Washington state workers are about to reclaim their time.
On Wednesday Governor Inslee's Department of Labor and Industries (L&I) announced a rule change that will increase the number of salaried workers eligible for overtime. The new rule raises the salary threshold for overtime eligibility from around $24,000 to approximately $70,000 (in 2020 dollars) by 2026. The state currently sets the threshold at only $13,000 per year, but workers are covered by the higher federal level, which was last adjusted by Bush administration in 2004.
Bottom line: If you're a salaried employee making less than ~$70,000 in 2026, your employer will owe you time-and-a-half for every hour you work over 40 hours per week, no matter what your job description is. The proposal will also simplify the "duties tests" used to exempt "executives," "administrators," or "professionals" from overtime protections, so people who are currently denied overtime because their jobs supposedly fall into one of those categories will soon get the protections.
According to the agency, once the phase-in is complete in 2026, 250,000 more employees in Washington will be newly eligible for overtime. But that figure doesn't include employees who technically should already be getting overtime now because their duties don't really qualify them for exemption. An analysis from Economic Policy Institute shows that just over 400,000 workers, all told, will be newly eligible, or will have stronger protections as a result of the change.
The salary threshold will be calculated as a percentage of the state's minimum wage. By 2026, the threshold will be equivalent to 2.5 times the annual amount of the minimum wage, and it will rise with inflation from then on.
The state will phase-in the change over six years. Businesses with 1 to 50 employees will have a slower phase-in rate than those with 51 or more employees. I'll bore you with the details of the phase-in rates some other time, but, just to give you a taste, the initial overtime rate for the smaller employers will be 1.25 times the minimum wage, while the overtime rate for the larger employers will be 1.75 times the minimum wage.
So, beginning July 1 of 2020, the overtime thresholds will be $35,000 per year for employees at the smaller companies and $49,000 per year for employees at the larger companies. Those numbers will slowly rise to ~$70,000 over six years.
The announcement kicks off a three-month public comment period, which will include a statewide tour of town halls to discuss the issue. That process will end in August, and the final ruling will be made this fall.
"It's About Time"
The last time Washington updated its threshold was in 1976. That's over 40 years ago. Since then, the number of workers eligible for overtime pay has drastically decreased. According to EOI, nearly 63% of salaried workers qualified for overtime pay in 1975. In 2016, only 6.8% of salaried workers qualified.
Over those last four decades, employers of all kinds have been pressuring employees to do extra work for free, either by dangling inflated job titles in front of their faces, or, in the case of nonprofits or small ventures, by relying on their workers' dedication to the cause.
"Make no mistake—weakened overtime protections have been a leading mechanism through which the wealthiest Americans have fattened our profit margins," says professional rich guy Nick Hanauer, who has long pushed for the rule change on a national level. "For way too long, rich people like me have been able to force working people like you to work long hours in exchange for exactly zero extra pay."
Washingtonian workers have been missing out on about $25 million per year in overtime pay, according to a handy tracker run by the Economic Policy Institute.
The EPI has been tracking the numbers since the Trump administration failed to defend a lawsuit brought by Republican states against the Obama administration's proposed change to federal overtime rules. A federal judge in Texas initially blocked Obama's proposal in 2016, which would have "extended overtime eligibility to an estimated 4.2 million workers," according to Politico.
Washington's rule will likely face a court challenge at some point, too.
What Will Happen Once the Rule Changes? And Who Is Going to Be Pissed?
From a business perspective, Hanauer says employers will "either have to pay you more for your time, or they'll have to hire more people to carry the workload."
He added: "Either way, it's good news for you, and great news for the economy," implying that there will be more jobs.
If you don't end up working as much overtime because your company decides to restructure your duties, then you'll get more of the most precious commodity in the country: time.
"Ensuring that workers once again get paid for their time will return millions of hours a year to people in our state. Hundreds of thousands of workers will once again have the time they need to care for their families, give to their communities, pursue their dreams, and just live their lives. It’s about time,” said a spokesperson for Working Washington.
With all the time you get back from not having to work 80-hour weeks with no pay, you'll also be able to pick up that second or third job you need in order to live in places like Seattle.
Of course, big business does not like the sound of any of this. In a statement, Kris Johnson, president of the Association of Washington Business, says the proposal "simply goes too far and risks a variety of unintended consequences including a reduction in program offerings at nonprofits, fewer opportunities for employees to advance into salaried management positions, and reclassification of employees from salaried to hourly positions."
Johnson asks state officials to "slow down, reconsider the number and match the federal requirements, which are in the process of being updated," forgetting to add that the fucking Trump administration is the entity updating those requirements.
The idea that the proposal goes "too far" also doesn't make much sense. Overtime salary thresholds have been set between 2.5 and 3 times the minimum wage since the inception of the Fair Labor Standards Act in 1938. When Washington last updated the rule, the state agency set the salary threshold at 2.7 times the minimum wage, which is a bit higher than the current proposal. So, if anything, the agency should be raising the threshold to at least 3 times the minimum wage, and maybe more to make up for workers missing out on millions of dollars in overtime pay for the last several decades.
Carolyn Brotherton, a union organizer and microbiologist who worked with the Postdocs at University of Washington, has heard complaints similar to Johnson's before, and she doesn't buy them.
In response to Obama's proposed rule change back in 2016, Brotherton said UW administrators were freaking out. "They said this would burden [the university], they said they'd have to lay people off, and that it would create administrative havoc. But they ended up just raising everyone's salaries to around $48,000," which was just above the newly proposed overtime threshold.
"Instead of training all those researchers to track their hours, they just upped the pay," she added. "When it comes down to it, researchers and postdocs tracking their hours would have been a new thing for the field. Science is not a 9-to-5 job. You have long days and short days, and it's just not a 40-hour work week."
Those same researchers, who bring in to the university billions of dollars in grants, will likely again be paid below the salary threshold as of next year.
Brotherton predicts some institutions will raise salaries as UW did in 2016. But there's another option, too. "They could also make people track hours and cross their fingers that academic culture will pressure people into not claiming overtime," she said. "A lot of researchers aren't in the mindset of thinking they're owed overtime. So it's going to be interesting to see what happens."