L&I released “pre-draft” rules late this afternoon which could restore overtime protections to hundreds of thousands of salaried workers in our state who haven't been getting any extra pay for the extra hours they work over 40.
Here are the key details of L&I’s “pre-draft” proposal — the latest step towards the first update to our state’s overtime rules in four decades.
L&I has proposed to raise the threshold for the overtime exemption & set it as a multiple of the minimum wage. Quick refresher on the way overtime rules work: all workers paid less than a specific threshold get time-and-a-half pay when they work extra hours over 40, regardless of whether or not they’re paid on a salaried basis, and regardless of what fancy job title their boss gives them. Currently that threshold in state law is just $13,000 a year. (The federal standard is about $24,000 a year.) Both are less than what a full-time minimum wage worker would be paid in our state.
L&I did not propose a specific threshold today. Instead they offered a range of possibilities: between 1.5x minimum wage and 3x minimum wage, which works out to a range of about $37,500/year to about $75,000/year. We have called for the threshold to be raised to 3x minimum wage, and we are pleased that figure is being considered. And we strongly believe that it would be inappropriate to allow a worker paid just $37,500 to work effectivelt unlimited hours.
L&I is proposing for the updated overtime rules to increase each year along with the minimum wage. The last time the state updated these rules was more than four decades ago. Because our state’s minimum wage increases each year with inflation, the threshold never again can be allowed to fall so far out of date.
Restoring overtime rights could improve the lives of hundreds of thousands of salaried workers, including front-line managers in food and retail; underpaid professionals in social work, research, and other fields; numerous office and clerical workers; more than a few journalists; and many others. And that means more parents with more time for their children, more people with more time to pursue their passions, and more neighbors with more time for their communities.
Background
How it works now: Washington State’s current outdated rules give companies an all-too-simple loophole to get out of paying overtime, no matter how many hours they make someone work. A company simply has to call someone “exempt” and pay them more than the applicable threshold for overtime exemption — only about $24,000/year — and they can wriggle out of paying them anything extra for the extra hours. Technically there are rules about what kind of jobs can be exempt, but usually your employer is the one who tells you whether you get overtime or not as long as they pay you more than the threshold. If you think they're wrong, you maybe could file a claim over that classification. But unless you have a lawyer on retainer, in the day to day reality of the workplace, your employer gets to decide.
It hasn’t always been this way: As recently as the mid 1970s (when the rules were last updated), more than 60% of salaried workers got time and a half pay when they worked extra hours over 40. Now less than 10% do — and it’s not because people are working less. (Source: Economic Policy Institute.)
Why it matters: Time is money, and employers are taking both. Salaried workers are clocking an average of 49 hours a week — some as many as 60 or more — and few get paid an extra dime for the extra hours over 40. (Source: Gallup.)
How did we get here: Today’s pre-draft rule comes as the latest stage in a months-long rulemaking process which included numerous rounds of substantial stakeholder comment, a detailed data review, and more than a thousand workers calling for action, including many who shared their own personal experience about the impact of out-of-date overtime rules.
What’s next: L&I will hold public hearings on this proposal over the next two weeks, then accept additional written comment. The final draft rule will be analyzed for economic impact and multiple additional rounds of feedback will be accepted before the rule is finalized. The department has indicated they plan to complete the rulemaking process this year.