Inflation-Adjusted Workers’ Compensation Penalties: What Washington Self-Insured Employers Need to Know

By Mathew J. Riberdy, Attorney at Law

Washington law requires periodic inflation adjustments to certain workers’ compensation penalties, and the next increase is scheduled to take effect beginning July 1, 2026. Self-insured employers, claims handlers, and employer representatives should be preparing now for the operational and financial impact.

In 2020, the Washington State Legislature passed House Bill 2409, which effectively increased several statutory penalty amounts and established automatic inflationary adjustments every three years. Prior to the Legislature’s passage of HB 2409, many of these penalty amounts had been unchanged since the 1980s. The 2020 legislative changes to RCW 51.48.095 specifically require that a percentage-based increase of the statutory penalty amounts every three years. The first adjustment took effect on July 1, 2023, with a 16.5 percent inflationary adjustment. The next inflationary adjustment is set to follow in 2026.

Currently, the Department anticipates an increase of approximately 12 percent beginning July 1, 2026. As an example, a penalty currently set at $1,161 would increase to about $1,300. Final adjusted amounts are expected to be announced and posted by the Department sometime in June of 2026. Because the inflationary adjustments to the penalty amounts are required by statute enacted by the Legislature, the Department does not have discretion to alter the inflation-based calculation.

Why this matters to self-insured claims operations:

With the upcoming inflationary adjustment the Department’s penalty amounts will increase, the cost of each penalty violation also increases in significance. Penalty exposure for self-insured employers more commonly arises from defects occurring within the claims handling process rather than due to intentional non-compliance. The increased penalty amounts going into effect starting July 1, 2026 will increase the exposure self-insured employers face.

As penalty amounts increase, documentation quality, timeliness, and internal controls become even more critical to defensibility. The inflation adjustment applies to several areas under Title 51 RCW, including:

• Delay or refusal of benefit payments by self-insurers
• Noncompliance with workers’ compensation statutes or rules
• Failure to keep or allow inspection of required records
• Willfully obtaining erroneous payments
• Violations related to operating without required coverage or violating stop work orders

Practical planning considerations:

Self-insured programs should consider:

• Reviewing claims timelines and diary controls
• Evaluating documentation standards for benefit decisions and disputes
• Reinforcing escalation protocols for higher-risk claims

Taking these steps now can help reduce penalty exposure once the 2026 adjustments take effect.

If you have any questions relating to penalty exposure faced by self-insured employers on a Washington workers’ compensation claim, please do not hesitate to contact any of the experienced attorneys at Reinisch Wilson PC for additional assistance.