What's covered in this guide?:
How Washington workers' comp works
Washington's Department of Labor & Industries (L&I) administers workers' compensation differently from most states — premiums are calculated per hour worked using risk-class-specific rates, and a portion is withheld from employee wages. In Workforce, you set this up by creating risk classifications, entering the employer and employee hourly rates, and assigning each classification to the teams it covers.
Most states bill workers' compensation as a percentage of payroll through a private carrier. Washington runs its own state fund and bills employers directly. The premium is calculated as:
Hours worked × the hourly rate for that risk classification
The hourly rate is split into two parts:
Employer portion — paid by the employer.
Employee portion — withheld from the employee's wages on each pay stub.
Washington L&I treats both portions as a single tax: Workforce withholds the employee share, accrues the employer share, and reports both together. L&I publishes the rates by risk class each year and sends each employer a Workers' Compensation Rate Notice with the rates that apply to their account.
Before you start
You'll need:
Your Washington L&I account number, set up on your Washington tax profile.
Your most recent Workers' Compensation Rate Notice from L&I — it lists each risk classification code assigned to your business and the employer and employee hourly rates for the current period.
Create a risk classification
Open Payroll > Payroll Settings > Risk Classifications. Click Add in the top right.
On the Risk Classification form, fill in:
Class Code — the risk class code from your L&I rate notice (for example, 490600). Workforce accepts the four-digit class code with or without the two-digit sub-classification suffix.
Description — optional, for your own reference.
Save the classification. You'll come back to assign teams and enter rates in the next two steps.
Enter the L&I rates
Open the risk classification you just created and expand the Workers' Compensation Rates section. If no rates have been entered yet, you'll see a No L&I Rates empty state with an Add button — click it to open the rate fields.
Enter, copying directly from your L&I Workers' Compensation Rate Notice:
Hourly Employer Contribution — the employer hourly rate for this class code.
Hourly Employee Withholding — the employee hourly rate for this class code.
Workforce computes the Total Rate automatically as the sum of the two. Save when both rates are filled in.
Rates aren't pre-loaded. They come from your rate notice — L&I assigns rates per employer based on your industry, claim history, and any experience-rating adjustments — so the value you enter here is the only source of truth Workforce uses.
Assign teams to the classification
Risk classifications are assigned to teams, not directly to employees. An employee's hours are taxed using whichever team the hours were worked under.
Still on the risk classification form, use the Locations and Teams selector to pick every team whose work falls under this class code. A team can only belong to one risk classification at a time, so assigning a team here moves it from any previous classification.
Save. Back on the Risk Classifications index, each card shows a status badge so you can see at a glance which classifications are ready:
Rates Complete — both rates entered and at least one team assigned.
Rates Missing — teams assigned but no rates entered.
Rates Not Required — teams assigned, but none of those teams are in a Washington jurisdiction, so L&I doesn't apply to this classification.
No Teams — classification exists but no teams are assigned to it.
Repeat steps 3–5 for every risk class code on your L&I rate notice.
How Workforce calculates the tax on a pay run
For every Washington pay stub, Workforce groups the employee's regular and overtime earnings lines by the team they were worked under, looks up the risk classification for that team, and applies the rate:
Employee L&I withholding = employee rate × hours worked, withheld from wages.
Employer L&I premium = employer rate × hours worked, accrued as an employer tax.
Only regular and overtime hours attract L&I — other pay types such as PTO, sick leave, and holiday pay are excluded from the calculation.
If an employee splits hours across multiple teams with different risk classifications, Workforce calculates each portion at its own rate and shows the breakdown by class code on the pay stub. Both the employee and employer amounts roll up to a single L&I line item for reporting.
Common gotchas
Pay run blocked: missing risk classification — A Washington employee has earnings from a team that hasn't been assigned a risk classification. Open Payroll > Payroll Settings > Risk Classifications, find or create the right classification, and add the team.
Pay run blocked: missing workers' comp rate — A team's risk classification exists but doesn't have rates entered yet. Open the classification and fill in both the hourly employer contribution and employee withholding rates.
New rates each year — L&I issues a new rate notice each calendar year. When yours arrives, edit each affected risk classification and update the rates so the new period calculates correctly.
Teams change roles — Risk classifications are job-based. If a team's work changes (for example, a back-of-house team starts taking front-of-house shifts), reassign it to the right classification so the correct rate applies going forward.
Non-Washington employees — Only earnings from Washington-jurisdiction teams attract L&I. Employees who work in other states are unaffected, even if their employer has Washington classifications set up.