L&I announces new draft overtime rule with salary threshold of $80K

L&I formally announced a new draft overtime rule that would raise the threshold for overtime-exempt employees to nearly $80,000 by 2026. If the rule is adopted, employers will need to pay salaried employees at least that amount or convert them to hourly workers, in essence creating a new super minimum wage.

The formal rulemaking process could take up to six months. L&I expects to adopt the rule in late 2019.  The new proposed system would be phased in over six years. It would start at $35,000 per year for employers with under 50 workers. Larger companies would start at $49,000 per year. It would increase annually until 2026, when it would hit an estimated $79,872 per year.

AGC protested the dramatically higher salary threshold when L&I released draft rules for comment in 2018. This final draft, however, keeps the high salary threshold but the department did agree to a phase-in, as was suggested by AGC.

In announcing the rule, L&I noted that Washington's overtime rules were last updated in 1976. Washington is operating under the federal threshold of $23,660 which is in the process of being updated (AGC suggested the department wait for, and mirror, the federal rule). L&I estimates that the new rule would make more than 250,000 workers in Washington eligible for overtime pay by 2026.

"The current system is out of date. It's at risk of failing tens of thousands of workers by broadly defining what a white collar worker is, which allows businesses to pay salaries that may be even less than minimum wage," said L&I Director Joel Sacks. "That's especially true for employees who are expected to work well over 40 hours a week, but don't get paid overtime."

L&I has scheduled a series of public hearings on the proposed rule in July and August.

The Overtime Rulemaking web page has details on this public hearing schedule:

  • Tumwater, July 15 at the Dept. of Labor & Industries headquarters
  • Seattle, July 16 at The Swedish Club
  • Bellingham, July 17 at Four Points by Sheraton Bellingham Hotel & Conference Center
  • Ellensburg, Aug. 5 at Hal Holmes Community Center
  • Kennewick, Aug. 6 at Springhill Suites by Marriot Kennewick Tri-Cities
  • Spokane, Aug. 7 at CenterPlace Regional Event Center

People can also comment by email to the Overtime Rule Program or by mail to the Employment Standards Program, P.O. Box 44510, Olympia WA  98504-4510. Comments may also be submitted by fax to 360.902.5300.

AGC members with questions or comments can contact AGC Chief Lobbyist Jerry VanderWood, 360.352.5000.