Washington “white collar” overtime exemption rules in effect as of July 1
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Monday, July 6, 2020

Washington “white collar” overtime exemption rules in effect as of July 1

By Payroll and Entitlements Editorial Staff

The Washington State Department of Labor and Industries reminds employers that changes to Washington’s rules that spell out what type of workers don’t have to receive overtime pay are now in effect, as of July 1. The rules establish the criteria for certain workers to be considered exempt from getting overtime pay and other protections under the State Minimum Wage Act. The Department originally announced the changes last December. These are the first major changes to these rules since 1976.

The July update is primarily to the part of the rules known as the “job duties test.” In general, it helps determine which workers are considered executive, administrative, and professional employees, as well as computer professionals and outsides salespeople. Workers who fit into these categories based on the duties they perform, and earn more than the required salary threshold, can be considered exempt.

Specifically, the updated rule changes impact Washington Administrative Code 296-128-500 through 296-128-545, and affect executive, administrative, and professional (EAP) workers, as well as outside salespeople and computer professionals across all industries in Washington. These rules determine which workers are required to by law to be paid at least minimum wage, earn overtime pay, and receive paid sick leave and other protections. Changes to these rules will mean some employers might need to provide minimum wage, overtime and sick leave to some employees who were previously considered as “exempt.”

A combination of predetermined fixed salary, the salary meeting a minimum threshold, and specific job duties is used to determine if a worker meets the definition of an “executive, administrative, or professional worker, outside salesperson or computer professional”— these workers are typically “white collar” workers. These workers, who generally have more economic security and bargaining power than lower-waged workers, must be salaried and paid a minimum specified salary level, and must perform executive, administrative, professional, outside sales or computer professional duties as defined by the state regulations.

Prior to July 1, the state used two job duties tests to determine if an employee could be classified as exempt. As of July 1, the state will use a single test aligned more closely with federal standards. The test for each exemption spells out what duties an employee must perform to be classified as exempt, regardless of the employee’s job title or job description.

Under the rules changes, the state will base the salary threshold on a multiplier of the state minimum wage. That threshold will increase incrementally until it reaches 2.5 times the minimum wage in 2028. The change will not impact most salaried workers this year because Washington employers will continue to follow the federal standard for the rest of 2020. That’s because the federal requirement that a salaried worker needs to earn at least $684 per week to be exempt from overtime is still slightly more favorable to employees than the new state threshold. Employers will have to meet the state threshold beginning Jan. 1, 2021, when it exceeds the federal level.

Employer resources. The Department has created a number of tools that explain the rules changes, including an online course that details the updates and leads users through a series of questions and answers to help determine if a worker meets the requirements to be considered exempt. More information is available on the Department’s rulemaking web page.

The new salary threshold implementation schedule can be found here.

There is also a threshold phase-in schedule for computer professionals paid hourly.

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