Background
Washington’s Department of Labor and Industries decided to significantly raise the state’s salary threshold to meet the salary test for a “white-collar” exemption from overtime. This new threshold goes into effect on July 1, 2020 and will be determined by an employer’s size. An employer’s size will be determined by its total number of Washington-based employees. This new rule seeks to bring the salary test for white-collar salary exemptions in line with the Federal Labor Standards Act (FLSA). You can find first-hand information on these rule changes here.
Summary
Washington’s new rule, announced on December 11, also seeks to bring the duties tests for the white-collar exemptions (executive, administrative, professional, and outside sales) more in line with the FLSA duties tests.
The new law will dictate a multiple of the state’s minimum wage for a 40-hour workweek to calculate the weekly minimum salary for a “white collar” exemption. In short, this means that fewer employees will be eligible to be classified as exempt from overtime requirements, and therefore must be paid for any overtime worked in accordance with state and federal laws.
For example, in 2020, for all employers, the multiple of the state’s minimum wage of $13.50 for a 40-hour workweek will be 1.25, which will make the salary threshold $675 per week or $35,100 per year. This calculation would be $13.50 (minimum wage) x 40-hour workweek x 1.25 (state-dictated multiple) = $675. See the full table of salary thresholds by date and company size below. Please note that the numbers provided by Washington State here look slightly different. That is because the state has included a projection of Consumer Price Index (CPI) increases after 2020.
(Please refer to the PDF for the chart)
Until the state’s minimum salary threshold exceeds the federal threshold under the Fair Labor Standards Act on January 1, 2021, Washington State employers must continue to follow the new 2020 federal salary threshold for overtime exemptions of $684 per week or $35,568 per year.
In continuation of Washington State law, the state has no highly compensated exemption rule, so the typical duties test must be applied in addition to meeting the minimum salary threshold.
Employer Next Steps
- Employers should make sure each employee is classified properly and correct any misclassifications.
- If you are a Full-Service or Virtual HR client and would like our assistance with reviewing employee classification status or taking appropriate steps for misclassified employees, please email us.
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This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable laws in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this content, please contact HR Knowledge at 508.339.1300 or email us.
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