(*See Update at the end of this post.)
Employers who have Washington employees need to plan for upcoming federal, state and local requirements for pay increases. This second post on our theme addresses the forthcoming increase in Washington's statewide minimum wage.
On September 28, 2016, the Washington State Department of Labor and Industries announced that the state minimum wage will increase by six cents an hour, from the 2016 rate of $9.46, to a 2017 rate of $9.53 per hour. Such announcements have become a fall ritual since voters approved a 1998 ballot initiative indexing Washington's minimum wage to increases in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The Washington minimum wage applies to adult workers in both agricultural and non-agricultural jobs. Workers younger than age 16 may be paid 85 percent of the adult minimum wage, or $8.10 per hour during 2017.
Overtime-exempt employees are not subject to the minimum hourly wage. Instead, employees who are classified as exempt under the executive, administrative, professional or computer professional exemptions must receive the minimum salary or pay level that corresponds to the exemption being used. As discussed in Part I, the FLSA's minimum salary level for executives, administrators and professionals is more than doubling effective December 1, 2016.
However, Washington's statewide minimum wage might increase substantially more than six cents per hour when 2017 arrives. On November 8, 2016, Washington voters will decide whether to adopt Initiative No. 1433, which would both raise the statewide minimum wage and institute a statewide paid sick leave requirement (instead of paid sick leave currently being required by only a handful of Washington cities). More specifically, if Initiative 1433 is adopted, the Washington minimum wage will increase to $11.00 on January 1, 2017 -- an immediate further increase of more than 15%. Then, three more Washington minimum wage increases would occur on January 1 of each of the three succeeding years:
*To $11.50 for 2018 (an increase of another 4.5%),
*To $12.00 for 2019 (another 4.2%), and
*To $13.50 for 2020 (another 12.5%).
Thereafter, the current approach to cost-of-living indexing of the Washington minimum wage would resume, starting with the wage rate for 2021. Historically, this indexing often has resulted in Washington's minimum wage being the highest in the United States.
Finally, remember that employers must apply the federal or local wage law that is most favorable to the employee. Thus, if an employee is covered by a higher local minimum wage, the employer must pay that wage rate instead of Washington's statewide minimum wage. The cities of Seattle, SeaTac, and Tacoma, Washington all have higher local minimum wage requirements, which also are set to increase in 2017.
Update: On November 30, 2016, the Washington Secretary of State posted final results showing the passage of Initiative 1433 by a margin of 57.42% to 42.58%, with nearly all of the counties in Western Washington voting to raise the state's minimum wage but none of the Eastern Washington counties passing this measure. Nonetheless, all Washington employers now must increase the minimum wages they pay non-exempt employees to $11.00 per hour beginning January 1, 2017, and must plan for the further state minimum wage increases listed above, set for 2018-2020.
Seattle-based attorney Karen Kruse has long assisted employers in complying with federal, Washington State and Washington local minimum wage laws.