OLYMPIA — Washington workers would have to receive significantly larger salaries to be exempt from overtime pay in the coming years under proposed rules being finalized by a state agency.
The rules — criticized Wednesday as a new “super minimum wage” by the Association of Washington Business and praised by Gov. Jay Inslee as a “long-overdue update” — would be phased in starting next year unless changes are made during an upcoming public comment period.
By 2026, a salaried executive, administrative or professional worker would have to be making nearly $80,000 per year to be exempt from overtime pay after working more than 40 hours in a work week. That’s 2.5 times the current salary that can exempt those workers from overtime pay.
The threshold for an overtime exemption will increase incrementally between July 1, 2020, and Jan. 1, 2026, and go up faster for employees with 51 or more workers than for those with smaller workforces. But it will mean thousands of white-collar workers will have “basic labor protections,” said Joel Sacks, director of the Department of Labor and Industries, which is proposing the rules.
“We are not telling how much employers must pay,” Sacks said at a news conference announcing the proposed rules. “We’re saying (employees) must be paid a certain amount and perform certain tasks to be exempt.”
Minutes after the proposed rule was released, AWB President Kris Johnson said it goes too far and risks unintended consequences.
“If adopted, this rule will create a new super minimum wage that will impact every business in the state, even those that don’t employ exempt workers,” Johnson said in a news release.
But Inslee, who directed the department to update overtime rules, said it will mean workers get fair compensation when they work more than 40 hours a week.
“The erosion of this threshold has left too many workers behind,” Inslee said in a statement released by his office.
The current state overtime rules were established in 1976, when the state minimum wage was $2.30 an hour and the exemption for overtime began at $250 a week or $13,000 a year. At that time, about 60 percent of white-collar workers were eligible for overtime pay.
State rules are currently superseded by federal law, which sets the exemption threshold at $23,660 a year. But that threshold is below the current state minimum wage, which works out to $24,960, so a person receiving minimum wage could be declared exempt from overtime if their employer gives them certain duties.
Along with the proposed changes in the wage threshold, the department also is proposing to make state rules more closely conform to federal rules on the jobs an employee must perform to be exempt from overtime pay. But the test will still focus on the executive, administrative or professional duties employees perform, not the title or job description they have.
The department will hold three hearings in Western Washington in July and three more in Eastern Washington in August to explain the proposed rules and take public comments. The hearing in the Spokane area will start at 10 a.m. Aug. 7 at the CenterPlace Regional Event Center.
The rules or amounts could change before the final rule is announced in December, Sacks said.
“We’ll hear from the AWB, we’ll hear from their members,” he said. The department tries to understand the issues they raise and “see if there are ways to mitigate those concerns.”
A lawsuit over the new rules is “always a possibility,” Sacks said, although he wasn’t sure if opponents would have to wait until the rules went into effect to sue.