What’s going on with LNI’s proposed policy updates regarding LEP?

By Shawna G. Fruin, Attorney at Law

In March 2025, the Department of Labor and Industries (LNI) asked for community comment on proposed updates to its loss of earning power (LEP) policy,[1] prompting many in the self-insured community to wonder why the changes are coming now, and what the changes mean for them.

For why the changes are coming now, it does not appear that any immediately new case law or legislative changes prompted the policy updates. But, the LEP policy was last updated in 1998, and since then, case law and statutory updates made the policy inconsistent with the law. While LNI ideally would have updated the policy at the time of those changes, the policy is currently outdated, so updating it is appropriate.

For what the policy means, it is important to remember Department policy is not law, and to the extent inconsistent, we should follow the Industrial Insurance Act’s rules, regulations, and case law before policy.[2] However, LNI policies illuminate what LNI might do when adjudicating an issue, or related penalties, and thus are important to understand for management of claims.

The most significant issues/changes with the new LEP policy relate to (1) when workers are entitled to LEP, (2) how LEP is calculated, and (3) specifically, how LEP is calculated upon reopening.

• When workers are entitled to LEP: For dates of injury after May 7, 1993, the 1998 LEP policy said workers must be working to get LEP, and that if they decline a modified duty job offer, they are not entitled to LEP. But, the draft/new policy changes both of those points, noting LEP is now owed if the worker is working or is able to work, and that if the worker declines a job offer, they are entitled to LEP. These changes appear to be an effort to comply with the 2006 Board of Industrial Insurance Appeals (BIIA) significant decision Karl Bean[3], which held: “lack of employment, whether due to termination for cause or otherwise, does not preclude entitlement to loss of earning power compensation for periods during which sufficient lost earning capacity is otherwise shown.”

• How LEP is calculated: Section 4 of the 1998 policy, and section 4 of the new/draft policy, are essentially unchanged in their directions for calculating LEP. But, those directives have an notable omission related to calculating LEP when a worker is not working. Presently, both policies require using “present wages” in all LEP calculations—but if a worker is not working, that amount is $0, so the resulting calculations will direct employers to pay more than just the reduced earning power. In contrast, in Bean, the Board clearly and explicitly provided a different method of LEP calculation when workers are not working: “where there is five percent or greater loss of earning capacity, but the injured worker is not in fact working, then (3)(a)(i) must apply – compensation is the time loss rate in proportion which the new earning power shall bear to the old.” Thus, the new/draft policy is inconsistent with Bean regarding how to calculate LEP when a worker is not working. 

• LEP calculations upon reopening: The 1998 LEP policy said that the rate of LEP after reopening is based on the compensation paid at the time of closure, while the draft/new LEP policy says reopening LEP is compared to date of injury wages. This update complies with a 2007 legislative update to the to the LEP rule in RCW 51.32.090(3)(c), “The prior closure of the claim or the receipt of permanent partial disability benefits shall not affect the rate at which loss of earning power benefits are calculated upon reopening the claim.”

If you have questions or concerns about navigating the complex rules and policy related to Washington loss of earning power, the Reinisch Wilson team is here to help.

[1] https://content.govdelivery.com/accounts/WADLI/bulletins/3d7e307.

[2] See, e.g., In re Maria Gonzalez, BIIA Dec., 97 0261 (1998) (“An internal policy does not have the force and effect of law.”)

[3] In re Karl Bean, BIIA Dec., 04 19814 (2006).