June 10, 2019
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Minimum overtime-exempt salary would jump to nearly $80,000 by 2026 under new L&I proposal

The Washington Department of Labor & Industries formally announced a new draft overtime rule last week that would raise the threshold for overtime-exempt employees to nearly $80,000 by 2026. If the rule is adopted, employers will need to pay salaried employees at least that amount or convert them to hourly workers, in essence creating a new super minimum wage.

The new proposed system would be phased in over the next six years. It would start at $35,000 per year for employers with under 50 workers. Larger companies would start at $49,000 per year. It would increase annually until 2026, when it would hit an estimated $79,872 per year.

Gov. Jay Inslee said of the proposal: "This is a long overdue update that will help tens of thousands of Washingtonian workers. Overtime protections ensure workers are fairly compensated when they work more than 40 hours in a given week — time that would otherwise be spent with their families and in their communities. The erosion of this threshold over time has left too many workers behind."

In announcing the rule, L&I noted that Washington's overtime rules were last updated in 1976. Washington is operating under the federal threshold of $23,660 which is in the process of being updated. L&I estimates that the new rule would make more than 250,000 workers in Washington eligible for overtime pay by 2026.

"The current system is out of date. It's at risk of failing tens of thousands of workers by broadly defining what a white collar worker is, which allows businesses to pay salaries that may be even less than minimum wage," said L&I Director Joel Sacks. "That's especially true for employees who are expected to work well over 40 hours a week, but don't get paid overtime."

AWB President Kris Johnson agreed that the state's current rule needs updating, but said the proposed rule is a huge jump and will likely come as a shock to many small businesses and nonprofits. The rule risks a variety of unintended consequences, from fewer program offerings at nonprofits, less opportunity for employees to advance into salaried management positions, and reclassification of employees from salary to hourly positions.

"If adopted, this rule will create a new super minimum wage that will impact every business in the state, even those that don’t employ exempt workers," Johnson said. "We encourage state officials to slow down, reconsider the number and match the federal requirements, which are in the process of being updated. This will prevent a patchwork of regulations in different states and minimize the unintended consequences, both for employers and employees."

L&I has scheduled a series of public hearings on the proposed rule in July and August.

The Overtime Rulemaking web page has details on this public hearing schedule:

  • Tumwater, July 15 at the Dept. of Labor & Industries headquarters.
  • Seattle, July 16 at The Swedish Club.
  • Bellingham, July 17 at Four Points by Sheraton Bellingham Hotel & Conference Center.
  • Ellensburg, Aug. 5 at Hal Holmes Community Center.
  • Kennewick, Aug. 6 at Springhill Suites by Marriot Kennewick Tri-Cities.
  • Spokane, Aug. 7 at CenterPlace Regional Event Center.

People can also comment by email to the Overtime Rule Program or by mail to the Employment Standards Program, P.O. Box 44510, Olympia, WA 98504-4510. Comments may also be submitted by fax: 360-902-5300.

The formal rulemaking process could take up to six months. L&I expects to adopt the rule in late 2019.

The Spokesman-Review and KUOW also covered the story.

For more on this issue, contact AWB Government Affairs Director Bob Battles.

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Manufacturing Solutions

A way forward on immigration

By Edmund O. Schweitzer III and Jay Timmons

Manufacturers are in the business of building solutions. When we see a need to be filled or a problem to be solved, manufacturers go to work innovating and making the products that improve our daily lives. But we don't stop there. When we see our nation facing a challenge, we don't just call on our legislators to fix it; we also provide solutions.

That's exactly what manufacturers have done to help fix our nation's broken immigration system. Earlier this year, the National Association of Manufacturers released "A Way Forward," a plan for comprehensive immigration reform that bolsters border security while strengthening the economy and providing certainty for those immigrants who are anxious about their future...

Legislation soon up for a vote in the U.S. House of Representatives and similar bills recently introduced in the U.S. Senate would provide a solution for these two populations, and manufacturers are calling on Congress to act swiftly. While this is not a comprehensive solution, these bills are a way to move our nation one step closer to a more functional immigration system, and for that reason, they should command strong, bipartisan support. It is simply the right thing to do...

Read the full op-ed in The Spokesman-Review
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State budget growth puts Washington in tight spot during next downturn

By AWB President Kris Johnson

State government will spend more than $52.8 billion over the next two years. This is an increase of about 18.3 percent over the previous two-year budget and one of the biggest increases in the last 25 years.

It's true there are many competing demands for resources, but lawmakers had $5.6 billion more to work with, before raising taxes. Rather than look for cost savings, they chose to raise more than $1 billion in new taxes.

It's a safe bet that most Washington families and small businesses did not increase their spending by 18.3 percent this year. This pace of expansion is unsustainable. When the tax collections drop, that usually means painful budget cuts and more tax increases.

Lawmakers made progress on important issues this year, but it came at a high cost. As they work through the interim and prepare for the next budget, our hope is that lawmakers will tap the brakes and slow the growth in state spending.

Washington has enjoyed years of strong economic growth, but we need to be prepared for the next downturn.

Read the full op-ed in The Wenatchee World
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