Wash. Rev. Code » Title 51 · Chapter 51.14
Revised Code of Washington

Wash. Rev. Code § 51.14.020 (2026)

Qualification

✓ current as of May 2026
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(1) An employer may qualify as a self-insurer by establishing to the director's satisfaction that he or she has sufficient financial ability to make certain the prompt payment of all compensation under this title and all assessments which may become due from such employer. Each application for certification as a self-insurer submitted by an employer shall be accompanied by payment of a fee of one hundred fifty dollars or such larger sum as the director shall find necessary for the administrative costs of evaluation of the applicant's qualifications. Any employer who has formerly been certified as a self-insurer and thereafter ceases to be so certified may not apply for certification within three years of ceasing to have been so certified.
(2)(a) A self-insurer may be required by the director to supplement existing financial ability by depositing in an escrow account in a depository designated by the director, money and/or corporate or governmental securities approved by the director, or a surety bond written by any company admitted to transact surety business in this state, or provide an irrevocable letter of credit issued by a federally or state chartered commercial banking institution authorized to conduct business in the state of Washington filed with the department. The money, securities, bond, or letter of credit shall be in an amount reasonably sufficient in the director's discretion to insure payment of reasonably foreseeable compensation and assessments but not less than the employer's normal expected annual claim liabilities and in no event less than one hundred thousand dollars. In arriving at the amount of money, securities, bond, or letter of credit required under this subsection, the director shall take into consideration the financial ability of the employer to pay compensation and assessments and his or her probable continuity of operation. However, a letter of credit shall be acceptable only if the self-insurer has a net worth of not less than five hundred million dollars as evidenced in an annual financial statement prepared by a qualified, independent auditor using generally accepted accounting principles. The money, securities, bond, or letter of credit so deposited shall be held by the director solely for the payment of compensation by the self-insurer and his or her assessments. In the event of default the self-insurer loses all right and title to, any interest in, and any right to control the surety. The amount of surety may be increased or decreased from time to time by the director. The income from any securities deposited may be distributed currently to the self-insurer.
(b) The letter of credit option authorized in (a) of this subsection shall not apply to self-insurers authorized under RCW 51.14.150 or to self-insurers who are counties, cities, or municipal corporations.
(3) Securities or money deposited by an employer pursuant to subsection (2) of this section shall be returned to him or her upon his or her written request provided the employer files the bond required by such subsection.
(4) If the employer seeking to qualify as a self-insurer has previously insured with the state fund, the director shall require the employer to make up his or her proper share of any deficit or insufficiency in the state fund as a condition to certification as a self-insurer.
(5) A self-insurer may reinsure a portion of his or her liability under this title with any reinsurer authorized to transact such reinsurance in this state: PROVIDED, That the reinsurer may not participate in the administration of the responsibilities of the self-insurer under this title. Such reinsurance may not exceed eighty percent of the liabilities under this title.
(6) For purposes of the application of this section, the department may adopt separate rules establishing the security requirements applicable to units of local government. In setting such requirements, the department shall take into consideration the ability of the governmental unit to meet its self-insured obligations, such as but not limited to source of funds, permanency, and right of default.
(7) The director shall adopt rules to carry out the purposes of this section including, but not limited to, rules respecting the terms and conditions of letters of credit and the establishment of the appropriate level of net worth of the self-insurer to qualify for use of the letter of credit. Only letters of credit issued in strict compliance with the rules shall be deemed acceptable.
[ 1995 c 31 s 1; 1990 c 209 s 1; 1986 c 57 s 1; 1977 ex.s. c 323 s 9; 1972 ex.s. c 43 s 16; 1971 ex.s. c 289 s 27.]

Notes:

Effective date—1990 c 209 s 1: "Section 1 of this act shall take effect January 1, 1991." [ 1990 c 209 s 3.]
Intent—1986 c 57: See note following RCW 51.14.077.
Severability—Effective date—1977 ex.s. c 323: See notes following RCW 51.04.040.
Notes of Decisions
Cited in 15 cases (2 in the last 5 years), 1973–2022 · leading case: Johnson v. Tradewell Stores, Inc., 630 P.2d 441 (Wash. 1981).
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Johnson v. Tradewell Stores, Inc., 630 P.2d 441 (Wash. 1981). · cites it 7× “First, they assert that while self-insured employers do not contribute to the State accident fund, RCW 51.14.020 requires them to maintain an escrow account to assure payment of employee benefits in cases of default.”
Dellen Wood Prods., Inc. v. Dep't of Labor & Indus., 319 P.3d 847 (Wash. Ct. App. 2014). · cites it 21× “*608 ¶2 We hold that as used in section RCW 51.14.020 of the Industrial Insurance Act, “default” means a self-insured employer’s failure to satisfy any of its multiple legal obligations under the Act, not solely its failure to satisfy its single obligation to pay workers’…”
WR Enter., Inc. v. Dep't of Labor & Indus., 147 Wash. 2d 213 (Wash. 2002). · cites it 3× “The Department argues that a 1972 amendment to former RCW 51.14.020 (1971) demonstrates that the Legislature intended to adopt a fund-based solvency approach when it adopted RCW 51.”
WR Enter., Inc. v. Dep't of Labor & Indus., 53 P.3d 504 (Wash. 2002). · cites it 3× “020 substituted the words "state fund" for the words "employer's class account.”
Manor v. Nestle Food Co., 131 Wash. 2d 439 (Wash. 1997). · cites it 2× “010; RCW 51.14.020(1). The statutes nowhere contemplate that self-insuring confers the status of employer to one not otherwise an employer, and neither Nestle Foods nor the majority cites to any statute providing that a self-insuring corporate parent is the "employer” of its…”
Manor v. Nestle Food Co., 932 P.2d 628 (Wash. 1997). · cites it 2× “010; RCW 51.14.020(1). The statutes nowhere contemplate that self-insuring confers the status of employer to one not otherwise an employer, and neither Nestle Foods nor the majority cites to any statute providing that a self-insuring corporate parent is the "employer" of its…”
Washington State Sch. Directors Ass'n v. Dep't of Labor & Indus., 510 P.2d 818 (Wash. 1973). · cites it 2× “020, which provides: (1) An employer may qualify as a self-insurer by establishing to the director’s satisfaction that he has sufficient financial ability to make certain the prompt payment of all compensation under this title and all assessments which may become due from such…”
Crown Zellerbach Corp. v. Dep't of Labor & Indus., 653 P.2d 626 (Wash. 1982). “For example, under RCW 51.14.020(4) an employer who wishes to become self-insured must pay to the Department a share of any deficit which is in the State fund at the time it becomes self-insured.”
Taylor v. Nalley's Fine Foods, 83 P.3d 1018 (Wash. Ct. App. 2004). “The director of the Department may revoke the status of a self-insured employer or may intervene in a claim being administered by a self-insured employer. RCW 51.14.080, .090; see also RCW 51.”
Chicago Bridge & Iron Co. v. Dep't of Labor & Indus., 731 P.2d 1 (Wash. Ct. App. 1986). “CBI supports this position based on RCW 51.14.020(4): If the employer seeking to qualify as a self-insurer has previously insured with the state fund, the director shall require the employer to make up his or her proper share of any deficit or insufficiency in the state fund as…”
Maxwell v. Dep't of Labor & Indus., 607 P.2d 310 (Wash. Ct. App. 1980). “Her primary contention is that, because self-insured employers may be required to deposit cash or securities with the Department to guarantee payment of worker benefits and administrative assessments, RCW 51.14.020(2), this "escrow account" is analogous to the "accident fund,"…”
Dep't of Labor & Indus. v. Am. Adventures, Inc., 801 P.2d 1032 (Wash. Ct. App. 1990). “020(4), requires that any employer who seeks to become self-insured, and who has previously been insured with the state fund, make up his share of any deficit in the state fund as a condition of self-insurer certification. The gist of these statutes and regulations is to make a…”
Show all 15 citing cases →
— Wash. Rev. Code § 51.14.020(1) — 4 cases
Johnson v. Tradewell Stores, Inc., 630 P.2d 441 (Wash. 1981). “First, they assert that while self-insured employers do not contribute to the State accident fund, RCW 51.14.020 requires them to maintain an escrow account to assure payment of employee benefits in cases of default.”
Manor v. Nestle Food Co., 131 Wash. 2d 439 (Wash. 1997). “010; RCW 51.14.020(1). The statutes nowhere contemplate that self-insuring confers the status of employer to one not otherwise an employer, and neither Nestle Foods nor the majority cites to any statute providing that a self-insuring corporate parent is the "employer” of its…”
Manor v. Nestle Food Co., 932 P.2d 628 (Wash. 1997). “010; RCW 51.14.020(1). The statutes nowhere contemplate that self-insuring confers the status of employer to one not otherwise an employer, and neither Nestle Foods nor the majority cites to any statute providing that a self-insuring corporate parent is the "employer" of its…”
Dellen Wood Prods., Inc. v. Dep't of Labor & Indus., 319 P.3d 847 (Wash. Ct. App. 2014). “*608 ¶2 We hold that as used in section RCW 51.14.020 of the Industrial Insurance Act, “default” means a self-insured employer’s failure to satisfy any of its multiple legal obligations under the Act, not solely its failure to satisfy its single obligation to pay workers’…”
— Wash. Rev. Code § 51.14.020(2) — 2 cases
Dellen Wood Prods., Inc. v. Dep't of Labor & Indus., 319 P.3d 847 (Wash. Ct. App. 2014). “*608 ¶2 We hold that as used in section RCW 51.14.020 of the Industrial Insurance Act, “default” means a self-insured employer’s failure to satisfy any of its multiple legal obligations under the Act, not solely its failure to satisfy its single obligation to pay workers’…”
Maxwell v. Dep't of Labor & Indus., 607 P.2d 310 (Wash. Ct. App. 1980). “Her primary contention is that, because self-insured employers may be required to deposit cash or securities with the Department to guarantee payment of worker benefits and administrative assessments, RCW 51.14.020(2), this "escrow account" is analogous to the "accident fund,"…”
— Wash. Rev. Code § 51.14.020(2)(a) — 1 case
Dellen Wood Prods., Inc. v. Dep't of Labor & Indus., 319 P.3d 847 (Wash. Ct. App. 2014). “*608 ¶2 We hold that as used in section RCW 51.14.020 of the Industrial Insurance Act, “default” means a self-insured employer’s failure to satisfy any of its multiple legal obligations under the Act, not solely its failure to satisfy its single obligation to pay workers’…”
— Wash. Rev. Code § 51.14.020(4) — 3 cases
Crown Zellerbach Corp. v. Dep't of Labor & Indus., 653 P.2d 626 (Wash. 1982). “For example, under RCW 51.14.020(4) an employer who wishes to become self-insured must pay to the Department a share of any deficit which is in the State fund at the time it becomes self-insured.”
Chicago Bridge & Iron Co. v. Dep't of Labor & Indus., 731 P.2d 1 (Wash. Ct. App. 1986). “CBI supports this position based on RCW 51.14.020(4): If the employer seeking to qualify as a self-insurer has previously insured with the state fund, the director shall require the employer to make up his or her proper share of any deficit or insufficiency in the state fund as…”
Dep't of Labor & Indus. v. Am. Adventures, Inc., 801 P.2d 1032 (Wash. Ct. App. 1990). “020(4), requires that any employer who seeks to become self-insured, and who has previously been insured with the state fund, make up his share of any deficit in the state fund as a condition of self-insurer certification. The gist of these statutes and regulations is to make a…”
— Wash. Rev. Code § 51.14.020(5) — 1 case
Pac. Bells LLC v. Inslee (W.D. Wash. 2022).
— Wash. Rev. Code § 51.14.020(7) — 2 cases
Manor v. Nestle Food Co., 131 Wash. 2d 439 (Wash. 1997). “010; RCW 51.14.020(1). The statutes nowhere contemplate that self-insuring confers the status of employer to one not otherwise an employer, and neither Nestle Foods nor the majority cites to any statute providing that a self-insuring corporate parent is the "employer” of its…”
Manor v. Nestle Food Co., 932 P.2d 628 (Wash. 1997). “010; RCW 51.14.020(1). The statutes nowhere contemplate that self-insuring confers the status of employer to one not otherwise an employer, and neither Nestle Foods nor the majority cites to any statute providing that a self-insuring corporate parent is the "employer" of its…”
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