Washington’s Department of Labor & Industries unveiled a set of proposed changes to the state’s overtime rules last month, proposing a substantial overhaul that has the potential to affect hundreds of thousands of paychecks statewide, including workers in Clark County.
The changes aim to provide what L&I characterizes as a long-overdue update to the state’s salary threshold for overtime-exempt workers, which hasn’t been updated since the 1970s.
“So many things have changed in those 40 years,” says L&I spokesman Tim Church.
But the scale of the proposal — which could more than triple the minimum allowed salary for some categories of white-collar workers — has caught the business community by surprise and led to complaints that L&I is jumping too far, too fast. The new rules may be finalized later this year.
Compensation for full-time employees is generally structured in one of two ways: an employee is either hourly, meaning they are paid a fixed amount of money per hour of work, or they are salaried, meaning they are paid a fixed amount of money per pay period regardless of the number of hours worked.
Under federal law, hourly employees who work more than 40 hours per week must be paid at a higher rate for their overtime hours. Salaried employees also need to be paid extra for overtime, but executive, administrative and professional workers who meet certain criteria are considered exempt from that rule.
On its website, L&I outlines the assumption behind the exception: executive, administrative and professional staff are “typically ‘white collar’ workers who often have more economic security and greater bargaining power than low-wage workers.”
But that rationale only holds up if the exempt workers are highly paid. That’s why the state and federal governments both set minimum salaries for overtime-exempt workers, in order to prevent a situation in which an employer could compel their low-wage employees to work more than 40 hours per week but classify them as salaried in order to avoid paying them overtime.
Those minimum thresholds are not tied to inflation and have remained stagnant for years or even decades, resulting in a salary threshold that is dramatically out of step with what would be considered a high-wage salary in today’s dollars. It has even fallen below the rate set by the state’s minimum wage for hourly workers.
“There are people who are salaried who, if they were hourly, would be making significantly less money than the minimum wage,” Church says.