State wants exempt salaried workers to make $80K. Not so fast, say business owners

Local business leaders are taking a dim view of a plan to raise the minimum salary in Washington to 250 percent of minimum wage — or nearly $80,000 a year — for executive, administrative and other salaried workers who don’t receive overtime pay.

But workers call the idea a win for work-life balance and for underpaid front line managers.

Executives suggested the state Department of Labor and Industries trim the plan to less than 200 percent and give businesses until 2021 to begin implementation, a year longer than currently planned.

The state is explaining the changes to the Minimum Wage Act at hearings across the state. Officials stopped in Kennewick this week.

The comment period continues into next month.

Managers said the changes are too big and happening too quickly, while workers praised them as a win for labor.

It is the first overhaul in four decades of the state’s minimum salary rule for workers who don’t receive overtime.

250% by 2025

If approved, the rule will take effect next summer, with the minimum salary ramping up to 250 percent of minimum wage by 2025 for employers with more than 50 workers and 2026 for those with less.

Steve Simmons, owner of CG Public House, a Tri-City restaurant and catering business, is opposed to the plan. He said his employees bring a wide variety of skill levels to the job, and he recruits workers with disabilities and barriers to employment.

Raising wages for salaried workers could hinder his ability to scale his business, he said.

He called on the state to scale back the minimum salary to 175 percent of minimum wage, delay implementation to July 2021 and adopt regional wages rather than a one-size-fits-all rate for the state.

Barronelle Stutzman, owner of Arlene’s Flowers in Richland, called the proposal an added layer of unwelcome regulation. Two years of automatic increases to the minimum wage, which now stands at $12 an hour, have added $48,000 to her payroll costs, she said.

Washington voters have tied the minimum wage to inflation, leading to annual increases.

Where, she wondered, is she supposed to find more money.

“Minimum wage was not meant to be a living wage,” she said.

Nolan Lockwood, who owns Walla Walla’s independent Harvest Foods, said the rising minimum wage for hourly workers forced him to trim his payroll by 11, to 27 people.

Raising the minimum pay for salaried or exempt workers could put him out of business, he said. Lockwood told L&I officials he won’t renew his lease in 2020.

No overtime pay

But Kenneth Buxton, a hospitality worker who is pursuing a degree in the industry so he can advance to management, supports the change.

He said the low minimum salary level encourages employers to abuse front line managers by making them fill in when hourly workers miss shifts. His supervisor colleagues regularly work 80-hour weeks, he said.

“That’s going to be me,” he mused. “That going to take away from my son.”

Nonprofits have gone on the record opposing the revised wages too.

The leaders of Columbia Industries, Grace Clinic and YMCA of Tri-Cities told the Tri-City Herald editorial board their funding hasn’t kept up and they can’t afford the new rates.

Converting salaried employees to hourly workers, as suggested by L&I, presents its own set of challenges, they said.

They would have to pay overtime when work exceeds 40 hours, upending flexible schedules that allow workers to take time off for family affairs.

That could threaten the ability of nonprofits to offer a wide range of services ranging from summer camps to college tours for high school students.

How it came about

L&I began reviewing the overtime protections in the state’s Minimum Wage Act in March 2018 at the direction of Gov. Jay Inslee.

Washington hasn’t updated its rules for salaried workers in four decades.

The result is that in Washington, minimum wage is the minimum annual salary is $23,660, a federal minimum.

The law carves out several exemptions to the minimum salary for agriculture and for some organizations serving children and veterans, L&I officials said.

If approved, employers with more than workers would have to pay 175 percent beginning next July, reaching the 250 percent level by 2025.

Smaller employers would begin at 125 percent next year, rising to the full 250 percent level in 2026.

It would affect an estimated 252,000 Washington workers when it is fully rolled out. There were more than 3.7 million jobs in Washington in June, according to Employment Security Department figures.

Employment is based on an employer’s Jan. 1 headcount.

Weigh in by Sept. 6

The deadline to comment is Sept. 6.

Written comments can be sent by email to EAPrules@lni.wa.gov or by mail, Employment Standards Program, P.O. Box 44510, Olympia, WA 98504.