EAP Draft Rule Concepts

As a nonprofit organization that works with 1000+ nonprofits annually, we are most concerned about the impact of the proposed rules on nonprofit organizations in our state.

It is not uncommon for nonprofit staff to be salaried or have jobs that are primarily managerial or administratively focused with compensation below the proposed thresholds. This is true even in senior leadership roles, particularly in smaller organizations. A sudden or sharp change to regulations forces nonprofits to make changes to programs or staffing that could be highly disruptive. We favor a gradual or moderate approach that allows adequate planning and implementation time. It will certainly be more difficult for nonprofits to absorb a standard that adopts a multiplier of 3x the minimum wage than it would be even to adopt a 1.5x multiplier or a standard that mirrors that proposed by the Obama administration.

Nonprofit organizations in different geographic regions throughout the state often compensate at different levels given significant cost of living differences. Any changes to overtime regulations need to be completed with great sensitivity about these geographic factors.

We also favor flexibility to accommodate programs, such as summer camps, where workers are essentially on call 24/7. Requiring overtime pay for these workers at the same levels proposed would be catastrophic to the existence of these programs.

It benefits all of us when nonprofit workers receive better pay and benefits. Our communities count on them to accomplish some of the most difficult and most important work a person can do. We encourage the government to partner with nonprofits to minimize mission impact that result from any changes to overtime regulations.

Operational support is critical to help nonprofits effectively staff their programs and compensate workers fairly. If the state increases the costs to nonprofits through these regulations, it is critical that state contracts are adjusted to reflect this increased cost to nonprofits to deliver services. It is critical that nonprofits and government work together to make sure this regulatory change does not result in fewer services being available to the community.

Thank you for the opportunity to comment on this important update. I would like to see three things occur as a result of this work. 1) raise the salary level test to exempt more workers, 2) ease the administrative burden for both the employer to comply and for the state to enforce these requirements, and 3) address the requirements as they related to technology jobs, and jobs where technology is changing the nature of work to clarify what is and is not exempt work. My specific thoughts are below.

Applicability:
Allow small businesses to follow federal rules. This alleviates the need to consider impacts to organizations that vary based on size and geography.

Salary Level Tests:
• Align the salary level test with minimum wage using a formula (at least 1.5x, preferably 2.0x). Automatically update the salary level test when minimum wage rates change. This is the simplest solution to administer, and likely accomplishes the overarching goal – to make more workers eligible for overtime.
• Add a Highly Compensated employee exemption and tie to minimum wage (5x for example). If employee meets both the highly compensated level and one of the federal exemption requirements, no further tests required. This narrows the exemption duties tests to a smaller group of people, and eases the administrative burden on employers and the enforcement burden on the State.

Duties Test comments:
• Eliminate all percentage caps for non-exempt duties. This is a heavy administrative requirement and is burdensome for employers to test for and manage, particularly as work evolves due to technology changes. Instead, provide better guidance and audit for sound decision making in the application of those guidelines.
• Executive Duties test – align with federal criteria. I suspect the additional WA state criteria does little to move more workers into non-exempt roles.
• Administrative Duties test – align with federal criteria and clarify the inclusion of jobs who use discretion and independent judgment to advise management on matters of significance. Identify technology change as a matter of significance. Update guidance examples to include types of work that is or is not exempt, particularly examples related to jobs with heavy reliance on technology, or in the technology arena. Many technology workers who work in both a hands on & advisory capacity do not require advanced education and would be exempt under this criteria rather than the computer exemption.
• Professional Duties test – align with federal criteria, and add “technology” and “math” to the advanced knowledge learning areas. Provide up to date examples of ‘advanced knowledge’ fields in guidance (data science, for example)
• Computer Exemption – eliminate and rely on Administrative or Professional exemptions. This simplifies compliance by reducing the number of exemptions. It also acknowledges that technology should not be viewed as a certain type of job. Technology skills are becoming increasingly embedded in a broad spectrum of roles, including those that qualify for executive, administrative and professional exemptions.
• Outside Salesperson – no opinion
Again, thank you for the opportunity to comment on this important issue that directly affects so many people who work hard to make ends meet.

Allison Brodine
Compensation Professional
Wenatchee, WA

The federal test for the Administrative exemption is very vague and the one that's most often misapplied. I agree with the suggestion that it should be clarified. "Non-manual office work directly related to management or general operations of employer or employer’s customers" describes nearly every office position. "Primary duty includes discretion and independent judgment on matters of
significance" is way too subjective. Matters of significance are a judgement call for any business. A matter of significance could be a receptionist deciding to whom a call gets transferred to get the customer the fastest service. The rule should define what constitutes a 'matter of significance', such as can this employee decide which bank the company is going to use? Can he or she unilaterally change company policies?

All exempt categories should have a cap on the percentage of time the employee can spend on non-exempt duties. When the percent caps were removed from the federal definitions in 2004, employers were free to classify people as exempt based on a title simply by declaring their "primary duty" is management regardless of how much time they actually spent managing. For example, a fast-food restaurant assistant manager can be classified exempt, even though she spends the vast majority of her time working the register, cooking, cleaning, etc and the only time she acts in a management capacity is when she's sending people home when business is slow and counting the registers at the end of the night.

I'd like to see the tests also emphasize that EAP exemptions are ONLY for office, non-manual work. Some industries exempt 'lead' workers and foremen who obviously don't fit into the office-non-manual category. That's also another reason to reinstate the percentage cap. If a foreman is also running a piece of equipment most of the time, he shouldn't be exempt.

I appreciate the department's examination of these exemptions. Too many employers believe that paying someone "on salary" or giving them a title like "specialist" is all they have to do to avoid paying overtime. If that was true, you could call a receptionist the Communications Specialist and make the position exempt. The best practice, from an HR perspective, is that unless a position fits PERFECTLY into an exemption category and there's no doubt, no "well maybe this makes them exempt or maybe that does", the position is hourly...period. And the EAP definitions should be detailed enough for employers and EMPLOYEES to easily make that determination.

I am most concerned with the addition of a highly compensated worker exemption. The level of compensation an individual receives, whether that is in wages, benefits, or both, does not indicate the degree of control the individual has with the flexibility of their work life balance. In the field of construction, where many of the workers would be considered "highly compensated", the only barrier to demanding excessive work hours is the penalty that overtime rates impose on employers. Workers in blue collar, manual labor positions, are particularly susceptible to needing time off from work which overtime rates help to ensure.

In reading the rules as laid out in the EAP Draft Rule Concept, the only criteria being considered is the level of compensation. If this rule goes into effect with only this criteria, then the exemption will drastically broaden to include large numbers of workers who are currently employed in highly physically demanding occupations. These workers are dependent on overtime protections. Please do not take them away.