When Washington state’s minimum wage increases on January 1, 2021, it will have a cascading effect. First, it will increase the salary threshold at which employees are exempted from overtime compensation requirements under the Minimum Wage Act. Second, employees who are no longer exempt from Washington’s Minimum Wage Act will become eligible for paid sick leave and paid rest breaks under Washington law. Employers with employees working in Washington state should therefore act quickly to determine how their workforce will be impacted by these legal developments.
On January 1, 2021, Washington’s minimum wage will increase by 19 cents per hour. Employees age 16 and older must be paid at least $13.69 per hour. Employees between 14 and 15 years of age must be paid at least $11.64 per hour.
This change resulted from Initiative 1433, passed by Washington voters in 2017. The initiative required the Washington Department of Labor and Industries (L&I) to calculate wage increases to the state’s minimum wage to adjust for inflation, starting in September 2020 and each subsequent year.
This increase will not affect employers operating in locations with higher wage rates. For example, the city of Seattle’s minimum wage rate for those working for large employers (501 or more employees) will increase to $16.69 per hour on January 1, 2021. Those large Seattle employers must pay the city’s higher minimum wage rate, rather than the state’s rate. For more information, consult the Minimum Wage Ordinance Fact Sheet published by the Seattle Office of Labor Standards.
Employees working in Washington may qualify for exemptions from overtime compensation requirements if they earn a salary at a certain threshold and meet certain duties test. (Computer professionals may be paid a salary or an hourly rate, as noted below.)
In December 2019, L&I announced changes to the rules governing payment of overtime compensation for white-collar workers, as discussed in our previous post. This summer, L&I also published helpful administrative policies found here that discuss the minimum salary thresholds and how the duties test had been modified to harmonize them with federal wage and hour law, the Fair Labor Standards Act, with some exceptions.
Additional changes are now required because Washington’s salary threshold is based on a multiplier of the state’s minimum wage. This means that the minimum salary threshold for Washington’s white collar exemptions will be increasing on January 1, 2021, as follows:
Salaried Executive, Administrative, Professional and Sales Employees
Computer Professionals Paid
by the Hour
Employers with 1 to 50 employees
1.5 times the minimum wage rate;
$821.40 per 40-hour workweek; or
$42,712.80 per year
2.75 times the minimum wage rate; or
$37.65 per hour
Employers with 50
or more employees
1.75 times the minimum wage rate;
$958.30 per 40-hour workweek; or
$49,831.60 per year
3.5 times the minimum wage rate; or
$47.92 per hour
Employees working in Washington who make less than these amounts after January 1, 2021, will become eligible for overtime compensation. In addition, as non-exempt employees, they will qualify for paid sick leave under Washington’s paid sick leave law. Likewise, employees working in Washington making less than the salary threshold will be entitled to meal periods and paid rest breaks.
Washington employers who misclassify employees as exempt are potentially exposing themselves to claims for (a) unpaid overtime compensation, paid at 1.5 times the employee’s regular rate for all hours exceeding 40 hours in a workweek; (b) missed meal periods and rest breaks; (c) paid sick leave; and (d) liquidated damages and attorney’s fees.
Determining how best to meet your business needs during these uncertain times can be challenging. Lane Powell’s team of attorneys are here to help you develop and implement the strategy that supports your business and your employees. For more information, contact Katheryn Bradley or Callie Castillo.
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