Changes to the Washington Department of Labor & Industries Loss of Earning Power Compensation Policy
Loss of Earning Power (LEP) under RCW 51.32.090 requires the self-insurer to compensate a worker when the worker’s earning capacity has decreased as a result of the industrial injury or occupational disease. The Department instituted a new LEP policy effective July 1, 2025. Policy 5.81 states that the worker must be able to return to work or be working to be entitled to loss of earning power. Whereas the old policy stated that LEP may be due if earning power had decreased as a result of an injury or occupational disease.
The old policy previously stated that LEP benefits were due until medical fixity if a worker remained eligible, however, Policy 5.81 now instructs LEP benefits to be paid through legal fixity if the worker remains eligible.
The new policy also clarifies LEP on reopened claims that were closed with a permanent partial disability award. The old policy was that if the Department reopens a claim closed with a permanent partial disability award, LEP is paid based on the earning power of the worker at the time of claim closure, not the earning power of the worker’s job at the time of injury. Policy 5.81 states that when a reopened claim that was closed with a permanent partial disability award, LEP benefits are paid based on a comparison of current or available earnings to the updated wages from the job at the time of the original injury. The Department adjudicator may also direct provisional LEP compensation while addressing claim validity or when reopening a new claim.
Regarding acceptance of an approved light duty or modified job, under Policy 5.81, when a worker chooses not to accept an approved light duty/modified job, loss of earning power benefits may still be payable based on the wages the worker would have earned at the modified job.
Additional changes under Policy 5.81 are that a worker may be entitled to LEP when missing work due to an unrelated condition if the employer pays sick leave. If the employer does not pay sick leave, the LEP benefits are calculated using the wages the worker would have received if they had worked during the period of LEP eligibility. However, a worker is not entitled to LEP while on sick leave due to the industrial injury or occupational disease, if the employer pays full wages in the form of sick leave. Vacation wages are not considered part of LEP wages when a worker receives vacation pay during a period of LEP compensation eligibility, unless vacation pay is provided for a period of time when the worker was capable of working.
The Joint Administrative Rules Review Committee (JARRC) found that the Department is using Policy 5.81 in lieu of rule RCW.521.32.090(3). This is controversial because the Industrial Insurance Act’s rules, regulations, and case law trump Department Policy. Yet, Policy 5.81 is significant because it shows how the Department will likely adjudicate or assess a penalty on an LEP issue moving forward.
Please do not hesitate to contact Sara at 503-776-5416 or to discuss the changes and how to navigate the Department’s newly implemented LEP policy.
Posted by Sara Densmore.
