Washington State Labor & Industries.
Report
Issue:
Whether to receive a briefing on the Status of the Transition of Workers Compensation from Self-Insured to Washington State Labor & Industries
Staff Contact:
Nicole Camus, Deputy Human Resources Director, 360.753.8213
Presenter(s):
Nicole Camus, Deputy Human Resources Director
Background and Analysis:
In 2023, the City began analyzing the cost and requirements to transition Workers Compensation from self-insurance to state-funded with Labor and Industries (L&I). The Fire Union (IAFF) had requested this transition on behalf of its members because as a self-insured employer, City administration was making decisions about member’s claims which was creating an adversarial relationship between employees and City administration in some instances. By switching to L&I, employees experience neutral and fair external administration of their Workers Compensation claims and the City’s role is to be focused on the well-being of the employee.
The City successfully transitioned the Workers Compensation program from being self-insured by the City to Washington State L&I on October 1, 2024. Any claims filed after October 1st will be administered by L&I. Those claims that occurred before October 1, 2024, will continue to be administered by the City.
The estimated cost to transition to L&I is $3.6 million. This includes the City’s premium to Labor & Industries, expenses to cover a contract with the Association of Washington Cities for Third Party Administrator services, and additional expenses related to claims and legal expenses with claims that occurred before October 1, 2024.
This informational briefing will summarize change management and training efforts, process effectiveness, claim administration in the new system, next steps, and financial impacts for 2025.
Staff will also share an opportunity the City has to enroll in the Firefighter Injury and Illness Reduction (FIIRE) program with L&I which is a prevention initiative focused on the fire service. By enrolling in this program, the City will recognize a ten percent premium reduction for firefighters. This is estimated to save $70,000 in the first year and will continue to increase as our experience rating changes and premiums increase.
Climate Analysis:
This agenda item is expected to result in no impact to greenhouse gas emissions.
Equity Analysis:
By enrolling in state-funded L&I Workers Compensation, City employees are in the main system for injured workers in the State of Washington. L&I is a neutral administrator, and decision-making authority for claims is no longer held by the City. The City’s role will be to support their employees in the claim process.
Neighborhood/Community Interests (if known):
Members of the community may have an interest in this agenda item as it deals with a program for which the City pays a premium and impacts workplace culture at the City of Olympia.
Financial Impact:
The City budgeted $3.6 million in the preliminary 2025 operating budget for Worker’s Compensation. The expenses are distributed through a variety of funds; the impact to the General Fund is $2.85 million.
Options:
1. Receive a briefing on the status of the Transition of Workers Compensation from Self-Insured to Washington State Labor & Industries.
2. Do not receive a briefing on the Status of the Transition of Workers Compensation from Self-Insured to Washington State Labor & Industries.
3. Take other action.
Attachments:
None