Editorials

Editorial: Nonprofits, small businesses will be hurt by aggressive overtime plan. It’s time to speak up

Washington state’s rules on overtime pay are in need of an update — no question.

The last time they were revised was in 1976 so a major overhaul obviously is in order.

But if the bureaucrats involved in the changes aren’t careful, the new policy likely will cause hardships for small business owners and force nonprofits to cut services or raise fees.

We don’t want new wage rules that help some people but harm others. There must be a balance.

Currently, the salary threshold that determines if an employee can be exempt from overtime pay is $455 a week — or $23,660 a year, which is pathetic.

This means employees who make this minimal amount can be considered “exempt,” and are expected to work more than 40 hours a week without any overtime.

Unscrupulous employers who take advantage end up paying workers less than minimum wage.

It’s wrong and it’s about time the rules change. But new salary thresholds must be realistic so businesses and nonprofits can comply, and the current proposal by the state Department of Labor & Industries is set significantly higher.

If approved, the increases would be phased in over several years, beginning in July 2020.

With the first jump, employees at businesses with 50 or fewer workers would need to earn $675 a week — or $35,100 a year – to be considered exempt.

Companies with more than 50 employees would have the bar set at $945 a week — or about $49,100 a year.

There would be increases annually until 2026 when the salary threshold for exempt workers would be set at nearly $80,000 a year for all businesses, regardless of size.

This does not include teachers and some other labor groups who have their own salary schedules.

In most industries, however, employees who make less than the exempt amount would be paid on an hourly basis and would qualify for overtime pay.

This is a concern for many nonprofit agencies, especially those that offer youth activities requiring long or odd hours.

Steve Howland, executive director of YMCA of the Greater Tri-Cities, said under the proposed rules nearly all of his exempt employees would have to become hourly workers.

Once that happens, he said they likely would have to cut events and programs because the organization couldn’t afford to pay the staff overtime.

Hourly employees also have very little flexibility in their day because they are clocking in and out and must account for their hours at all times, even when traveling for training. That lack of freedom would be tough on many of his workers, he said.

Howland and others from the Columbia Basin Non-Profit Association met last week with the Tri-City Herald Editorial Board to discuss their anxiousness over the new overtime rules.

Mark Brault, CEO of Grace Clinic, and Brian McDermott, President of Columbia Industries, along with Howland, said they support the intent of the new overtime pay plan, but they want to see adjustments made to the current proposal.

Among their recommendations is a delay in the implementation of the new rules so they have more time to re-organize, especially with it coming on the heals of a state increase in the minimum wage.

They also believe special considerations should be made for nonprofits — especially those that run summer camps, all-day respite care, crisis response services, community fairs and other programs that operate outside regular hours.

The overtime rule puts all these kinds of activities in jeopardy, they said.

Gov. Jay Inslee was the one who asked L&I to change the overtime pay rules, and we agree with his intent. The current salary threshold for exempt employees is terribly low.

But sweeping changes rarely work for everyone.

The burden the new rules would put on nonprofits, in particular, must be addressed before they are allowed to go into effect. Otherwise the good intended likely will be overshadowed by the harm caused.

Representatives from L&I will be in Kennewick on Tuesday, Aug. 6, from 9 a.m. to noon for a public hearing on the issue at the SpringHill Suites by Marriott.

Citizens also can submit comments by email to eaprules@lni.wa.gov or by fax at 360-902-5300. Those who want to mail in their comments can send them to the Employment Standards Program, P.O. Box 44510, Olympia, Wa. 98504.

Comments must be received by 5 p.m. Sept. 6. If you have concerns about the proposal, now is the time to speak up.

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