State’s new overtimes rules take effect in July 2020

A controversial plan

to overhaul the state’s overtime rules will change the way tens of thousands of

workers will be paid.

The new rules increase

the minimum amount workers must earn to be exempt from overtime.

Beginning July 1, the

state minimum salary threshold will increase to $675 a week, or $35,100 a year,

for all businesses, which is 1.25 times the state’s minimum wage.

The threshold will

increase incrementally until 2028, when it is expected to reach about $1,603 a

week, or about $83,356 a year, for an overtime exempt worker, 2 1/2 times the

minimum wage.

In addition to

qualifying for overtime pay, non-exempt workers also must receive other

protections under the state’s Minimum Wage Act, including paid sick leave.

The state Department

of Labor and Industries announced the new rules Dec. 11.

The state agency

received 2,266 comments from the public and heard testimony from 182 people at

seven public hearings held around the state in July and August.

An August public

hearing in Kennewick drew several Tri-City employers and nonprofit leaders who

criticized the proposal, citing concerns about their bottom lines and ability to

be flexible with employee scheduling.

The new rules also

change job duties descriptions used along with the salary threshold to

determine if an employee can be exempt from overtime and bring the state more

in line with federal standards, said Joel Sacks, director of Labor and

Industries.

The changes will

restore overtime eligibility to an estimated 259,000 workers when fully

implemented, and strengthen overtime protection for about 235,000 other

workers. They are the first major updates to the state’s overtime rules in more

than 40 years.

Sacks said he

understands the effect the new rules will have on businesses.

“We recognize how all

this might impact businesses. That’s why the implementation of the new state

rules won’t begin until next July, and they will be phased in over several

years. We also have an outreach plan to assist businesses with the transition,”

he said in a statement.

Employers have

multiple options to comply with the rules. For example, they can convert

current salaried exempt employees to salaried non-exempt or hourly non-exempt,

and pay overtime for any work over 40 hours in a work week.

To reduce overtime

costs, employers could limit the number of hours of work to 40 per week, or

less. If they wish to maintain the employee’s exempt status, they would need to

ensure the employee meets the duties test requirements and is paid at least the

updated salary threshold requirements.

The changes

specifically focus on white-collar employees typically working in a management

or professional capacity who receive a set salary.

Initially, Washington

employers will be required to follow the new federal overtime rule taking

effect on Jan. 1. The new federal threshold, at $684 a week, or $35,568 a year,

will be slightly higher than Washington’s until 2021. When state and federal

thresholds conflict, businesses must meet the threshold most favorable to

employees.

Washington’s threshold

will exceed the federal level on Jan. 1, 2021. At that time, businesses with 1

to 50 employees will have to pay exempt employees at least 1 1/2 times the

state minimum wage, about $827 a week, or $43,004 a year. For businesses with

51 or more employees, the threshold will be 1.75 times the minimum wage, about

$965 a week, or $50,180 a year.

“These updates to the

state overtime rules are a big step toward ensuring Washington workers are

treated fairly and properly paid for the work they perform,” Sacks said. “This

decision corrects a wrong, and is long overdue.”

To be overtime exempt,

an employee generally must be paid a fixed salary, must perform certain defined

job duties, and the salary must meet or exceed the salary threshold. Under

current federal guidelines, that threshold is $455 a week. The current state

threshold set more than 40 years ago is $250 a week.

“This is an incredible

day for Washington,” Gov. Jay Inslee said in a statement. “We need to make sure

the middle class shares in our state’s prosperity. 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.”

To learn more about

the process to change the rules, go to Lni.wa.gov/OvertimeRulemaking.