As an employer in Washington, July 1 often means new rules and/or regulations. This year is no exception. One new regulation that employers must be aware of and implement is the new rule on overtime pay for “Executive, Administrative and Professional,” or EAP employees.
Previously, any employee that was considered “management” and earned a salary of $23,660 per year was generally exempt from overtime pay requirements. These employees could work over 40 hours per week and not be paid for the extra hours worked.
Beginning July 1, 2020, this will no longer be the case. Employers will have to use two new standards to determine if EAP employees must be paid overtime rates for any hours worked in excess 40 per week.
The first standard is relatively straightforward and is based solely on compensation. For 2020, the salary standard for Washington employees will be the same as the new federal standard. Any employee earning less than $668 per week or $35,568 per year must be paid overtime for any hours worked in excess of 40 per week, regardless of job duty.
The second standard used to determine whether overtime must be paid is a “duties test,” which is subjective. In order for an EAP employee to be considered exempt from overtime requirements, his/her job duties (not just job title) must include such things as management/supervision of at least two people, ability to hire/fire, etc.
In order for an EAP employee to be exempt from overtime pay requirements, they must meet BOTH the salary threshold and duties tests. Otherwise, overtime pay (1.5 times the hourly wage) must be paid.
The Department of Labor & Industries has more detailed information on the new overtime rules on their website.
Please note that beginning January 1, 2021, and each year thereafter, the salary threshold will increase. For 2021, the threshold for employers with 1-50 employees will be $827/week ($43,004/year), and for employers with 50+ employees the threshold will be $965/week ($50,180/year).
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