Employers brace for ‘monumental’ changes in 2020
Employers might be tempted to take a wait-and-see attitude toward Washington’s new overtime rules that will dramatically increase pay for some salaried workers.
Unlike the new minimum wage rate and paid family leave, which took effect on New Year’s Day, the overtime rules don’t change until July 1.
Between now and then is the short session of the Washington Legislature, which convened Jan. 13 for a 60-day session.
Lawmakers will be under pressure to walk back or at least minimize the impact of the overtime rules enacted by the state Department of Labor and Industries rules in December.
The Tri-City Regional Chamber of Commerce, for one, wants Olympia to delay implementation or, failing that, to yoke wages to the local cost of living, sparing rural areas the influence of Seattle prices.
The Association of Washington Business will emphasize the new rules’ potential to chill hiring as part of its larger pro-jobs message.
Employment law is an ever-changing landscape and 2020 is no exception. In addition to the new overtime rules, Washington employers must adapt to a host of changes.
Most Washington workers were able to start taking paid leave under the state’s new Family and Medical Leave law on Jan. 1.
And the minimum wage for non-salaried workers rose to $13.50 an hour on Jan. 1.
In a lesser change, the Internal Revenue Service has adjusted W-4 forms to reflect the Tax Cuts and Changes Act.
Here’s a look at the key changes and what they mean to employers.
Overtime for salaried workers
In November, the Department of Labor and Industries enacted rules that raise the minimum annual salary for management employees to $35,100, on July 1, rising to $79,872 by 2026.
Employers have a choice for employees who earn less.
They can raise salaries to meet the new minimum, or convert them to hourly workers, making them eligible for overtime when they exceed 40 hours in a week.
It’s a “monumental” change, said George Cicotte, a Kennewick employment attorney.
The change promises to affect everyone, from hotel operators who rely on front-line managers to fill in for absent maids, to nonprofits whose staff work erratic schedules.
Cicotte advises against hoping lawmakers will step in.
“Employers should probably have started planning for them on Jan. 1,” Cicotte said. “There are going to be tons of people who are going to be eligible for overtime that weren’t eligible.”
Labor and Industries implemented the change through the rule-making process, which opens the door for the Legislature to intervene.
It’s a legislative priority for the regional chamber.
The regional chamber adopted a policy paper calling on lawmakers to delay implementation until Jan. 1, 2021, to give employers more time to adapt.
It also proposes slowing down the implementation schedule. Instead of raising salaries over the six years Labor and Industries contemplates, the chamber proposes a 10- to 12-year schedule.
The chamber also supports indexing wages to the local cost of living rather than the state one, which is skewed by the Seattle metro area.
The Association of Washington Business acknowledged the state’s former overtime protections for salaried workers was outdated and needed adjustment.
But it believes Labor and Industries went too far.
Paul Guppy, the association’s legislative director, said the overtime rules will have a chilling effect on jobs, but that it will be masked by the state’s low unemployment and strong economy.
They reduce flexibility and will cause discontent among formerly salaried workers who find themselves “demoted” to hourly.
“Every time public officials impose artificial rules on job opportunities, there are fewer job opportunities,” he said.
Paid Family and Medical Leave
Washington workers and employers began paying premiums to the state unemployment fund to cover paid leave on Jan. 1, 2019.
Now, workers can start claiming the new state-run benefit.
The premium payment amounts to 0.4 percent of gross wages, split between the worker and the employer.
A worker earning $50,000 a year pays about $127 in annual premiums while their employer pays about $73.
Businesses with fewer than 50 employees don’t pay the employer portion of the premium.
Qualified workers can take 12 or more weeks of paid leave to care for new children, recover from surgery, care for ill family members and other major life events.
The state – not employers – pays workers who take paid leave – 90 percent of their average weekly wage, up to $1,000 per week.
But employers must be prepared to hire temporary replacements.
That takes planning, Cicotte said.
Workers who worked at least 820 hours in 2019 are eligible for paid leave. Most workers can take up to 12 weeks off, though more generous benefits are available for childbirth or complicated pregnancies.
Leave is available for cancer treatments, to assist siblings in treatment, to recover from injuries, or extended hospital stays with premature babies and more.
Not all workers are eligible.
Federal workers, workers on tribal land and the self-employed are not covered by the new act, nor are those covered by a collective bargaining agreement.
Washington’s minimum wage rose to $13.50 an hour on Jan. 1, one of the highest in the nation.
It’s the final raise awarded through Initiative 1433, which voters approved in 2016.
Starting next year, Washington’s minimum wage will be tied to the Consumer Price Index.
Workers age 16 and over are eligible for the full rate. Workers age 14 and 15 may be paid at least 85 percent of the minimum wage, or $11.48 an hour in 2020.
New W-4 forms
The U.S. Treasury and Internal Revenue Service have simplified the W-4 to make it easier for employees to claim the proper deductions under the Tax Cuts and Jobs Act.
Many weren’t having enough deducted from their paychecks, leading to unpleasant surprises at tax filing time.
Employees aren’t required to complete a new W-4.
On the Statehouse radar
Secure Scheduling. The city of Seattle mandated predictable schedules for shift workers two years ago. The Legislature considered it in 2019 but the bill did not pass. It is expected to return in 2020. The 2019 edition would have required food service, hospitality and retail employers with more than 250 workers to give at least 14 days’ notice of work schedules. Employers in rural counties would have been exempted.
Domestic Worker Protections. State Attorney General Bob Ferguson is requesting funding to explore the idea of extending health, safety, wage and other protections to nannies, housekeepers and other domestic workers, a group that has historically been excluded from labor protections. Gov. Jay Inslee’s amended 2019-21 budget presumes the Legislature will authorize the expense. If approved, a work group will examine if domestic workers should be eligible for paid sick leave and other protections.
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