Minimum Wage

Beginning on January 1, 2025, the minimum wage in Washington will go up to $16.66 per hour, up 2.35% from 2024.  In addition to the statewide minimum, various cities and counties have a dizzying array of higher minimum wages based on differing standards.

Additionally, Olympia is considering a city level minimum wage of $20.29, but this has not yet been passed.

Exempt Employees

The minimum annual salary threshold for exempt employees statewide will also rise on January 1, 2024.  For small employers (up to 50 employees) the minimum annual salary will remain at twice the minimum wage, or $69,305.60 a year.  For large employers (more than 50 employees) the minimum will be $77,968.80, which is 2.25 times the minimum wage.  Employers should review compensation for any currently exempt employee who will be below the minimum thresholds in 2025.  If an employee is going to be below the 2025 threshold the employee will either need to be given a raise effective no later than January 1, 2024, or converted to hourly employees and provided meal and rest breaks along with overtime.

The thresholds for noncompete agreements will rise to $123,394.17 for employees and $308,485.43 for independent contractors.

Non-Compete and Non-Solicitation Agreements

Washington

This year the Washington legislature made a few changes to the Washington non-compete statute that should be addressed in new agreements.  First, the definition of non-compete was expanded to include “an agreement that directly or indirectly prohibits the acceptance or transaction of business with a customer.”  This expanded definition addressed agreements that did not prohibit general competition in the marketplace, but instead targeted specific customers.  A non-solicitation agreement targeting current customers of the employer remains permissible, but an outright prohibition on doing business with that customer is now treated as a non-competition agreement and subject to the salary and time limits.  Additionally, while a non-solicitation of current customers remains permissible, the inclusion of former or prospective customers is not included in the definition of a non-solicitation agreement.

For a detailed discussion of the amendments to the Washington statute read Emily Husa’s blog: The Rules of Washington NonCompetition Agreements Have Changed.

Federal

As has been widely publicized, the FTC rule barring most non-competition agreements nationwide is currently on hold.  We anticipate the FTC will appeal that decision and the case will be working through the federal courts for the foreseeable future.

Recently, the National Labor Relationship Board’s General Counsel issued GC Memorandum 25-01, which targets noncompetition agreements and “stay-or-pay” agreements.  Stay-or-pay agreements include “any contract under which an employee must pay their employer in the event that they voluntarily or involuntarily separate from employment.”  The Memorandum establishes a rebuttable presumption that a stay-or-pay provision is unlawful.  However, the “employer may rebut that presumption by proving that the stay-or-pay provision advances a legitimate business interest and is narrowly tailored to minimize any infringement on [National Labor Relations Act] Section 7 rights, that is, the provision: (1) is voluntarily entered into in exchange for a benefit; (2) has a reasonable and specific repayment amount; (3) has a reasonable “stay” period; and (4) does not require repayment if the employee is terminated without cause.”  The Memorandum does not establish the legal standard under the NLRA but does establish the policy of the NLRB and can foreshadow possible enforcement action by the NLRB that could result in a decision of the full Board, which would have a binding effect on employers.  Employers with training repayment agreements or other agreements that could result in an employee repaying funds in the event of termination should review those agreements and consider the risks of enforcement actions by the NLRB.

Finally, the Memorandum restated the General Counsel’s position that many non-competition agreements are unlawful.  The NLRB has engaged in some enforcement action on noncompete agreements but has not issued a full Board decision to date.  Given Washington’s existing limits on non-compete agreements, the potential impact in Washington is likely limited, as the NLRA does not apply to managers and supervisors.  Employers should continue to monitor the Board’s activity for changes in 2025.

For questions about these, or other Employment Law updates, please contact the Labor and Employment Law team at Lasher.