Overtime Reform After 44 Years
For the first time since 1976 there are major changes being made to Washington’s overtime rules.
The Department of Labor and Industries (L&I) announced the rule change on Dec. 11, which will go in effect on July 1, 2020.
The Department of Labor and Industries has updated the rules that determine which workers in Washington State are required by law to be paid at least minimum wage, earn overtime pay, and receive sick leave among other protections under the state Minimum Wage Act. The changes will affect executive, administrative, and professional (EAP) workers as well as outside salespeople and computer professionals across all industries in Washington.
The new rules will make an estimated 259,000 additional workers eligible for overtime pay by the time the rules are fully implemented in 2028, with another 235,000 workers having protection strengthened.
Changes to these rules will mean that some employers will have to provide overtime, minimum wage, and paid sick leave to some employees who were previously treated as exempt. In other cases, employers may need to increase salaries for exempt employees.
These workers will be identified by a combination of a predetermined fixed salary, the salary meeting a minimum threshold and specific job duties determines whether a worker meets the definition of an executive, administrative, or professional worker, outside salesperson or computer professional contained in state rules. Typically, “white collar” workers who often have more economic security and relative bargaining power than lower-wage workers.
As a general rule, these workers must be salaried and paid a minimum specified salary level, and must primarily perform executive, administrative, professional, outside sales or computer professional duties as defined by Washington State regulations.
In addition, starting on July 1 the minimum salary threshold needed for a company to not pay a worker overtime rates increases from $250 a week to $675 a week, which places a the new threshold to 1.5 times the states minimum wage. Small employers (with 1-50 employees) will have a more gradual schedule to phase-in these changes to give them more time to comply with the new rules compared to larger companies (51+ employees). The first threshold increase is set to start on July 1, 2020.
This minimum salary threshold will continue to increase every year until 2028, when it will reach 2.5 the states minimum wage or a rate of $1,603 a week, or $83,356 a year. In the years after 2028, the threshold will only increase to match minimum wage increases caused by inflation.
The new rules also make updates to the job duties tests. The state currently uses two job duties tests that have been reduced to one test with language that now more closely aligns with the federal job duties test.