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SB 5381

Establishing department authority to ensure payment is received from the self-insured employer after a self-insured group or municipal employer has their self-insurer certification withdrawn.

2025-2026 Regular Session Introduced by Steve Conway and 3 co-sponsors

The bill requires decertified self-insured employers to reimburse L&I for workers’ comp payments it makes on their behalf, via quarterly charges and rules.

Senate Rules "X" file.
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Bill Summary · SB 5381

Summary: SB 5381 (Washington, 69th Legislature, 2025 Regular Session)

Overview

SB 5381 would authorize the Washington State Department of Labor & Industries (L&I) to fulfill the obligations of a self-insured employer that loses self-insurer status (decertified)—including paying workers’ compensation—and to require the decertified employer to reimburse the department for these payments. The bill adds a new section to Chapter 51.14 RCW and directs rulemaking to ensure ongoing financial obligations are met by decertified self-insurers.

Purpose and Intent

  • Ensure that workers’ compensation benefits continue to be paid when a self-insured group or municipal employer has its self-insurer certification withdrawn.
  • Establish a mechanism to recover the cost of those payments from the decertified employer through quarterly charges or other director-determined methods.
  • Provide the director with authority to adopt rules governing continuing obligations and methods for decertified self-insurers to satisfy financial obligations.

Key Provisions

  • New Section in RCW 51.14:
    • For self-insurers authorized under RCW 51.14.150 and for decertified self-insurers that are counties, cities, or other municipal employers, the department shall fulfill the decertified self-insured employer’s obligations, including paying compensation.
    • The decertified self-insured employer is liable to reimburse the department for all payments made, via periodic charges not less than quarterly, in a manner determined by the director.
  • Director’s Rulemaking Authority:
    • The director shall adopt rules to implement the purposes of this section, including continuing obligations of decertified self-insured employers and methods by which the self-insured employer shall meet financial obligations.

Affected Parties

  • Self-insured employers that lose their self-insurer status (decertified), including counties, cities, and municipal employers.
  • The Department of Labor & Industries (L&I), which would administer and oversee payments and reimbursements.
  • Workers receiving workers’ compensation benefits during periods when a decertified employer’s status is withdrawn.

Financial and Compliance Implications

  • Decertified self-insurers would be responsible for reimbursing L&I for payments made on their behalf, with quarterly charges as a mechanism for collection.
  • L&I would retain authority to implement and enforce continuing financial obligations of decertified employers through rules.
  • Potentially smoother continuation of workers’ compensation payments to claimants even after decertification, with a clear reimbursement framework for the decertified employer.

Timeline and Procedural Status

  • Introduced: January 21, 2025.
  • Public hearing: January 27, 2025 (Senate Labor & Commerce).
  • Executive action: February 7, 2025 (Senate Labor & Commerce) with standard committee votes (majority “do pass,” minority positions noted).
  • Second reading to Rules Committee: February 10, 2025.
  • Status: Senate Rules “X” file as of March 17, 2025.

Legislative History Highlights

  • Referred to Senate Committee on Labor & Commerce after first reading.
  • Various committee actions in February 2025, including reports and executive action.
  • Advances to the Rules package as of mid-March 2025.

Notable Considerations

  • The bill creates a financial recovery mechanism from decertified employers, which may affect how municipal self-insurance programs plan for potential decertification.
  • Rulemaking by the director will define the practical method and schedule for repayments and ongoing obligations.

Compiled from official sources — confirm details with the bill’s official record.

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