On June 5, 2019, the Washington Department of Labor & Industries issued initial proposals for increases to overtime pay that will, if passed in their current form, have a dramatic impact on Washington employers.
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Currently, under federal and state law, employers are required to pay overtime to employees who work more than 40-hours in a week. Executives, Administrators and Professionals (EAPs) who earn over $23,660 (Federal) or $13,000 (Washington) are exempt from the OT requirement provided they meet the EAP exemption definition.
The Trump Administration recently proposed an increase in the Federal EAP threshold to $35,308. Prior to that, the Obama Administration proposed an increase to $47,000 but 20 states sued to prevent it. It has been over 40-years since there has been an adjustment. Some adjustment may be appropriate.
L&I’s proposal is an increase of the threshold to nearly $80,000 by 2026 with the first adjustment effective on July 1, 2020. Four other states (NY, CA, MA and PA) are proposing lesser increases. The Washington proposal is by far the highest and most dramatic increase. Any Washington increase over the Federal proposal would supersede the lower Federal amount.
Incremental increases would be phased in over the six year period depending on employer size and using a formula based on the state’s minimum wage. On July 1, 2020, the threshold for employers with 1-50 employees would increase from $250 to $675/wk. or about $35,000 per year, while the weekly threshold for employers with over 50-employees would increase to $945 in 2020 (about $49,000/yr.). After annual increases, by 2026 the threshold for all employees regardless of employer size would be $1,536/wk., just short of $80,000/yr.
If the new rule becomes law in Washington, many employers will need to increase the salary of EAPs in order to maintain their exempt status, or alternatively, say goodbye to the exemption and provide them with overtime, paid sick leave and other benefits under the State’s Minimum Wage Act. It is expected the changes could affect more than 250,000 workers by 2026.
The public comment period now runs from June 5 ending September 6, 2019, in which public hearings and other feedback opportunities are provided. The formal rulemaking process may take up to six months, after which L&I will prepare its final rule.
The current public hearing schedule is:
· Tumwater, July 15 at the Dept. of Labor & Industries headquarters.
· Seattle, July 16 at the Swedish Club.
· Bellingham, July 17 at Four Points by Sheraton Bellingham Hotel & Conference Center.
· Ellensburg, Aug. 5 at Hal Holmes Community Center.
· Kennewick, Aug. 6 at Springhill Suites by Marriot Kennewick Tri-Cities.
· Spokane, Aug. 7 at CenterPlace Regional Event Center.
Comments may also be submitted by email to the Overtime Rule Program at EAPrules@Lni.wa.gov, by mail to the Employment Standards Program, P.O. Box 44510, Olympia, WA 98504-4510, or by fax: 360-902-5300.