Posted
Jan 26, 2023 12:00 PM
Most of you have probably implemented the overtime and minimum wage changes that went into effect on January 1, but we want to ensure that organizations are aware of all the provisions of these regulations and are not leaving themselves open to fines, back wages, or court cases by being out of compliance.
We're focusing on Washington State regulations. Rules vary by state and sometimes by city (such as Seattle, SeaTac, and Tukwila), but generally speaking minimum wage increases and related overtime rules become effective with the new year. If you are located in another state, check to see what rule updates apply to you.
Minimum Wage
Washington State’s minimum wage increased to $15.74 per hour. If you have employees who work a minimum of two hours in a two-week period in Seattle, you need to pay them the higher Seattle minimum wage. This rule also applies to any employee who works from their home within Seattle.
Seattle Minimum Wage
If your organization is located in Seattle:
Minimum Wage
Washington State’s minimum wage increased to $15.74 per hour. If you have employees who work a minimum of two hours in a two-week period in Seattle, you need to pay them the higher Seattle minimum wage. This rule also applies to any employee who works from their home within Seattle.
Seattle Minimum Wage
If your organization is located in Seattle:
- If you have 501 or more employees, you must pay a minimum of $18.69.
- If you have 500 or fewer employees,
- You pay $16.50 if you spend at least $2.19/hour toward medical benefits.
- You must pay $18.69 if you do not pay $2.19 or more toward medical benefits.
Commuter Benefits
Businesses with 20 or more employees in Seattle must also offer their employees a monthly pre-tax payroll deduction for transit or vanpool expenses. This deduction is pre-tax, so the law lowers the tax bills for both workers and businesses.
Washington State Overtime Rules
Most employees who work in Washington must be paid overtime unless they are paid more than the salary threshold and meet the duties test to be exempt. As of January 1, 2023, the threshold amount has been adjusted:
Businesses with 20 or more employees in Seattle must also offer their employees a monthly pre-tax payroll deduction for transit or vanpool expenses. This deduction is pre-tax, so the law lowers the tax bills for both workers and businesses.
Washington State Overtime Rules
Most employees who work in Washington must be paid overtime unless they are paid more than the salary threshold and meet the duties test to be exempt. As of January 1, 2023, the threshold amount has been adjusted:
- An organization with 50 or fewer employees must pay overtime for any hours worked beyond 40 hours/week to any employee who earns less than $57,293.60 in a year.
- If the organization has 51 or more employees, employees are paid overtime if they earn less than $65,478 in a year.
These thresholds apply to all employees, even if a person meets all the state and federal duties tests to be salaried. The same thresholds apply to part-time employees. If they earn below the thresholds shown above, they must be paid overtime if they work more than 40 hours in a work week. Check out L&I's salary threshold implementation schedule.
The overtime pay rate is 1.5 times an employee's normal hourly wage ("time and a half"). To help you assess the impact of the law, the WA State Department of Labor and Industries provides a salary budget tool. For computer professionals, the pay rules are different and very complex, so we recommend you visit the L&I website for guidance.
If you are a worker who feels like you’re owed overtime compensation, learn how to file a claim with the state.
Your Options
If an employee's annual pay is below the threshold, you can either increase their salary to more than the threshold or if their position meets the exempt criteria and is internally equitable, you can reclassify them as non-exempt. These changes are set to happen every year until we reach 2028 when the exempt salary threshold is projected to be $93,288.
You might want to consult with an HR expert to consider both the short-term and long-term impacts of these rules. Given that it is not unusual for exempt staff to work more than 40 hours per week, how will you need to change your management structure and staffing plan to limit work to 40-hour weeks?
Be sure that reclassified and all nonexempt employees are aware of the change to their break policies and provide training on how your employees should submit their time sheets. Some employees may feel that they are being demoted when they have to track hours closely and ask permission to work over 40 hours.
Looking Ahead
Not sure how to handle these policy changes? Request HR consulting to learn what steps you need to take to ensure that you can deliver your mission while remaining compliant and being fair to your employees.
Are these overtime regulations positively or negatively impacting your organization? Talk to your legislators or write an email to Joel Sacks, Director of the Washington State Department of Labor and Industries. Blind copy your email to nancy@501commons.org and let us know if we can share your comments when advocating for a review of the impact of the overtime rules on nonprofits.
The overtime pay rate is 1.5 times an employee's normal hourly wage ("time and a half"). To help you assess the impact of the law, the WA State Department of Labor and Industries provides a salary budget tool. For computer professionals, the pay rules are different and very complex, so we recommend you visit the L&I website for guidance.
If you are a worker who feels like you’re owed overtime compensation, learn how to file a claim with the state.
Your Options
If an employee's annual pay is below the threshold, you can either increase their salary to more than the threshold or if their position meets the exempt criteria and is internally equitable, you can reclassify them as non-exempt. These changes are set to happen every year until we reach 2028 when the exempt salary threshold is projected to be $93,288.
You might want to consult with an HR expert to consider both the short-term and long-term impacts of these rules. Given that it is not unusual for exempt staff to work more than 40 hours per week, how will you need to change your management structure and staffing plan to limit work to 40-hour weeks?
Be sure that reclassified and all nonexempt employees are aware of the change to their break policies and provide training on how your employees should submit their time sheets. Some employees may feel that they are being demoted when they have to track hours closely and ask permission to work over 40 hours.
Looking Ahead
Not sure how to handle these policy changes? Request HR consulting to learn what steps you need to take to ensure that you can deliver your mission while remaining compliant and being fair to your employees.
Are these overtime regulations positively or negatively impacting your organization? Talk to your legislators or write an email to Joel Sacks, Director of the Washington State Department of Labor and Industries. Blind copy your email to nancy@501commons.org and let us know if we can share your comments when advocating for a review of the impact of the overtime rules on nonprofits.