Last year, WFIA participated during the stakeholder process for the Washington overtime eligibility for executive, administrative, and professional (EAP) exemptions. The EAP rules are the employment rules that determine which workers in Washington are required by law to be paid at least minimum wage, earn overtime pay, receive paid sick leave and more under the state Minimum Wage Act. If employees are classified as exempt, that means they are exempt from the rules in the Minimum Wage Act – but only if they meet the duties test and the salary threshold.
Federal EAP Rules
The Federal EAP rules took effect on January 1, 2020. The new salary threshold is $684 per week, or $35,568 annually. In the federal rules, the Department of Labor is permitting employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary test requirement. For employers to credit nondiscretionary bonuses and incentive payments (including commissions)toward the standard salary level test, such payments must be paid on an annual or more frequent basis.
State EAP Rules
Under the state changes, the minimum pay a salaried worker must receive to be considered exempt would increase incrementally to 2.5 times the state minimum wage by 2028. Small employers (with 1-50 employees) will have a more gradual phase-in schedule to give them additional time to comply with the new rules compared to large companies (51 or more employees). The effective date for the first threshold increase is July 1, 2020. Click here to see the salary threshold phase-in schedule. Please keep in mind that bonuses may not be used to calculate salary under the state rules.
What rules do I follow?
Currently, you must follow the federal EAP rules. Salaried exempt employees will have to be paid at least that amount in 2020 because it is higher than the first phase on the incremental state threshold increase of 1.25 times the state minimum wage ($675 a week). When state and federal thresholds conflict, businesses must meet the threshold most favorable to employees.
On Jan. 1, 2021, the state threshold will be the more favorable because small businesses will have to pay at least 1.5 times the state minimum wage (about $827 a week), and large businesses will have to payat least 1.75 times the minimum wage (about $965 a week).
Click here for the overtime rules fact sheet. Contact Cat Holm, WFIA Legislative Director and Legal Counsel, if you have any questions at catherine@wa-food-ind.org or360-867-8721 (work cell).
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