More Washington workers could see OT pay under proposed rule

OLYMPIA, Wash. — More than 250,000 workers in Washington state would be newly eligible for overtime pay by 2026 under a rule proposed Wednesday by the state’s Department of Labor and Industries.

The state agency announced that it had formally filed the proposed rule, which would ultimately more than triple the salary threshold under which employers must pay overtime to their workers. Under the proposed rule, the higher salary threshold will be set as a percentage of the state’s minimum wage, which is currently $12.50, but will rise to $13.50 an hour next year.

The overtime-exempt threshold will increase yearly, starting July 1, 2020, and will vary depending on the size of the company until 2026, when all companies will have the same threshold.

The agency said that following a rulemaking process that will include public hearings across the state, it expected the new overtime rules to be adopted by the end of the year.

The proposed rule is the first update to the state’s overtime rules in more than four decades and would shrink the so-called “white collar exemption” that exempts workers who perform “executive, administrative or professional” duties from overtime and minimum wage requirements.

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Washington workers are currently covered by the federal threshold, in which salaried positions are exempt from overtime pay, except for positions that pay less than $455 a week, or $23,660 per year. The state’s overtime threshold, last updated 43 years ago, is even lower, at $13,000. In cases where an employee is subject to both state and federal overtime laws, the employee is entitled to overtime according to the higher standard, according to the U.S. Department of Labor.

“The current system is out of date,” Joel Sacks, director of the state Department of Labor and Industries, said in a written statement. “We want to make sure that people who legitimately deserve overtime get paid for the extra hours they work.”

Under the proposal, employers with 50 or fewer employees would have to pay overtime to workers who are making less than $675 a week — or about $35,000 a year — starting July 1, 2020. For larger companies, workers earning less than $49,000 a year can be paid time-and-a-half pay when they exceed 40 hours a week. In 2020, the total number of employees affected would be about 77,000, growing to about 252,000 by 2026, when the overtime-exempt threshold for all employees in the state reaches $1,536 a week, or nearly $80,000 a year.

Four other states are already in the process of significantly raising or considering raising their thresholds, and a handful of other states have thresholds slightly above the federal limit, said Paul Sonn, state policy director with the National Employment Law Project.

California is currently phasing its overtime threshold up to $62,400, New York is phasing its up to $58,500, and Pennsylvania has announced a rule raising its threshold to $47,000. Massachusetts is holding a hearing on June 18 on a bill to raise its overtime threshold to $65,000, Sonn said.

“The Washington proposal is the boldest overtime pay restoration effort currently among the states,” Sonn said. “We think it will spur other states to follow Washington’s lead.”

Kris Johnson, president of the Association of Washington Business, said that while the current rule needed updating, “this proposal simply goes too far.”

“We encourage state officials to slow down, reconsider the number and match the federal requirements, which are in the process of being updated,” Johnson said in a written statement. “This will prevent a patchwork of regulations in different states and minimize the unintended consequences, both for employers and employees.”

Washington state’s proposal comes months after the U.S. Department of Labor announced a proposal to raise the federal salary threshold to receive mandatory overtime to $35,308 a year. That March proposal from President Donald Trump’s administration is a smaller increase to the threshold than what had been proposed under the Obama administration, which sought to mandate overtime pay to those earning less than about $47,000 a year. That plan was blocked after more than 20 states sued.

Washington was among 14 states and the District of Columbia that sent a letter to the Department of Labor in May opposing the latest federal proposal and calling for a regulation more in line with the Obama-era proposed rule. The governors of Wisconsin and Michigan sent their own letters last month calling for the same.

Rachel La Corte, The Associated Press