L&I adopts overtime threshold at 2.5 times the minimum wage

L&I adopts overtime threshold at 2.5 times the minimum wage https://wahospitality.org/wp-content/uploads/2019/09/LI-proposes-overtime-threshold.jpg

The Department of Labor & Industries announced today the adoption of rules to update the Executive, Administrative and Professional (EAP) exemptions under the Washington State Minimum Wage Act. The adopted rules propose a new overtime salary threshold set at 2.5 times the statewide minimum wage and a phase-in period of eight years beginning July 1, 2020.

On Jan. 1, 2020, small (0-50 employees) and large (51+ employees) businesses will be subject to the new federal overtime threshold which is currently set at $684 per week or $35,568 per year. After that the state overtime threshold will grow according to business size, ending at 2.5 times the 2020 minimum wage. By 2028 at full implementation the overtime threshold will be approximately $83,356 per year.

While we appreciate a longer phase-in period than what was proposed in the last draft rules, we still believe a threshold of 250% of minimum wage is inappropriate.

The hospitality industry is very proud to provide jobs at all levels – from first jobs, second chances and lifelong careers. Key to this industry are the opportunities in middle management as people advance and gain more skills. A salary threshold at this level will harm our career ladder and employees who are ready to advance into the next stage of their career. We are disappointed the Department ignored our request to first examine the impact of the rules on our workforce before adopting another experiment for Washington’s small businesses.

As Washington Hospitality Association members thank you for your engagement and willingness to provide input on this issue over the last 20 months of the rulemaking process. We submitted more than 245 personalized comments to L&I, attended public hearings across the state and talked to local lawmakers about this issue.

The Washington Hospitality Association will continue to work with the rest of the business community to pursue options in response to L&I’s action.

To read L&I’s full announcement, click here.

For the 8-year salary threshold phase-in schedule, click here.

Calculating your employer size

According to the Washington State Department of Labor and Industries: “The size of the employer is based solely on the number of Washington-based workers it employs at the time of the effective date of each step of the implementation schedule. Each Washington-based employee counts as an employee whether that person works full time or part time. Workers not meeting the definition of ’employee’ under the Minimum Wage Act or are exempt from the act do not count toward the employer size calculation. Employers can also use the size determination provided by the state Employment Security Department for Paid Family and Medical Leave purposes. This approach looks back over four previous quarters to determine the employee count. This has the added advantage of reducing administrative burdens for employers since they will be able to use Employment Security Department’s calculation to comply with both Minimum Wage Act requirements and administration of Paid Family and Medical Leave by that department. Employers may choose the calculation method that is most consistent with their business practices.” To see L&I’s full Q&A on changes to overtime rules, click here.