EAP Pre-Draft Proposed Rule Language

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In March 2018, the Department of Labor & Industries filed a CR-101 for the rulemaking addressing the Executive, Administrative, and Professional (“EAP” or “white collar”) exemptions from the Minimum Wage Act. These are the rules that determine which salaried employees in Washington are required by law to receive overtime pay, minimum wage, and paid sick leave.

Over the last six months, the department has engaged stakeholders regarding the scope and content of the rulemaking, relevant data, and draft concepts for updates to the rules. Prior to filing the official CR-102 draft version, L&I wants your feedback on the first pre-draft of the proposed rule language.

We are asking the public to review the pre-draft version of the proposed rules and provide feedback by October 26, 2018. Additional information, including the rulemaking timeline, can be found on the “Learn about EAP exemptions” page of this engagement site.

Feedback can be submitted directly to this page via the “Submit Comments” tab. Feedback can also be submitted using an attached document via the “Upload Documents” tab. Please note that uploaded documents will not appear on the website immediately. Uploads may take up to 24 hours to post.

Feedback can also be submitted via the EAPRules@Lni.wa.gov email box. Feedback submitted to the email box will be uploaded to this engagement site.

In March 2018, the Department of Labor & Industries filed a CR-101 for the rulemaking addressing the Executive, Administrative, and Professional (“EAP” or “white collar”) exemptions from the Minimum Wage Act. These are the rules that determine which salaried employees in Washington are required by law to receive overtime pay, minimum wage, and paid sick leave.

Over the last six months, the department has engaged stakeholders regarding the scope and content of the rulemaking, relevant data, and draft concepts for updates to the rules. Prior to filing the official CR-102 draft version, L&I wants your feedback on the first pre-draft of the proposed rule language.

We are asking the public to review the pre-draft version of the proposed rules and provide feedback by October 26, 2018. Additional information, including the rulemaking timeline, can be found on the “Learn about EAP exemptions” page of this engagement site.

Feedback can be submitted directly to this page via the “Submit Comments” tab. Feedback can also be submitted using an attached document via the “Upload Documents” tab. Please note that uploaded documents will not appear on the website immediately. Uploads may take up to 24 hours to post.

Feedback can also be submitted via the EAPRules@Lni.wa.gov email box. Feedback submitted to the email box will be uploaded to this engagement site.

To submit your feedback directly to this page, please enter your comments in the text box below.
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I also agree that raising the salary base to 1.5 times and to perhaps phase year two or three to 2.0. The 3.0 is not an option for our non-profit as all funds earned through program and membership fees need to cover the costs of operations, therefore the proposed 3.0 times the state minimum wage (which also continues to rise) would then have to be passed on to the participants. This is not an option for most of our families. Funds raised through donations and grants currently covers children in need of scholarship. If the proposed 3.0 increase goes through, those funds raised would need to support the salary changes, not serving those in need. There is only so much funding available!

Dorry Foster about 17 hours ago

I wish to respectfully submit my opinion of the proposed salary basis for executive, administrative and professional employees. Specifically addressing the proposal for salary basis to equal a minimum of 1.5 to 3.0 times the state minimum wage. I support 2.0 times the state minimum wage. Since the pending federal salary base is approximately 1.98 times our current minimum wage, 2.0 times is slightly more generous. Plus with Washington State’s minimum wage slated to increase by 4.348% in 2019 and then by 12.5% in 2020 with CPI-W based COLA adjustments thereafter, every year the exempt salary basis will automatically increase to maintain the mandated relationship. Eg, if the basis is 2.0 times minimum wage, when minimum wage increases $1.50 per hour in 2020, the salary basis must increase by $3.00 per hour.

I am a CPA who is the general manager of a small international clientele business in Island County. This salary basis affects me personally. However, I have a fiduciary duty to my business and its other employees. In evaluating the impact of the state-wide minimum wage changes in combination with the proposed salary basis change for exempt employees proposed, increasing wages by the percentages noted above, plus the accompanying increases in employer-paid payroll taxes, my business is stretching past what it can afford. Given the global economic and geopolitical factors that affect my business, I cannot assume that my revenue stream will increase by the same percentages to offset these mandated wage increases.

Others have posted comments on this website from the non-profit side. Small for-profit businesses face the same challenges. In discussions with colleagues in similar positions at area small for-profit and non-profit businesses, all are concerned about the same issues I noted above.

Personally, qualifying as exempt allows me the freedom to put in the time needed to perform the job needed to manage my business versus watching the clock. Given today’s technology, even when not physically in the office, I am connected to the office and working. Tracking that time is challenging. My concern is if I am re-classed as non-exempt because my business cannot afford to pay the salary basis passed, will this lead to me working off clock or becoming less productive? Both will have negative impacts on my business. In discussions with my colleagues, they expressed the same concerns, plus I saw this same concern posted in other comments.

Fixing the exempt salary level at 2.0 times minimum wage will be a stretch for some small businesses and non-profits, but it is a lot fairer than mandating above that level. If a level above 2.0 is set, then I see this as discrimination against small businesses and non-profits causing employees in similar positions and otherwise meeting all other tests for exempt status, to be treated differently strictly due to the size of the employer.

Thank you for allowing me to submit my personal and professional opinions of the proposed change.

Patricia Hernandez 7 days ago

I support the adoption of the draft rules on EAP exemptions from the minimum wage act with a threshold of 3x the state minimum wage. Changes to these exemptions are long overdue. Far too many wage earners are required as a condition of employment to work hour beyond 40 per week, in some cases far beyond, without overtime pay. The rules as drafted make the exemptions much more closely fit the conceptual difference between overtime eligible work and overtime exempt work. The type of business is immaterial, including whether the business is a nonprofit. The regulations should be written for the type of work, not the type of business at which the work is performed. Either the nature of the work is such that it should be overtime exempt or it is not. Many types of businesses may cite various impacts, hardships, or funding constraints, just as employees may cite the various impacts hardships on themselves and their families when they are not compensated by overtime for long hours. Please adopt the rules as written with the threshold of 3x the state minimum wage.

Frank Prochaska 8 days ago

We believe it is a good idea to tie the Exempt wages to the current minimum wage so that this wage amount stays current. We would suggest a 1.5 times the minimum wage amount. Many small non profit organizations have a very difficult time funding for high salaries, our employees want to do this type of work and the funding we receive does not allow us to compete with private business wages, We do however usually provide great benefits. 2 times the minimum wage would force individuals to not report all of the hours they work, simply because they are running the agency and cannot afford to pay overtime if they are not making the minimum amount to be exempt. Non profits also tend to have more inexperienced staff who are doing exempt work but are not paid 2 or 3X the minimum wage. Please consider 1.5x the minimum wage for the exempt staff salary so as not to hurt non profits. Thank you

Jenifer Morgan 8 days ago

This requirement "a) Who owns at least a bona fide twenty-percent equity interest in the enterprise in
which the employee is employed, regardless of whether the business is a corporate or
other type of organization, and who is actively engaged in its management; and.." may not be applicable to those who work within a PLLC agreement, i.e. no one holds a 25% equity interest but all have equal say

Maryann, Renzi 8 days ago

The verbiage used in 296-128-540(c) is hard to decipher. Is the intent that the non-outside sales work not exceed 20 percent of the employee's workweek? If so, why not say that (see, e.g., 296-128-520(c)). As drafted, if the employer's nonexempt employees worked 1000 total hours, this language suggests the outside salesperson could work 200 hours "of a nature other than that described in (1)(a) and (b) - whatever that means.
Subpart (d) should be changed to read "Who is compensated by the employer on a guaranteed salary, commission, fee basis, or any combination thereof." Thanks.

Jeff James 9 days ago

I would second what Beth Harvey said in regards to nonprofits and using the "proposed but not adopted threshold of $47.5K per year". The only thing I would propose adding is a five year phase-up from the current federal exempt level of $23,660. To double this threshold or increase even more would indeed harm smaller and even medium sized nonprofits who would need additional resources to compensate for the overtime, or raise salaries to meet a higher threshold. Phasing up allows those nonprofits and even small for profit business to raise additional dollars over a reasonable timeframe. This would align with what we have seen via the gradual increases in the minimum wage. Thanks for allowing me to give my feedback.

Peter Grignon 9 days ago

1. Paragraph D on page 4 (Executive exemption), paragraph C on page 6 (Administrative exemption), paragraph C on page 8 (Professional exemption), and paragraph C on page 12 (Outside sales exemption) are extremely unclear as to the intent of the paragraph and how it affects the duties test. These paragraphs need to, at the very least, be re-written to clarify their intent. Further, if I understand the intent of these paragraphs correctly - and I am not certain I do - then I think it would be extremely difficult to measure and track the 20% of time established in these paragraphs. I cannot, as written, see what value these provisions add to the definitions of these exemptions.

2. I strongly urge the Department to use the proposed-but-not-adopted Federal salary threshold of $47.5K per year as its guide for establishing a threshold for exempt pay. I believe this calculates to around 1.8x the 2019 Washington minimum wage. I work for a nonprofit organization, and like many nonprofits we made changes to our compensation structure - some minor, some significant - to comply with the Federal rule change two years ago before it was held up in Federal court. I feel that the Federal threshold is reasonable, and to raise the overtime-eligible minimum salary higher than that would, in the case of my nonprofit, potentially cause financial hardship. At the very least I recommend that the Department give consideration to adopting some kind of sliding scale that does not overly burden smaller nonprofits and businesses with wages that they cannot afford to pay. Larger and for-profit employers may very well have the capacity to meet a higher threshold, but small organizations like mine simply do not have the resources to be able to meet a threshold that is 3x the Washington State minimum wage, and we are highly unlikely to ever be able to meet that high of a threshold.

Thank you for the opportunity to offer feedback.

Beth Harvey 9 days ago