Employer Pay Requirements

Latest Updates to Employer Pay Requirements

by | December 20, 2019

Are you waiting on the latest updates to the employer pay requirements coming in 2020? Well, The US Department of Labor and Washington State Department of Labor & Industries has a gift for you. New employer pay requirements just in time for the holidays!


Federal Employer Pay Requirements Changes. Beginning January 12, 2020, Employers will receive new exemptions of specific benefits to the regular rate of pay calculation for employers calculating overtime for non-exempt employees under FLSA. These exemptions will clear up some confusion around which benefits to include in the “regular rate of pay” overtime calculation.

Washington Employer Pay Requirements State Changes. Beginning July 1, 2020, the minimum salary thresholds will increase and updates to the tests for “exempt” employee job duties. Both changes will occur under the existing overtime rules. The impact of this change on wage and overtime laws will result in more workers becoming eligible for overtime pay.

Federal Employer Pay Requirements

Regular Rate Rule Update

Currently, under the Fair Labor Standards Act (FLSA), employers must pay non-exempt employees overtime for all hours worked over 40 hours in a given workweek. Overtime is paid based on an employee’s regular rate of pay, which includes most monetary forms of compensation and payments (including salaries, nondiscretionary bonuses, commissions).

The final rules were published by the DOL on December 12 and will become effective on January 12, 2020. This update allows the exclusion of specific categories of payments from the regular rate. This update could encourage you to offer additional benefits by alleviating concerns of unknown overtime consequences or litigation, benefiting both you and your employees.

The final rule permits you to exclude specific categories of benefits from the regular rate of pay calculation such as the cost of providing certain benefits, such as

  • parking, wellness programs, employee discounts, tuition benefits payments for unused paid leave
  • reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel
  • specific bonuses
  • Contributions to benefit plans to assist with financial hardship. The specific exclusions are provided in the rules.

You should take this opportunity to review your overtime pay calculation practices in light of the new updates.

Washington State Employer Pay Requirements

Wage and Overtime Update

The Washington Department of Labor and Industries (L&I) published its final rule amending Washington’s overtime exemption regulations. In the first significant update to the Washington overtime rules since the 1970s, this amendment:

Updates the job duties test for executive, administrative, and professional workers (aka “white collar” workers) to more closely align with the federal job duties test.

Raises the minimum salary level for exempt employees from $455/week ($23,660/year) to $675/week ($35,100/year), and gradually increases the minimum salary for exempt workers through 2028 until it reaches 2.5x the Washington minimum wage, which is estimated to be $1,603/week ($83,356/year).

What does this mean for your business? These changes will result in approximately 250,000 workers becoming newly qualified to receive overtime pay, which previously exceeded the much lower minimum salary threshold. Employers will need to consider whether to begin paying overtime or increase salaries for these affected employees.

The salary threshold in Washington will not exceed the federal limit ( $679/week or $35,308/year), until January 1, 2021. Then the threshold for small employers (1-50 employees) will be 1.5x the state minimum wage (est. $827/week or $43,004/year), and the limit for large employers (51+ employees) will be 1.75x the minimum wage (est. $965/week or $50,180/year). You can find the full salary threshold implementation schedule can here.

Enlist Help

You likely will need to review your overtime pay calculation as well as pay and benefits for employees who now qualify for overtime. Equinox attorneys can help you understand your obligations and implement the right solutions. Contact us to learn more.