Proposal would up minimum salary for exempt eligibility

Hundreds of thousands of workers could earn overtime pay

under a new proposal from the state Department of Labor and Industries.

The proposed changes would significantly increase the

minimum amount employees must earn before they can be exempt from receiving

overtime pay and could impact more than 250,000 workers, according to the

agency.

The changes, which affect executive, administrative and

professional workers, as well as outside salespeople, across all industries,

could mean some employers will have to provide minimum wage, overtime and paid

sick leave or increase salaries to those who were previously considered exempt.

The state’s proposal also updates the test used to determine

who qualifies for the overtime exemption and more closely aligns the state rule

with federal standards.

To comment on the proposed OT rule at Kennewick meeting
The state Department of Labor and Industries plans several public hearings around the state and offer other opportunities for people to provide input on a proposed rule to restore overtime protections.
The Kennewick public hearing is Tuesday, Aug. 6 at Springhill Suites by Marriott in the Vista Hall room, 7048 W Grandridge Blvd. in Kennewick. An explanation about the proposed rule from Labor and Industries staff is from 9-10 a.m. and the public hearing is from 10 a.m. to noon.
People also can comment by email, EAPRules@Lni.wa.gov, or by mail: Employment Standards Program, P.O. Box 44510, Olympia, WA 98504-4510. Comments also may be submitted by fax: 360-902-5300.

Washington employers currently are using the federal

threshold, which allows salaried workers to be exempt from overtime if they

perform certain types of work and are paid at least $455 per week, or about

$24,000 per year.

The current state threshold, which was last updated 43 years

ago, sets a level that’s even lower, at $13,000 annually.

The proposed rule calls for restoring the protections by

setting higher salary thresholds, which would increase incrementally to 2 1/2

times the minimum wage by 2026, depending on the size of the employer.

To meet the proposed new requirements, employers with 50 or

fewer employees would have to pay overtime-exempt workers a minimum of $675 a

week, or about $35,000 a year, beginning July 1, 2020, increasing to a minimum

of $79,872 per year by 2026.

Larger companies with 51 or more employees would have to pay

overtime-exempt workers about $945 a week, or about $49,000 a year beginning in

2020, increasing to $79,872 per year by 2026 — the same salary level required

for small businesses.

The Association of Washington Business, which serves as the

state’s chamber of commerce, isn’t a fan of the proposal, saying it goes too

far and would have a ripple effect on every business in the state.

“Requiring employers to pay salaried workers at least

$79,872 per year by the time this rule is fully implemented and linking future

pay increases to the state minimum wage is an astonishing increase over the

current overtime rule and will likely catch many small businesses and

nonprofits by surprise. If adopted, this rule will create a new super minimum

wage that will impact every business in the state, even those that don’t employ

exempt workers,” AWB President Kris Johnson said in a statement.

Johnson agreed that the current rule needs updating but said

the Labor and Industries proposal goes too far, saying it “risks a variety of

unintended consequences including a reduction in program offerings at

nonprofits, fewer opportunities for employees to advance into salaried

management positions, and reclassification of employees from salaried to hourly

positions.”

Washington’s overtime rules, last updated in 1976, haven’t

changed in more than 40 years. During that time, the percentage of white-collar

workers who are considered exempt from overtime and other worker protections

has grown substantially. Meanwhile, the minimum amount exempt workers must earn

in the state has remained unchanged. As a result, some salaried workers can be

paid less than minimum wage, don’t receive overtime and are not entitled to

paid sick leave.

“The current system is out of date. It’s at risk of failing

tens of thousands of workers by broadly defining what a white-collar worker is,

which allows businesses to pay salaries that may be even less than minimum

wage,” said Labor and Industries Director Joel Sacks in a news release. “That’s

especially true for employees who are expected to work well over 40 hours a

week, but don’t get paid overtime.

“We want to make sure that people who legitimately deserve

overtime get paid for the extra hours they work,” Sacks said. “Washington’s

minimum wage has been updated repeatedly for decades; this hasn’t been. This

proposed rule links future salary thresholds to the minimum wage.”

The formal proposed rule is the next step in a multi-year

process that has involved two pre-draft rules, multiple public feedback

sessions — including one in Kennewick — and several meetings with business,

labor and nonprofit representatives to exchange ideas.

Working Washington, a statewide workers’ organization

focused on raising wages and improving labor standards, is in favor of the

proposal.

“It’s about time,” said Rachel Lauter, executive director of

the group, in a statement. “The state’s plan to restore overtime

protections will return millions of hours a year to people in our state.

Hundreds of thousands of workers will get back the time they need to care

for their families, give to their communities, pursue their dreams, and just

live their lives. It’s another example of how Washington state is leading

the nation on workers’ rights and growing our economy because of it.”

Gov. Jay Inslee said the state is frequently ranked among

the top economies and best state for workers in the country and that the update

is overdue.

“Overtime protections ensure workers are fairly compensated

when they work more than 40 hours in a given week — time that would otherwise

be spent with their families and in their communities. The erosion of this

threshold over time has left too many workers behind,” he said in a statement.

By 2026, exempt salaried workers would have to be paid at

least 2.5 times minimum wage and meet the job-duties test.

Along with updating the required salary threshold, the

proposed rule would change the method used to determine if an employee is doing

work that allows them to be classified as exempt. The state currently uses two

“duties tests” to make this determination.

Under the proposal, they’d be combined

into one test that would align more closely with the method used at the federal

level. The change would make the process simpler for employers, and increase

the likelihood that workers are correctly classified, according to Labor and

Industries.

The public comment period ends Sept. 6 and Labor and

Industries will consider all input received in preparing a final rule.

The formal rulemaking process could

take up to six months. Labor and Industries expects to adopt the rule in late

2019.

“We know we’re proposing a significant change, and it’s

important to have a serious discussion and hear all views,” Sacks said.

More information about the proposal is on the lni.wa.gov/WorkplaceRights/Wages/Overtime/OvertimeRules/default.asp.