Washington has published a final rule that updates the criteria for determining which workers are exempt from minimum wage and overtime. The new rule takes effect July 1, 2020.
Background:
To be exempt from minimum wage and overtime, a worker must meet specific salary and duties tests. In Washington, "exempt" employees must satisfy all three of the following tests:
- Salary-level test: Employees must earn a weekly salary that meets the minimum requirements. Until July 1, 2020, the minimum salary requirement is $250 per week for the administrative, professional (including the salaried computer professional), executive, and outside sales exemptions.
- Salary-basis test: With very limited exceptions, the employer must pay employees their full salary in any week they perform work, regardless of the quality or quantity of the work.
- Duties test: The employee's primary job duties must meet certain criteria.
Note: Federal law has its own exemption rules, which were recently updated, including an increase to the minimum salary requirement (now $684 per week) for several exemptions. Employers subject to both sets of rules need to coordinate compliance with both laws.
The New Overtime Rule:
Increase in salary:
Washington's new rule will increase the minimum salary requirement incrementally until it reaches 2.5 times the state minimum wage in 2028. Small employers (with 1-50 employees) will have a more gradual phase-in schedule to give them additional time to comply with the new rule. The increase schedule as set forth by Washington state for the executive, administrative and professional exemptions is:
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Effective date:
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Employers with 1-50 employees:
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Employers with 51 or more employees:
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Multiply minimum wage by
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Projected salary threshold
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Multiply minimum wage by
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Projected salary threshold
|
|
Weekly
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(Annual)
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Weekly
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(Annual)
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7/1/20
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1.25x
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$675
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$35,100
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1.25x
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$675
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$35,100
|
|
1/1/21
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1.5x
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$827
|
$43,004
|
1.75x
|
$965
|
$50,180
|
|
1/1/22
|
1.75x
|
$986
|
$51,272
|
1.75x
|
$986
|
$51,272
|
|
1/1/23
|
1.75x
|
$1,008
|
$52,416
|
2x
|
$1,152
|
$59,904
|
|
1/1/24
|
2x
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$1,177
|
$61,204
|
2x
|
$1,177
|
$61,204
|
|
1/1/25
|
2x
|
$1,202
|
$62,504
|
2.25x
|
$1,353
|
$70,356
|
|
1/1/26
|
2.25x
|
$1,382
|
$71,864
|
2.25x
|
$1,382
|
$71,864
|
|
1/1/27
|
2.25x
|
$1,412
|
$73,424
|
2.5x
|
$1,569
|
$81,588
|
|
1/1/28
|
2.5x
|
$1,603
|
$83,356
|
2.5x
|
$1,603
|
$83,356
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Note: For the hourly computer professional exemption, the minimum hourly rate will increase to $37.13 for employers with more than 50 employees on July 1, 2020. See the text of the law for additional details.
Change to duties test:
Effective July 1, 2020, the rule also changes the job duties tests for exemption to more closely align with the test used under the federal Fair Labor Standards Act (FLSA). Employers should review the rule closely to ensure their employees are properly classified.
Compliance Recommendations:
Washington employers that have employees who earn a salary that falls below the new requirement, or who no longer perform the duties of an exempt employee, have the option to either:
- Raise the employee's salary to meet the new minimum (if you elect this option, review the employee's job duties to ensure they continue to qualify for the applicable exemption); or
- Reclassify the employee as non-exempt and pay them overtime whenever they work more than 40 hours in a workweek.
Please contact your dedicated service professional with any questions.