More Washington workers will either get a raise or qualify for overtime starting in 2021 under new rules from the state Department of Labor and Industries.
The minimum pay for an employee to be considered a manager and exempt from overtime for working more than 40 hours a week will slowly rise through 2028, eventually reaching an estimated $1,600 a week and covering some 259,000 workers. Many of those workers are in the retail, hospitality, information technology, finance and health care industries.
The new state schedule for overtime pay starts next July but won’t pass the federal thresholds until Jan. 1, 2021. After that, those thresholds will increase for at least some workers at the start of each subsequent year. They represent the first change in state overtime standards since 1976, department Director Joel Sacks said.
“It’s the right thing to do for workers across the state,” Sacks said. “It’s going to have a real impact on employees across the state.”
The current threshold in state regulations for exempting an employee from overtime is $250 per week, which is below the state minimum wage and not relevant because it’s below the federal threshold of $455. The federal threshold goes to $684 on Jan. 1, and the new state formula bumps the Washington threshold to $675, or 1 1/2 times the state minimum wage.
Starting in 2021, the state threshold will go above the federal level and continue to rise. The changes will be slightly less in the beginning for small companies with 50 workers or less than for those with 51 or more.
By Jan. 1, 2028, all companies will have to pay overtime to employees who make less than 2 1/2 times the minimum wage. Because the state ties minimum wage increases to a Consumer Price Index, that’s estimated to be $1,603 per week, or about $83,350 per year by 2028.
The final rules were announced Wednesday after months of public comment and a series of hearings across the state. The time frame for reaching 2 1/2 times the minimum wage for all companies was extended by two years in response to concerns expressed by some businesses.
The new schedule does not tell employers how much they have to pay their workers, Deputy Director Elizabeth Smith said. “It ensures workers are paid for the hours they work.”
The new overtime thresholds were hailed by labor groups.
Washington is leading the way in setting a benchmark for policies that benefit workers and the economy with approval of the overtime rule change, said Jack Sorensen, of Civic Ventures, an organization supporting the change. It will restore overtime protections for about 45% of salaried workers in the state, he said.
“More workers will get their time back, money in their pockets, or both,” he said.
Bob Battles, general counsel and government affairs director for employment law for the Association of Washington Business, agreed the old state thresholds were out of date. But the newer higher levels in the later years could have unintended consequences, he said.
“Small businesses and nonprofits are not going to be able to afford this,” Battles said, while some employees might lose chances for advancement that come through working extra time and learning a business.
Because the new state thresholds will remain below the federal thresholds through 2020, the Legislature will have “a window” to make adjustments to the rules that the AWB could support, he said.
Reporter Amy Edelen contributed to this report.
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