As we step into 2024, businesses across Washington State and the nation are facing a wave of crucial employment law changes. These changes impact various aspects of the workforce, and businesses must adapt to remain compliant and competitive. JB Consulting Systems is here to guide you through the implications of these changes and provide solutions and recommendations for your business. While this blog highlights many of the changes happening in Washington State, please keep in mind that similar changes are happening in other states. Please reach out if you need help deciphering all these new updates in your area.
Key Highlights:
- The Washington State minimum wage rate for nonexempt employees aged sixteen and older will increase by 3.4 percent in 2024, reaching $16.28 per hour.
- Overtime exempt workers must be paid at twice the annual minimum wage rate, regardless of the size of the employer.
- Several cities, including Seattle, SeaTac, and Tukwila, will have higher minimum wage rates in 2024 than the state’s minimum wage. These city-specific rates are often based on factors such as the employer’s industry or size.
Washington State Overtime Rules Update
The Department of Labor & Industries (L&I) has recently made significant updates to Washington’s overtime rules. These changes have far-reaching implications for employers in Washington. The updated rules determine which employees must be paid at least the minimum wage, earn overtime pay, and receive other protections under the state Minimum Wage Act.
- Who’s Affected: These changes affect executive, administrative, and professional (EAP) workers, outside salespeople, and computer professionals across all industries in Washington. These changes affect “white-collar” workers who often have more economic security and relative bargaining power than lower-wage workers.
- Key Changes: The critical updates include an incremental increase in the minimum annual salary threshold for exempt employees and the elimination of large versus small employers related to that salary threshold. Mores specifically, as of January 1, 2024, in order to maintain exempt status, an employee’s salary must be at least $67,724.80 annually, which equates to 2x’s the state minimum wage. This change comes with the elimination of a differentiation between previously identified small employers (1-50 employees) and large employers (51+ employees). Also noteworthy, by January 1, 2028, the salary threshold is planned to increase to 2.5x’s the minimum wage rate, projected currently to be $92,560.00. Salary Threshold Implementation Schedule
- Salary Threshold for Non-compete Agreements: In WA State, the thresholds for non-compete agreements will rise to a minimum annual salary of $120,559.99 for employees and approximately $301,399.98 for independent contractors. Further, in 2023 the Federal Trade Commission proposed a rule that would ban non-compete agreements nationwide, however a decision regarding this proposal will not be voted on until at least April 2024.
- Minimum Wage Impact: Washington’s minimum wage will increase to $16.28 per hour. Keep in mind, there could be differences city, industry, or company size. Seattle, SeaTac, and Tukwila all just announced minimum wage increases that are higher than the state’s new minimum wage increase.
- Local Minimum Wage Increases (WA State):
- SeaTac has announced that, effective January 1, 2024, its minimum wage will increase to $19.71 per hour for covered hospitality and transportation industry workers.
- Seattle has also announced a minimum wage increase effective January 1, 2024. For employers with 501 or more employees, the minimum wage will rise to $19.97 per hour. Small employers (those with 500 or fewer employees) will experience varying increases based on factors like medical benefits and tips:
- The minimum wage will increase to $19.97 per hour for small employers that do not pay at least $2.72 per hour toward medical benefits or whose employees do not earn at least $2.72 per hour in tips
- The minimum wage will increase to $17.25 per hour for small employers that pay at least $2.72 per hour toward medical benefits or whose employees earn at least $2.72 per hour in tips.
- Tukwila’s minimum wage will be $18.29 per hour for mid-size employers and $20.29 per hour for large employers during the period of January 1, 2024 to June 30, 2024. On July 1, 2024, the minimum wage for mid-size employers will increase to $19.29 per hour, while the rate for large employers will remain at $20.29 per hour.
- “Mid-size” employers are defined as those with at least 15 but no more than 500 employees worldwide or that generate over $2 million of annual gross revenue in Tukwila.
- “Large” employers include all those with more than 500 employees, regardless of location, as well as franchisees associated with a franchisor or a network of franchises with franchisees employing more than 500 employees in total.
- Employers that do not meet the criteria for mid-size or large-size employers are subject to Washington State’s minimum wage requirements for employees.
- Local Minimum Wage Increases (WA State):
Federal Overtime Regulation Proposals
Simultaneously, the U.S. Department of Labor has proposed substantial changes to the Fair Labor Standards Act’s (FLSA) annual salary-level threshold for white-collar exemptions to overtime requirements. The proposed increase would raise the threshold to $55,068, with automatic updates every three years.
Implications for Businesses
The implications of these changes for businesses are far-reaching:
- Increased Labor Costs: With higher salary thresholds and the potential reclassification of employees, businesses may face increased labor costs.
- Compliance Challenges: Staying compliant with evolving employment laws is vital. Failure to do so can lead to backpay liabilities and financial penalties.
- Impact on Employee Classification: Employee classifications may need to change to align with new wage and overtime regulations. Accurate classification is essential to ensure compliance.
- Budget Adjustments: Businesses need to review their budgets to accommodate the increased labor costs and potential salary adjustments.
- Management/Supervisor Training: Enhanced training is necessary to align with new regulations and ensure compliance.
Changes Beyond Washington and Federal Level
While these changes are significant in Washington State and at the federal level, it’s essential to note that several other states are implementing similar wage and employment law changes. For businesses operating across state lines, understanding these changes is crucial to maintain compliance.
JB Consulting Systems Can Help
At JB Consulting Systems, we understand the importance of navigating these changes seamlessly. With our expertise in HR and employment law, you can trust us to guide you through these changes. We recommend all businesses conduct Salary Reviews, conduct employment status tests to ensure all employees are classified correctly, and create a Compensation Plan.
- Salary Reviews: We recommend a thorough salary review to ensure your classifications align with the new regulations.
- Custom Compensation Plans: Our team can create customized compensation plans to meet the unique needs of your business while complying with the regulations.
The employment law changes in 2024 are a call to action for businesses. JB Consulting Systems is your partner in ensuring compliance, adapting to these changes, and thriving in an evolving workforce landscape. Stay informed, be proactive, and partner with experts like JB Consulting Systems to navigate these changes successfully and secure your business’s future. Reach out today.