By Kris Johnson

Thousands of professional salaried employees in Washington could be converted into hourly workers if a new proposal from the state Department of Labor and Industries goes into effect.

For individual workers, the

change may or may not result in a pay cut. In some cases, employees might end

up making about the same amount or even more money once overtime pay is added

to their base pay.

But there’s no guarantee

employers could afford to pay overtime, especially small businesses. And the rule

change could trigger a number of unintended consequences, including a loss of

flexible schedules, fewer opportunities for advancement and — for nonprofits in

particular — a major impact to the bottom line that could force a reduction in

service.

The issue came to the surface

last month when officials from Labor and Industries announced a

proposed update to the state’s Executive, Administrative and Professional

 rule.

Among other things, the

rule establishes a salary threshold that serves as a sort of minimum wage for

exempt, salaried employees. To be exempt from overtime,

an employee must make at least that threshold amount. Anyone who makes less

must be paid overtime for working more than 40 hours per week.

By all accounts,

Washington’s current salary threshold is outdated and needs updating. In fact,

it’s so outdated that Washington currently is governed by the federal overtime threshold,

which also is in the process of being updated.

But the new rule laid out

by Labor and Industries officials is an

astonishing increase over the current rule and likely will catch many small

businesses and nonprofits by surprise. Officials are recommending that

Washington’s overtime threshold become a percentage of the state’s minimum wage

— specifically 2.5 times the minimum wage.

This means the overtime

threshold would rise annually with the cost of living, just like the minimum

wage. And it means that by 2026, when the rule would be fully implemented, the new

threshold would be nearly $80,000 per year, more than triple the current

threshold.

Labor and Industries officials are holding

public hearings on the proposed change in July and August. They expect to adopt

the rule late this year, with it taking effect in July 2020, phasing in over

six years.

If it’s approved, any

employer with salaried workers making less than that amount will be faced with

the difficult decision to either raise their employees’ salary to nearly $80,000

or convert the worker to hourly status. For employers who can’t afford to give

out big raises, they may have little or no choice but to switch employees to

hourly status.

In theory, this could lead

to increased pay for some workers, but that’s only if their employer can afford

to pay overtime. Small businesses, nonprofits and other employers that can’t absorb

the cost increase will likely cut services.

Even for workers who don’t take a step backward financially, the change could feel like a demotion. Increasingly, employees value flexibility in work hours, particularly younger workers. Making the transition from a salaried job — with the flexibility to duck out for a couple of hours in the middle of the day to take care of family obligation — to an hourly worker who is required to be in the office a full eight hours, without the option of working from home, will be jarring.

No one is disputing that

Washington’s overtime rule needs updating. But the state’s proposal simply goes

too far, too fast and risks harming the employees it’s intended to help.

Kris

Johnson is president of the Association of Washington Business, the state’s

chamber of commerce and manufacturers association.