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Changes to Overtime Rules Q&A

Executive, Administrative, and Professional (EAP) Rulemaking (Overtime Rulemaking)

Q1. What are these rules and to whom do they apply?
A. The rules determine which employees in Washington are required by law to receive overtime pay, be paid at least minimum wage, and paid sick leave. They affect executive, administrative, and professional workers and outside salespeople across all industries in Washington.

Q2. Who qualifies as an executive, administrative, or professional worker?
A. A combination of salary and job duties determines whether a worker meets the definition of an executive, administrative, or professional worker contained in state rules. These workers are typically "white collar" workers who often have more economic security and greater bargaining power than lower-wage workers.
In general, the employee must be salaried, paid more than a specified salary level and primarily perform executive, administrative, or professional duties.

Q3. How will this rule update change overtime requirements?
A. Changes to these rules would mean some employers would have to provide overtime and paid sick leave, as well as paying at least minimum wage for all hours worked, to employees who were previously treated as exempt from those requirements. These employees will have new rights and protections under the state's Minimum Wage Act.
One of the key proposed changes increases the minimum pay some salaried workers must receive to be exempt from overtime requirements. Washington's rules will also align more closely with the federal rules regarding many parts of the job duties requirements.

Q4. Why is the state changing these rules now?
A. Washington's current overtime rules for executive, administrative, or professional workers, last updated in 1976, are out-of-date and unfair. Under the current situation, a salaried employee can be paid less than minimum wage and be denied paid sick leave. Both the state and federal rules are old and there have been a number of changes in recent years that impact this issue. And it's a priority for our Governor to ensure fairness for workers.

Q5. What's the timeline for the rulemaking process?
A. The formal rulemaking process could take up to six months. This will provide opportunities for public comment, including public hearings in July and August. A list of those hearings is provided in Question 17. Also, once we have a final rule, L&I will allow time to inform businesses about the change and implement it.

Q6. Are you coordinating the state rules with the federal rules?
A. These are two separate rulemaking processes. To keep compliance as easy as possible, Washington's rules will align with the federal rules regarding many parts of the job duties requirements. The draft federal rules were released in March 2019 and the comment period for them recently closed.

Q7. What are the current state and federal rules? How do they work together?
A. Whichever rule provides more protection to the employee takes precedence – currently, that's usually the federal law. Under the current federal law, a salaried employee must be paid a minimum of $455 a week – $23,660 per year – to be exempt from overtime requirements.

Under the current state rule, a salaried employee must be paid a minimum of $250 a week – or about $13,000 year – to be exempt from overtime requirements.

And just to give this some context, a full-time minimum wage job in our state in 2019 makes $480 per week for a 40-hour work week.

Both state and federal laws also require salaried employees to meet job duties requirements to be exempt from overtime requirements.

 

 

Weekly

 

Annual

 

Federal overtime exemption threshold

 

$455

 

$23,660

 

State overtime exemption threshold

 

$250

 

$13,000

 

WA 2019 minimum wage
 

 

$480

 

$24,960

Q8. How did you come up with the numbers in the proposed rule?
A. Over the last year, L&I has been meeting extensively with representatives from business and labor organizations to exchange ideas and develop proposals on the changes to the overtime rules. We also took input through multiple public feedback sessions held around the state in the fall of 2018. We used all this input to establish the numbers in the draft rules.

Q9. What is meant by an "exempt" white collar or executive, administrative or professional (EAP) employee, and what makes someone exempt?
A. An exempt white collar or EAP employee is not entitled to overtime pay for working additional hours in a pay period, whereas a non-exempt employee must be paid overtime in the amount of one and a half times their typical pay rate for each additional hour worked in a pay period. They must also receive paid sick leave and other protections under state law. Exempt employees are paid a salary rather than an hourly wage, must earn a minimum amount per week (see the chart above), and must work in a specific type of job, as determined by a job duties test.

Q10. What is a job duties test?
A job duties test determines whether a job primarily involves executive, administrative, or professional duties as defined in the rules. There are separate tests for each job duty category. Employers are responsible for determining whether a worker's job duties meet the requirements to be an exempt executive, administrative, or professional employee, or an exempt outside salesperson. L&I will provide webinars and website content to help employers determine how these changes would apply to their employees, the timing of the changes, and other information.

Q11. Are the state and federal job duties tests the same?
A.
The state and federal tests are similar but are not exactly the same. Under the proposed rule, the state and federal tests are similar in their descriptions of the job duties that employees must perform to be exempt from overtime requirements. Both state and federal tests focus on the duties actually performed, not on the job title or on the duties that an employer writes into a position description. The proposed state rules will align with the federal rules regarding many parts of the job duties requirements.

Q12. When would these changes take effect?
A. There are two pieces to this: 1) The date when the draft rules are finalized and adopted, and 2) the date when the first update to the salary level goes into effect.
1) After the draft rule is released in early June, the formal rulemaking process begins, which involves opportunities for public comment such as attending public meetings and hearings or submitting written comments online, by email, or by letter. This public comment period could take up to six months. All input received will then need to be considered and addressed before the rule is finalized and adopted. The rule is expected to be adopted in late 2019.

2) Once the proposed rule is adopted, the process includes time for employers to implement any changes. The changes will go into effect gradually based on the size of the employer – smaller employers will have more time to make any required changes. We expect the first update to the salary level to take effect July 1, 2020. Small businesses will have more time to implement the changes. All employers will need to fully implement the new requirements by January 1, 2026. Refer to salary chart below.

Q.13 Will employers have to pay all their salaried employees a higher salary because of these changes?
A. No, employers may choose to treat salaried employees as non-exempt, pay them overtime and minimum wage, and provide them other benefits associated with the Minimum Wage Act. If an employee is classified as non-exempt, they must receive at least minimum wage, overtime for hours worked over 40 per week, and paid sick leave.

Q.14. Why is implementation of the new requirements so far in the future?
A. These changes are significant for businesses, and employers will need time to prepare for implementation. Employers will need to budget for the changes and may need assistance understanding and complying with the new rules.

Q.15. How will L&I assist businesses with implementation once the rule is approved?
A. We will be providing webinars and website content to help employers determine how these changes would apply to their employees, the timing of changes, and other information.

Q16. What's the next step?
A. With the release of the draft rules, L&I will now begin gathering more feedback from stakeholders through a formal rulemaking process, including public hearings and a public comment period beginning June 5, 2019 and ending September 6, 2019. L&I will consider all input we receive in preparing a final rule.

Q17. Who will make the final decision on this?
A. The director of the Department of Labor & Industries will make the final decision, after careful consideration of all the input received.

Q18. How can people stay informed?
A. Sign up to receive email updates on the overtime employment rule changes at Lni.wa.gov/wagenews.

Q19. Can people email or mail comments to L&I?
A. Yes. Email  us at EAPRules@Lni.wa.gov or mail written comments to:

Employment Standards Program
PO Box 44510
Olympia, WA 98504-4510

L&I must receive all comments by 11:59 p.m. September 20, 2019.


 

 

Proposed minimum weekly salary levels required for an overtime-exempt employee

 

 

When the proposed changes would take effect

 

July 1, 2020

 

January 1, 2021*

 

January 1, 2022*

 

January 1, 2023*

 

January 1, 2024*

 

January
1, 2025*

 

January 1, 2026*

 

Future years

 

 

For employers with 1-50 employees

 

$675

(1.25 times
min. wage)

 

$965

(1.75 times
min. wage)

 

$1127

(2 times
min. wage)

 

$1296

(2.25 times
min. wage)

 

$1324

(2.25 times
min. wage)

 

$1353

(2.25 times
min. wage)

 

$1536

(2.5 times
min. wage)

 

Beginning Jan. 1, 2027, the salary level will remain at 2.5 times minimum wage and be updated annually for inflation

 

 

For employers with 51 or more employees

 

$945

(1.75 times
min. wage)

 

$1103

(2 times
min. wage)

 

$1268

(2.25 times min. wage)

 

$1296

(2.25 times min. wage)

 

$1324

(2.25 times min. wage)

 

$1503

(2.5 times min. wage)

 

$1536

(2.5 times
min. wage)

 

Total employees affected (cumulative)

 

77,000

 

125,000

 

168,000

 

190,000

 

198,000

 

229,000

 

252,000

 

 

Notes:
*     The salary levels for the years marked by an asterisk are projections, based on estimated increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) of 2.17 percent annually.

  1. Under the current federal law, a salaried employee must be paid a minimum of $455 a week to be exempt from overtime requirements.
  2. Under the current state law, a salaried employee must be paid a minimum of $250 a week to be exempt from overtime requirements.
  3. A full-time minimum wage job in Washington in 2019 makes $480 per week for a 40-hour work week.
  4. Certain hourly computer professionals, as defined in the proposed rule, would have higher minimums than those listed here.

 


For more detail, see L&I Admininistrative Policies:
Acrobat PDF file Minimum Wage Act Applicability (ES.A 1.) (150 KB PDF)
- Outlines when and to whom the state Minimum Wage Act applies. State overtime laws are included in the Minimum Wage Act.
Acrobat PDF file Overtime (ES.A.8.1). (161 KB PDF)
- Interprets when overtime is due and how it is paid, and when it is not due.
Acrobat PDF file How to Compute Overtime (ES.A.8.2). (57 KB PDF)
Acrobat PDF file Salary Basis for White Collar Workers (ES.A.9.1). (106 KB PDF)
- Defines what constitutes a salaried worker.
Acrobat PDF file Retail or Service Exception (ES.A.10.1). (25 KB PDF)
- Explains how a retail or service employee could be exempt from overtime if the position meets specific circumstances.
Acrobat PDF file Q&A on Retail/Service Exception (ES.A.10.2). (16 KB PDF)
Acrobat PDF file Examples of Retail/Service Businesses (ES.A.10.3). (21 KB PDF)

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