Vancouver workers, business owners, unions and business organization representatives gathered Thursday for a public hearing on a proposed set of changes to Washington’s rules governing salaried, overtime-exempt workers.
The changes have the potential to affect workers across many industries, and that was reflected in the audience of roughly 70 people who attended the hearing at Clark College’s Columbia Tech Center building.
The proposed changes would alter several criteria for whether salaried employees can be considered overtime exempt, meaning an employer does not need to pay them extra if they work more than 40 hours in a given week.
The biggest change would be to raise the minimum required salary for exempt workers to a new rate of 2.5 times the state’s minimum wage. The minimum wage is set to be adjusted annually based on the consumer price index starting in 2021. (Washington’s minimum wage is currently $12 per hour, so if the proposed rule was currently in place, 2.5 times the minimum wage would be equivalent to $62,400 per year, assuming 40 work hours per week for the whole year.)
Washington State’s current minimum salary was set in 1976 and is equivalent to $13,000 per year, although the state’s rule is currently superseded by the federal government’s higher minimum salary of $23,660.
The Department of Labor and Industries released a public draft of its proposed rule changes in June. The Vancouver meeting was the last in a series of seven public hearings that the department has held throughout the state.
They’ve all been well-attended, according to L&I spokesman Tim Church, some drawing as many as 150 people. The agency has received nearly 500 additional comments through its website, he said.
Business owners concerned
Reactions to the proposal at the Vancouver hearing were mixed. Of the 16 people who testified, 10 said they wanted to see the draft reworked to ease the impact on businesses.
“This will only make things more difficult for us,” said Lois Cook, who together with her husband runs a small business that sells telephone services.
John McDonagh, president of the Greater Vancouver Chamber of Commerce, presented the results of an informal poll of the organization’s member businesses. Most acknowledged the need for an update to the overtime rules, he said, but the respondents said L&I’s proposal would hamper their ability to provide benefits and bonuses, and decrease the amount of schedule flexibility available to employers and employees.
Ryan Makinster, government affairs director for the Building Industry Association of Clark County, raised concerns about how the changes would impact industries with seasonal swings in productivity, such as homebuilders.
Partrick Farmer, an owner of several Domino’s Pizza franchises, said the increase would hamper employers’ ability to hire entry-level workers and provide them with opportunities for advancement.
The business owners and representatives also argued that the proposed six-year phase-in period for the new salary threshold would be too abrupt and could be compounded by other economic challenges.
“The next recession is on everyone’s mind,” said Nelson Holmberg, executive director of the Southwest Washington Contractors Association.
Many of the people who testified in opposition asked L&I to wait for the federal government to make a change first. The U.S. Department of Labor is currently reviewing a proposal to hike its own salary threshold, although its proposed new threshold of $35,308 per year is lower than L&I’s proposal.
The other six who testified spoke in favor of the update, arguing that it’s long overdue and merely brings the state’s salary standards back in line with where they were when the current threshold was instituted in 1970.
The $13,000 threshold was equivalent to 2.7 times the state’s minimum wage at the time it was implemented, said Jack Sorensen of the workers advocacy group Civic Ventures. Historically, the ratio has been even higher, he said.
“If anything, (the current proposal) is too little after too long,” he said.
Several members of Local 775 of the Service Employees International Union testified in support of the changes and described experiences working for employers who coerce low-paid salaried employees into working unpaid overtime.
“Employers are taking advantage of low-income workers,” said SEIU member Linda Lee.
Some of the supporters pushed back on the business owners’ arguments in their own testimony, particularly the issue of schedule flexibility and the assertion that an increased salary threshold would require cuts to other benefits.
“Why do we have to choose between getting paid for our time and getting good benefits?” said Shannon Myers, president of the Southwest Washington Central Labor Council.
Sorensen also disputed the notion that the proposed change will require any businesses to raise their employees’ salaries. If businesses don’t want to pay overtime or raise salaries to an exempt level, all they have to do is send employees home once they reach 40 work hours, he said.
“If you’re saying this is going to hit you, you’re betraying the fact that you’re using free labor,” he said.
L&I’s review process
The Vancouver meeting was the final public hearing on L&I’s schedule, but the agency will continue to accept written comments about its draft proposal until Sept. 6. Comments can be emailed to email@example.com.
L&I will then spend several months reviewing the comments and deciding whether to adjust the proposed rules. The agency expects to adopt the final rules by the end of the year, Church said, with the phase-in period targeted to begin July 1, 2020.
The rule change is not a legislative process, so the final text of the rule change and the decision to move forward rests solely with L&I.
This story has been updated to clarify that Washington State’s current minimum salary for exempt workers is superseded by the higher federal minimum number.