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Washington workers' comp for contractors who hire subs: L&I rules and how to avoid paying a sub's premiums
General educational information, not legal or insurance advice. Washington law and the Department of Labor & Industries (L&I) decide your situation. Check with L&I or an attorney before relying on this.
Washington works differently from Idaho
Washington does not allow private workers' comp insurance. Employers buy coverage from L&I's Washington State Fund or qualify as certified self-insured employers (L&I, Do I Need a Workers' Comp Account?). That means there's no private carrier, certificate from an insurance company, or year-end carrier audit like an Idaho contractor is used to.
| Washington | Idaho (for comparison) | |
|---|---|---|
| Who sells coverage | L&I state fund only, or certified self-insurance | Private carriers or the Idaho State Insurance Fund |
| Premium based on | Hours worked, at an hourly rate per risk class | Payroll, at a rate per $100 per class code |
| How you pay | Quarterly reports and payments to L&I | Estimated up front, settled by a carrier audit |
| Proof a sub is covered | L&I account in good standing, checked on L&I's Verify tool | Certificate of insurance or exemption documentation |
Premiums are based on hours, paid quarterly
Most Washington risk classes charge premium per hour worked rather than per dollar of payroll. Part of the rate is withheld from workers' pay, and the employer pays the rest (L&I, Unique Premium Rating Features in Washington). Reports and payments are due April 30, July 31, October 31, and January 31 for the quarter just ended, and an open account with no hours still files a "no hours" report (L&I, File Quarterly Reports). Because premium is hour-based, our payroll-based audit cost calculator doesn't apply in Washington.
You can owe your sub's unpaid premiums
Under RCW 51.12.070, whoever lets a contract is "responsible primarily and directly for all premiums upon the work." In plain terms, if your sub doesn't pay L&I for its workers on your job, L&I can come to you for those premiums, and you can try to collect them back from the sub.
How to protect yourself
A registered contractor (or licensed electrical or plumbing contractor) is not responsible for a sub's premiums when all of these are true (RCW 51.12.070(1); WAC 296-17-31004; L&I publication F262-262-000):
- The sub is a registered contractor under RCW 18.27, or licensed for plumbing (RCW 18.106) or electrical work (RCW 19.28).
- The work you subcontracted is contractor, plumbing, or electrical work as those laws define it.
- The sub keeps its own books and records of all business income and expenses.
- The sub has its own principal place of business, eligible for an IRS business deduction, other than one you provide.
- The sub has an L&I workers' comp account in good standing, or is a certified self-insurer.
- L&I's publication adds that you aren't supervising the sub or its workers (no assigning tasks, keeping time sheets, paying a wage, or setting hours).
"Good standing" means the sub is registered with L&I for state fund coverage, its certificate of coverage hasn't been revoked or canceled, it has filed all required reports in the past year, and it's current on payments or on an approved payment agreement (WAC 296-17-31004).
A simple routine
- Before the contract: look the sub up on L&I's Verify a Contractor tool. Print or save a dated copy of the result showing the account in good standing. The law accepts a dated L&I printout as proof, and a check is good for one year.
- Turn on tracking: file a Contractor Tracking Request. L&I says it will mail you a notice if the sub falls behind on premiums or registration within a year.
- Every year: re-check each sub you keep using and save the new dated printout. If L&I notifies you that a sub's account is no longer in good standing, you can be liable for its premiums from that date forward.
- Keep records: L&I says to keep each sub's legal name, contractor registration number and expiration date, and UBI or L&I account number, plus records of any materials you supply. Use written contracts.
- Track it in one place: our free tracker works for this too. Use the expiration column for the date your yearly L&I check runs out.
What about general liability?
L&I covers workers' comp only. Your general liability and commercial auto coverage still come from private insurers, and many general contractors still ask subs for a GL certificate. See contractor insurance types explained. Coverage for employers' liability in a monopolistic state works differently, so ask your agent whether you need it.
Shopping for general liability: [AFFILIATE LINK PLACEHOLDER: ERGO NEXT Insurance quote, pending program approval] Comparing quotes from more than one carrier or an independent agent is common practice.
Sources (checked Nov 2, 2026)
- RCW 51.12.070 (Washington State Legislature)
- WAC 296-17-31004 (Washington State Legislature)
- L&I publication F262-262-000, Avoid Liability for Your Subcontractor's Unpaid Workers' Comp Premiums
- L&I pages: Do I Need a Workers' Comp Account?, Unique Premium Rating Features in Washington, File Quarterly Reports, Verify a Contractor