Employers in Washington, Seattle, and other municipalities face increases in the applicable minimum wage on January 1, 2017: $11 in most of Washington and from $13 to $15 in Seattle, depending on whether the employer has 500 employees and provides health benefits. Like Colorado, Arizona, and Maine, Washington voters on election day approved dramatic increases in the statewide minimum wage over the next three years. The ballot initiative also granted all employees in Washington paid sick leave to care for their own or a family member's physical or mental health condition, or to obtain services related to domestic violence, effective January 1, 2018. This law will have a significant impact on all Washington employers.
Washington State Minimum Wage
Initiative 1433 amends Washington’s Minimum Wage Act and becomes effective January 1, 2017. The measure increases the state’s minimum wage to $13.50 per hour by January 1, 2020, through four annual increases:
Effective January 1, 2017, $11.00 per hour
Effective January 1, 2018, $11.50 per hour
Effective January 1, 2019, $12.00 per hour
Effective January 1, 2020, $13.50 per hour
Starting in 2021, the Washington state minimum wage will increase annually by the rate of inflation, calculated by using the consumer price index for urban wage earners and clerical workers. The Washington minimum wage is currently $9.47. Unlike similar legislation recently enacted in Oregon, California, and New York, Washington’s law does not contain special carve-outs based on the employer’s size or the employer’s location within the state. Businesses in Washington cities with higher municipal minimum wages will not be affected by the 2017 state $11 hourly rate. Employers must pay the highest applicable minimum wage, whether federal ($7.25 per hour), state, or municipal.
Oregon State Minimum Wage
Employers with locations in Oregon should also prepare for a 2017 minimum-wage increase. During its last session, the Oregon Legislature amended Oregon's minimum-wage law to establish a series of annual minimum-wage rate increases through July 1, 2022. The amendment also established three separate wage rates based on the employer's location within an urban growth boundary—currently, though, only the Portland metro area has an urban growth boundary. The three wage rates are Standard, Urban Counties, and Nonurban Counties and will increase as follows next year:
|
Effective Date |
Standard |
Urban Counties |
Nonurban Counties |
|
July 1, 2016 |
$9.75 |
$9.75 |
$9.50 |
|
July 1, 2017 |
$10.25 |
$11.25 |
$10.00 |
Beginning in 2023, the Oregon minimum wage will increase annually by the rate of inflation, calculated by using the consumer price index for all urban consumers for all items.
Seattle and SeaTac Minimum Wage
Companies with workers in Seattle and SeaTac are subject to city ordinances requiring minimum-wage increases that are the same as or greater than the increases required by the Washington ballot initiative. Under the City of Seattle’s local ordinance, on January 1, 2017, large employers (more than 500 employees) must pay workers a minimum wage of $13.50 per hour (if the workers also receive medical-benefits payments) or $15 per hour (without medical benefits payments). Likewise, small employers in Seattle will have to pay employees a minimum compensation rate of $13 per hour (with a minimum wage of $11 per hour plus $2 per hour paid toward an employee’s medical-benefits plan or tips reported to the IRS) or minimum wage of $13 per hour (if no medical-benefits payments or reported tips). And the minimum wage for all businesses in SeaTac will be $15.35 per hour starting January 1, 2017. Employees must receive the applicable minimum wage that is most favorable to them, whether federal, state, or municipal.
Washington State Paid Sick Leave
The second, and potentially most impactful, part of Initiative 1433 is its provision of paid sick leave to all wage earners after 90 days of employment. Beginning January 1, 2018, all Washington employers must provide their workers, including temporary and part-time employees, with paid sick leave at a minimum rate of 1 hour for every 40 hours worked.
An employee may use this paid leave as follows:
-
To accommodate or treat the employee’s mental or physical illness, injury, or health condition, or for preventive medical care;
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To provide care for or treat a family member with a mental or physical illness, injury, or health condition, or for preventive medical care;
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To accommodate the closure of the employee’s place of business for a health-related reason, or the closure of the employee’s child’s school or place of care for a health-related reason; or
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To obtain services, seek treatment, or address legal needs related to domestic violence.
Employers may provide more generous paid-sick-leave policies or allow employees to use sick leave for additional reasons. Employees may carry over up to 40 hours of unused paid sick leave to the following year. The Department of Labor and Industries is currently drafting regulations that may address some of the questions left unanswered by the initiative, such as whether employees may cash out unused sick leave upon termination of employment.
The amended state law follows the lead of local governments in Seattle, Tacoma, and Spokane, Washington, which all passed paid sick- and safe-time leave ordinances over the last four years. There are some major variances between the state law and the local ordinances, such as the date when an employee is entitled to begin using the paid leave, the rate of accrual, exemptions from coverage, and limitations on usage. We suggest that employers reevaluate their current leave policies to determine whether they meet the state or local paid-sick-leave law that provides the most favorable benefit to its workers. Employers with workers in more than one location with a paid-sick-leave law (i.e. Seattle, Tacoma, Spokane, Oregon [see our article on Oregon's paid leave law here], Arizona, and parts of California) may have to develop a more detailed leave policy to address this changing sick-leave landscape. But until Washington proposes its leave regulations, employers may not want to finalize those policies.
Because Initiative 1433 will be incorporated into the existing minimum-wage statute, the existing enforcement mechanisms will apply. Employers could be liable for back wages, costs, and reasonable attorney fees for failure to comply with the new minimum-wage and paid-sick-leave requirements on their respective effective dates.
If you would like additional guidance on how to prepare for changes in Washington’s minimum-wage law, contact a member of our employment law and labor relations team.
