Beginning January 1, 2021, the Washington State Department of Labor and Industries (L&I) will be implementing new rules regarding overtime-exempt employees. This means that employers are not required to pay these employees overtime for working more than 40 hours and they are also exempt from paying an hourly minimum wage, paid sick leave and other benefits. Overtime-exempt employees are determined by a combination of a predetermined fixed salary, a minimum threshold salary, and specific job duties.
Predetermined Fixed Salary
The employee must be paid a predetermined fixed salary that is not dependent on quantity or quality of work.
Minimum Threshold Salary
The minimum threshold for salary will be a multiplier of minimum wage. The new minimum wage for 2021 will be $13.69 an hour, an increase from $13.50 an hour this year.
Small businesses with up to 50 employees must provide a salary of at least 1.5 times the minimum wage to overtime exempt employees. In 2021, this would be $821.40 a week and $42,712.80 a year.
Large businesses with more than 50 employees must provide a salary of at least 1.75 times the minimum wage to overtime exempt employees. In 2021, this would be $958.30 a week and $49,831.60 a year.
This threshold multiplier will be in effect until 2028, when it reaches 2.5 times the minimum wage. After that, the threshold will be increased based on inflation.
The following table shows the projected minimum salary threshold up until 2028:
Specific Job Duties
Overtime exempt employees are typically white-collar, salaried employees. These are workers who primarily engage in duties classified as executive, administrative, or professional. There are strict federal and state requirements you must meet to qualify an employee as overtime-exempt.
Blue-collar workers are typically exempt from overtime. This includes agricultural workers, casual laborers, and those exempt from the Minimum Wage Act.
To determine if an employee is eligible to be overtime exempt, L&I provides professional job duties test requirements in WAC 296-128-530.