Ep. 559 WCIRB Proposes Dual Wage Threshold Increases for 2026

Rancho Mesa’s Alyssa Burley sits down with Jeremy Hoolihan, Partner with the Janitorial Group, and talk about the California WCIRB’s proposed Dual Wage threshold increase.

Show Notes: ⁠⁠Subscribe to Rancho Mesa's Newsletter⁠⁠.

Host: ⁠⁠⁠⁠Alyssa Burley⁠⁠

Guest: ⁠⁠Jeremy Hoolihan⁠⁠

Editor: Jadyn Brandt

Music: "Home" by JHS Pedals, “Breaking News Intro” by nem0production

© Copyright 2025. Rancho Mesa Insurance Services, Inc. All rights reserved.

Transcript

Alyssa Burley: You’re listening to Rancho Mesa’s StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive.

I’m your host, Alyssa Burley, and I’m joined by Jeremy Hoolihan, Partner with Rancho Mesa. Today, we’re going to talk about the California WCIRB’s proposed Dual Wage threshold increase.

Jeremy, welcome to the show.

Jeremy Hoolihan: Hi, Alyssa. It's great to be here at StudioOne.

AB: Well, we're glad that you're here.

JH: Thank you.

AB: Now, we've seen California's Workers' Compensation Insurance Rating Bureau increase the dual wage thresholds in the past. And in your recent article, you mentioned that the WCIRB's classification and rating committee just reviewed the proposed increases on November 11th, and they have approved 13 of the 16 threshold increases. So what's driving the WCIRB's decision to increase the dual wage threshold by $2 to $6? And how does this relate to trends in wages and claims data?

JH: Well, Alyssa, as most you know in California, there are 16 dual wage classifications that affect California contractors. In California, certain construction class codes use a dual wage system to separate employees into really two tiers, first being the higher wage and the second being the lower wage. The rationale is that workers earning at or above a set hourly threshold qualify for lower workers' compensation rates because statistically they tend to have less frequency of claims and severity of claims, whereas the lower wage employees, you know, tend to be less experienced and unfortunately tend to have higher, you know, frequency of claims and oftentimes severity of claims as well.

So with that being said, the WCIRB periodically adjusts these thresholds to reflect, you know, rising wages, inflation, and updated claims data. And when wages increase across the industry, but thresholds, you know, stay static, more employees drift into the higher wage threshold, which creates an imbalance. And so therefore, the WCIRB now reviews and adjust the thresholds every two years.

AB: Okay. So how might these proposed changes impact contractors' premiums and what practical steps should business owners take now to prepare for the September 2026 if the proposed changes are approved?

JH: Well, I think preparation is pretty critical. So what I would recommend is that employers review their payroll and identify employees earning near their current dual wage threshold. And you know, you can model the impact that, you know, a $2 to $6 increase can, you know, can increase your premium, you know, from a classification standpoint. I'd evaluate those wages and then determine if there's any employees whose wages are close to the new proposed threshold and potentially consider giving them a raise because it can do a couple things. One, from a morale standpoint, it can really, you know, increase that. And number two, the offset of the premium savings compared to what you're paying that employee in a higher wage could be a wash at the end of the day. So it could be a win-win for everybody.

And I would just also recommend that you keep, you know, really good records. You know, time cards are critical because at the time when dual wages are changing and payrolls are differing, you can run into a potential audit dispute or issue at audit time.

AB: So earlier I mentioned that 13 of the 16 proposed thresholds were approved. So why weren't those other three approved and why might those particular trades be affected more than others?

JH: Well, I feel like the classification and rating committee just wanted to make sure that they had it right and they wanted to really just give it a little bit more time and research to commit to that recommended $6 increase because obviously it’s going to have a tremendous impact to the marketplace. So the committee decided to meet after January, after they’ve not only met with each other further but also the bureau wants to conduct further outreach with the covered industries that could be affected.

And if I had to guess, I would say the reason those are seeing such high increases are because generally speaking, those trades tend to be tied to unions. And so union employees tend to have higher wages. And so really what this is going to, the biggest impact is going to be on those types of contractors that are doing private work, you know, residential that don't have the high wage earners, you know, as a union contractor would. And, you know, I would recommend highly just getting together with your broker in advance to see how these potential increases are going to affect their premiums.

Rancho Mesa has a spreadsheet where we can kind of play around with increasing payrolls for individuals and seeing how that compares from an overall cost standpoint.

AB: Okay so, Jeremy, if listeners have questions about the dual wage increase, thresholds, what's the best way to get in touch with you?

JH: Best way to reach me is my direct line (619) 937-0174. And my email address is jhoolihan@ranchomesa.com.

AB: All right. Well, thanks, Jeremy, for joining me in StudioOne™.

JH: It's been a pleasure. Thanks for having me.

AB: Thanks for tuning in to our latest episode produced by StudioOne™. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at RanchoMesa.com and subscribe to our weekly newsletter.