By Audra Hedberg, HR Compliance Consultant, Trüpp.
Washington state leads the way for employment law
Washington state has taken dramatic steps to increase the minimum salary for overtime-exempt employees. Effective July 1, 2020, Washington’s overtime exemption regulations were amended to raise the minimum salary levels and simplify the duties test for most overtime-exempt employees.
As we have seen, Washington state led the way with the nation’s most progressive paid family leave program, which went into effect January 1, 2019. Now the state is leading the way for exempt salary levels. Several states, including California, New York, Pennsylvania, Colorado, Michigan, and Massachusetts, have had salary levels higher than the federal FLSA requirements, but none have adopted a threshold as high as Washington’s.
Overtime-exempt salary workers will see incremental increases through 2028
Initially, employers will need to comply with the federal FLSA overtime rules which went into effect on January 1, 2020. The federal requirement for 2020 is higher than that set by the state of Washington, which takes effect on July 1, 2020; see chart below. The first major impact of the law will start on January 1, 2021, when the required minimum salary will exceed the new amount under the federal rules. Employers with 50 or fewer employees will see the minimum salary level rise to $827 per week (or $43,004 per year), while all other employers will see an increase to $965 per week (or $50,180 per year).
This is not a one-time increase. The state announced annual incremental increases and will phase them in by 2028. By that time, salaried employees will be making at least $83,400 per year.
How to comply with Washington’s new overtime rules
- Plan for annual incremental increases. Organizations will need to plan and budget for the required salary increases.
- Ensure the duties test is satisfied. Not only should employers confirm that employees are paid appropriately, they need to make sure employees have satisfied the duties test.
- Update job descriptions to reflect actual duties. Because job responsibilities are constantly changing, compliance is based solely on job duties. Titles are irrelevant. Now is the time to ensure job descriptions match employee responsibilities and that they are informed by the duties test.
- Seek professional assistance. Employment classifications must satisfy the duties test, requiring complex analysis. An outside audit is recommended to ensure compliance.
- Avoid costly penalties. Organizations that do not adhere to the law are liable for serious financial penalties, including unpaid overtime claims under Washington law.
- Conduct a full classification audit. Now is the time to conduct and audit to ensure your current workforce is in line with the new requirements to avoid legal liability.