DOL Issues Proposed Rules for Exempt Employee Salary Levels
As we predicted in our Spring Employment Breakfast, the Washington State Department of Labor & Industries has issued a series of proposed rules regarding the classification of exempt employees, with changes to both the duties test and the salary test. An employee must meet the requirements of both tests to be properly classified as an exempt employee. If adopted, these regulations will go into effect in July 2020.
This writing addresses the proposed increases in salary levels. We will address changes to the duties tests in a subsequent blog.
The proposed rulemaking increases the salary level for exempt employees substantially, over a several year period, and distinguishes the amount of increase between employers with 50 or fewer employees, and those employer with more than 50 employees. Size threshold is based solely on the number of Washington-based employees, and both part-time and full-time employees count toward the threshold.
From July 1, 2020-December 31, 2020
Employers with 50 or fewer employees – the exempt salary level will be 1.25 times the State minimum wage for a forty hour workweek.
Employers with more than 50 employees – 1.75 times the State minimum wage for a 40 hour workweek
From January 1, 2021 to December 31, 2021
The multiplier for small employers will increase to 1.75.
The multiplier for larger employers will increase to 2.0.
From January 1, 2022 to December 31, 2022
For small employers, the multiplier will increase to 2.0 times the State minimum wage.
For large employers, the multiplier will increase to 2.25 times the State minimum wage.
From January 1, 2023 through December 31, 2024
For small employers, the multiplier will increase to 2.25 times the State minimum wage.
For large employers, the multiplier will remain at 2.25 times the State minimum wage.
From January 1, 2025 to December 31, 2026
The multiplier for small employers will remain at 2.25 time the State minimum wage.
For large employers, the multiplier will increase to 2.5 times the State minimum wage.
From January 2026 and every year thereafter
The multiplier of 2.5 times the State minimum wage shall apply to all employers.
The DOL will hold public hearings in July and August throughout the State and accept written comments through September 6, 2019. The intended date of adoption is December 3, 2019.
As we warned, this is a substantial and significant increase. Washington employers may wish to make their opinions regarding these proposals known through the public comment period.