The Washington Department of Labor and Industries announced sweeping changes, effective July 1, 2020, to the rules determining whether an employee in Washington State is entitled to receive overtime compensation.

In Washington State, the default rule is that all employees are entitled to overtime compensation. There are exceptions, however, when the employee meets three important criteria. An employee is not entitled to overtime compensation (that is, he or she is an overtime “exempt” employee) when the employee (1) is paid a salary rather than an hourly rate; (2) is paid a salary that is above a minimum threshold; and (3) the employee performs job duties that fall within a specific category of work.

The new rules affect the second and third criteria listed above by raising the minimum threshold salary for an overtime exempt employee, and by clarifying the legal test for whether an employee preforms the requisite job duties to be exempt from overtime. The minimum threshold salary will increase on July 1, 2020[1] and will increase again incrementally each year until 2028. Thereafter, any more increases will coincide with increases in the minimum wage. Importantly, with each increase, the minimum threshold salary will be different depending on the employee’s job duties and whether the employer has 50 or more employees.

The rule changes affect both employers and employees alike. For employers, now is a good time review your employee overtime classifications in case any employees no longer qualify as overtime exempt. For employees, it may be a good idea to consider whether you are properly classified, as you may be entitled to unpaid overtime compensation. The employment attorneys here at Lasher Holzapfel Sperry & Ebberson are ready to take your call.

[1] Independent of the state overtime rules, the minimum threshold salary under the Federal Fair Labor Standards Act increased nationwide as of January 1, 2020. Employers should be sure they are in compliance with this new minimum threshold salary.