New Washington Law to Extend Overtime Pay for Salaried Managers, Other Employees

The state of Washington has updated its rules around overtime pay for salaried workers in an attempt to better protect workers usually left out of overtime laws. This means an increase in overtime pay for salaried managers and others.

In most states, salaried workers are exempt from overtime pay, which often gives workers a pay rate of one and a half times their normal rate for every hour worked above 40 in a given workweek.

This means that salaried workers are often required to work more than 40 hours a week for no additional pay. Though some salaried workers are compensated enough to make this beneficial, many of them aren’t. According to Washington’s lawmakers, changing this and creating a law that works for salaried workers making a more modest income, is key to strengthening the middle class.

The new laws have just been finalized and will be phased in by 2028. Under the new laws, salaried workers who make up to around $83,400 a year will be entitled to time-and-a-half pay for all hours worked above 40 in a given workweek. 

Some workers will be included in this new overtime law if they make more than $83,400, but only if they perform certain types of jobs. Those who make over $83,400 and are still excluded from the overtime law are those who are managers and executives, who have significant power to make business decisions, such as the power to hire and fire workers.

Previously, most salaried workers were exempt from overtime under Washington State’s law. Those who were included and were eligible for overtime were those salaried workers who made only $13,000 a year — below the federal level of $23,660 annually. These new laws in Washington are anticipated to extend overtime pay for salaried managers and others to around 260,000 new workers. Additionally, the new law will increase benefits for around 235,000 other workers.

Komo News explains that the salary cutoffs for overtime were effective decades ago, but have since become outdated due to inflation. Though inflation caused salaries to rise, in many cases, the salary cutoffs for overtime inclusion stayed the same, pushing many workers out of overtime.

According to Komo News, businesses may have taken advantage of this phenomenon by making more positions salaried instead of hourly, which let them require their salaried workers to work longer hour for no extra pay, as opposed to paying hourly workers more.

Reportedly, some companies may go so far as to misclassify workers as salaried instead of hourly, just to get out of paying them overtime when they should be eligible, based on the type of work they perform. Hopefully, Washington’s new laws will help de-incentivize businesses from engaging in such practices at the expense of their workers.

The Fair Labor Standards Act prohibits misclassifying employees, because the law recognizes that employers may try to take advantage of wage and hour laws to cut costs. According to T Sheets, the number of FLSA lawsuits had gone up in recent years, and many of these lawsuits relate to employee misclassification.

Some employers may not be aware that they are misclassifying employees, but ignorant employers can still face legal consequences for misclassifying employees. Some employers may be in the dark about how they can be misclassifying employees because in many instances, the differences between who should quality as hourly or salaried may not be cut and dry.

The type of duties that an employee performs is a large determining whether or not a person is salaried or hourly. However, some jobs incorporate a range of duties or change over time, which can make classification tricky.

Employees can file lawsuits against their employers for misclassification. If a worker’s claim is successful, and the court determines that they have been misclassified, an employee could be eligible for backpay of unpaid overtime. This could come in addition to other damages the court decides to award. T Sheets explain that these claims can be costly, because employees can make claims fo misclassification that occurred two to three years ago.

As Washington introduces its new rules around overtime pay for salaried managers, many employers will have to make adjustments to how employees are compensated. It will be more important than ever for employers to not only be aware of the laws in the abstract, but how the changes affect their employees and company structure.

Washington is not the only state to raise the salary threshold for overtime inclusion, and take steps to extend overtime pay for salaried managers. States including California, Pennsylvania, New York, Massachusetts, and Michigan have taken similar steps, to a more conservative degree than Washington’s. The federal government is also raising the overtime threshold to $35,308 from $23,660, says SHRM.

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This article is not legal advice. It is presented
for informational purposes only.