EAP Pre-Draft Proposed Rule Language (Second Version)

I believe such an aggressive a Rule change will have adverse unintended consequences. With the State wide Min Wage scheduled to go up Jan 1, 2020 already by 12.5%, a multiple of that will price many current positions out of the market, forcing a reduction in the number of salaried positions on a wide scale. I am in the restaurant industry, and I can easily see how many employers would opt to replace 1 full time position with 2 part time positions. Also, many industries include bonus plans, which could be reduced or eliminated.

Over the years, I have seen employees opt for the predictability of a salary position, vs an hourly position with overtime that ebbs with various business cycles. Depending on the Threshold this would cause employers to withhold an offer like that. It should be noted that we are currently in upward economic cycle. Downturns do come, and in the wake of downturn cycle, employers would choose to eliminate these types of positions 1st, again potentially replacing them with part time staff.

This Rule change would certainly have the effect of reducing the number of individuals who are offered an entry level management position, significantly increasing the load on senior salaried personnel, and reducing upward mobility of the workforce.

If this rule is political necessity, I would suggest a maximum Threshold factor of 1.25 to 1.5, depending on the size of the business. This would still offer an incentive for employers to offer such a position, and employees to want to take such an offer. With the State wide 2020 $13.50 Min Wage, a 40 hour time individual would make $28,080, at a 1.25 Threshold factor, that individual would make, $35,100. A $7,000 a year increase. I believe that for every increase in the Threshold factor over 1.25 will increase the level of unintended consequences.

There will be winners and losers, with currently considered rate of increase, the probability leans towards more losers than winners.

I am a small business owner with 1 employee who currently qualifies to be salaried. Some weeks she works less than 40 hours, other weeks she works slightly more because she wants to "get ahead" on some work so she chooses to log-in from home. Right now, I can give her that freedom of choice. She ultimately probably benefits from being salaried. If the law changes, I will change her to hourly, and she will not have a choice to log-in from home. Her pay will fluctuate based on her hours, and if anything, it may actually reduce her pay a bit. I understand changing the minimum threshold some, but doubling it seems extreme.

AVM Biotechnology is a Seattle based start-up with less than 10 employees, all who are owners of the company. We project commercial marketing approval by the FDA of our lead drug in Dec 2021, at which time we will grow rapidly. Until we have revenue we must remain lean and mean. As owners, rewarded for our hard work, we cannot be successful unless we work overtime, and we could not afford to pay those rates for overtime. This new law will harm small, emerging companies, particularly those like AVM Biotechnology who grant significant ownership to their team members. The proposal should not apply to companies with less than 25 employees and no revenue. Thank you for your consideration.

I understand why we need to re-visit the Salary threshold due to minimum wage increases. However, lawmakers need to spend some time and look at the areas that are supporting this state. Many of the areas are outside of Seattle and are Agriculture towns. The cost of living is significantly less. Every wage increase that happens is due to King County politics. Business Owners cannot afford these rate increases. Businesses will start moving out of state as it is easier and more cost efficient to go elsewhere. We need to keep our businesses open. The state needs to also make decisions for areas other the King County and what is good for them. What's good for them is not good for the rest of the state.

The draft proposal should incorporate the overtime for salaried workers. I am a salaried employee and employer sometimes delegates so much of work that it could not be reasonably done within 40 hours. I am spending 60-65 hours a week with 12-14 hours day and working thorough the weekends without any overtime since I am salaried employee. The draft proposal should incorporate the provisions for overtime for salaried workers otherwise salaried workers will always be exploited by the employers.

Our nonprofit is struggling with keeping up with the minimum wage changes. This is a financial burden we can not bear as we are already looking at cutting benefits and stopping our annual cost-of-living adjustment.
If the salary threshold changes, most if not all of our management team would be impacted by this.
We would have to change our staff to salary non-exempt which would result in a change in record keeping, policy writing and implementation, and potentially lower production from our managers that consistently work over 40 hours in a week. We already struggle with large workloads as we cannot afford additional staff or overtime. Less hours in the office would not help this situation.

We are a small to mid-size community theater and having only a few staff to cover the many duties to run the organization. We can not raise the salary levels to accommodate these requirements without some hardships. We also pay 100% of medical and dental insurance and that too would have to be adjusted, probably making the employee make up the difference. These requirements would be fine for large corporations, but please don't do this to the many non-profit arts organizations. This would close many doors.

Thank you to L and I for stepping and taking on this very unpopular task, however, it appears as though L and I is making this decision in a vacuum! Substantially increasing salaried employees pay, seemingly overnight, is detrimental not only to the company paying but the employee as well. It makes me wonder if anyone at L and I has every ran a business. This increase is too far too fast and I think it will actually hurt the employees L and I is trying to help.

I did not see any language dealing with appointed exempt employees and am wondering what they would fall under. as I work for a sheriff in an appointed position but also as an exempt employee and I over see an entire department would this rule apply to myself and many others around the state who are in the same position as most of us make less then the proposed amount you are listing. it would be nice if we were included in this law as most of us are on call 24/7 365.

I appreciate the opportunity for feedback on L&I’s draft proposal. Looking at this proposal, which we recently found out about, causes a lot of anxiety. We are a small non-profit with approximately 45 employees. We provide low-cost respite to families who have children and adults with developmental disabilities living in their home. We spend 94% of our funds providing services, only 6% is for overhead
We are facing the fact in this upcoming year that the reimbursement rate from state contracts will no longer allow us to pay for one on one staffing to help kids with significant disabilities, including tube feeding, seizure and behavior issues for our summer camp. We serve 185 kids all of who are being served by volunteers except the 42 one on ones who require a person who has been trained or skilled in dealing with health and behavior issues. The State of Washington reimbursement rate for services under Developmental Disabilities Administration is not able to keep up with Minimum wage. Many services ask volunteers to supplement services.
We provide 20 year-round services and utilize volunteers to help. It requires dedicated management staff to train, manage and ensure safety and quality of programming that is being done by volunteers and entry level staff. Our staff are trained and work many hours whenever the call for help is needed.
Our organization only has one employee the Executive Director who will meet the salary expectation you have proposed. The cost for overtime of management will be cost prohibitive. Our only solution will be to cut services. Please rethink this to a more manageable number, not 2 to exceed 2 times; please do not make it go up each year and please create an exception for non-profits.
And before you implement can you ensure that the State of Washington can afford to implement it in its budget.

This will have a significant impact on non-profit organizations, especially the smaller ones. Because most non-profits run on lean budgets, they will be forced to make adjustments in hours and wages, because they cannot afford to pay overtime. Another potential impact will be to reduce services or cut programs, thus impacting the most vulnerable and citizens who are in need. The non-profit I am associated with receives most of it's funding from the state of Washington. The State has not increased reimbursement rates by any significant amount in nearly 8 years. It is already a struggle for non-profits to keep up with minimum wage increases and paid leave requirements, with no additional funding to pay for these mandates. With competitive employment environment we are experiencing, attracting and retaining quality employees is a challenge. Consider the ramifications of these decisions not just on large corporations, but small businesses and non-profit organizations.

As someone who has told employees in the past they were being reclassified from exempt to non-exempt I can say they all saw it as a demotion. Why is the state trying to “help” workers who mostly will be disappointed when they receive this great benefit of overtime. These workers will now have to clock in and out and be told that they cannot exceed 40 hours. And ultimately this makes no sense to help the people it’s trying to help....it’s too easy to get around the rules. If an employee is working 60 hours a week at $35k a year now and they are exempt, all the company’s has to do is lower the hourly wage to compensate for the extra hours of overtime. “Hey, good news, you get overtime now...but your hourly wage is being reduced 25% so you still make the same amount.”

I currently serve on five nonprofit boards, and I am concerned about the impact that the proposed changes to the exemption level might have on small organizations and on the ability of nonprofits to expand their impact. As a social justice advocate, I agree that workers should not have to carry the burden of poor planning and management by their employers! Often times, people prefer comp time or other flexibilities rather than over time, and in a competitive work environment, such as we have here in Washington, employers that offer good benefits and nice leave packages often attract better candidates-- that includes the over-time versus comp time pay. I am especially concerned that an increase of 200+-300+% is such a shock that many organization ( and small for-profit companies) would have to scale back or even close. Perhaps an initial increase of 50% to about $35K/year would give everyone the chance to evaluate and absorb changes.

Starting teachers in Wenatchee School District make $46K/year-- and I guarantee that first-year teachers are working more than 40 hours per week every week from August 15-July 1! Even tenth year teachers usually work more than 40 hours. What is required to do a job does not always line-up with office hours and many young professionals want to do their work in their way and not worry about the clock.

It seems to me that a responsible government would be re-evaluating all kinds of income levels on a regular basis-- and not after many years of inactivity suddenly try to change everything all at once. Just as the senior property tax exemption was only raised a small amount, so too should labor changes be raised incrementally.

I run a large non-profit corporation. We have 1,400 employees and an annual budget of $45M. We believe pay is one of the single best predictors of social and racial justice. We raised our minimum wage to $15, when our state's minimum wage is only $12. We did this out of the belief that people helping others living in poverty should not, themselves, live in poverty. We also believe that the current standard for exempt employees is way too low- $23,000. The option put forward in the pre-draft version- to raise the exempt standard to 2-2.5 times the current minimum wage, however, would be a significant hardship to organizations like ours. What this would mean in Washington state (where the minimum wage will be $13.50/hour in 2020) is the new exemption standard will be between $54,540 and $68,175. This represents a 137% to 196% increase. This will put many organizations out of business. We rely on exempt employees to work more than 40 hours/week when the work requires it. To bump to $40K/year seems much more reasonable and still a 73% increase. The fact that the federal government has kept the current standard so low for so long is embarrassing, but that embarrassment should not be fixed by hikes of this size.

Please understand this comes from an organization that works everyday for fair wages for not only its lowest paid staff, but also its exempt staff (for our organization $37,500 is our current exempt cutoff).

This legislation would be a tremendous step forward for workers all over this state. Successful companies - large conglomerates or small "mom and pop" businesses - should not be built on the back of exploitative labor practices that assume unpaid overtime work from poverty-level employees. This legislation would ensure that having a salaried position actually guarantees a level above a living wage.

Yes, there will be difficulties for some, especially those in my sector (nonprofits) to implement this, and I would agree with a stepped phase-in of the new caps over several years. But let's not act like this situation is the fault of anything besides the neglect of this legislative area (untouched since 1977!), and certainly let's not use that legislative ineptitude as an excuse to leave the working class exposed to exploitation and poor labor practices.

In my opinion, the higher salary threshold should be phased in based on employer size instead of geographic location. Larger employers are more likely able to handle increased overtime costs. Smaller "mom and pop" companies might not survive if they have to pay higher overtime costs. Also, companies in more rural communities or areas with lower costs of living might not make the thresholds for any proposed changes under this rule, so making it less effective if based on geographic region.

Please clarify the salary threshold of between 2 and 2.5 times minimum wage starting January 1, 2020. Which exemptions would be at 2 and which at 2.5? I also notice that the Computer Professional exemption still states 3-4 times minimum wage in the draft rules. Thank you.

1. Assuming an effective date of January 1, 2020, should the department consider a phased-in implementation of the new threshold for employers based on employer size? Yes, a large company should be the first wave, larger companies tend to have more infrastructure to quickly research, and make changes to overtime rules in a more expeditious manner. This would be followed by mid size and small employers. What phase-in schedule should the department propose? All large companies by 12/31/2020, mid and small employers by 12/31/2021
a. What method would you recommend to define employer size? 1-500 = small, 501-2000 = mid, 2000+ = large
b. When would you recommend the updated threshold take effect for all employer sizes? By end of 2021 for all employer sizes

2. During a phase-in period and/or once the rule is fully implemented, should the department consider adopting a higher salary threshold in higher-wage cities, counties, or areas of the state? Possibly, further research may be required to determine where and how dramatic wages differ by municipality or region of the state.
a. What method would you recommend for defining which areas would be subject to a different threshold? This is a difficult analysis as many commute from a lower cost of living area to a higher paying, metropolitan area. Maybe it is defined as Seattle and a 50 mile radius?
b. Would you recommend a different phase-in schedule apply to these higher-threshold areas? How should the implementation schedule differ? Id recommend this step, as well as 2A, be considered as part of a 2nd wave to see the impact on the implementation of items 1a and 1b.
3. What definition of “primary duty” (found in WAC 296-128-505(4)) should be included in the rules?
4. What criteria for the duties tests, if any, should differ between the federal and state rules—I’m a fan of the employer discretion on the 50% rule, this is not as clearly defined in the FLSA rules.

The two organizations I work with are small non-profits. Increasing the minimum amount for exempt employees will cause extreme hardship to our organization. One of our organization is an assisted living where we accept Medicaid - the Medicaid rates don't adequately cover the cost of providing services now and if we are required to pay overtime for our Administrators and other key Managers we probably won't be able to continue to be successful. In 2019 the minimum wage is going up to 13.50 an hour, if the rate is 2.5 times that equals $70,200 and we would probably not have any employees as exempt.