Per state statute, Washington’s minimum wage increases each year as a function of increases in the Consumer Price Index (CPI-W). Effective January 1, 2024, Washington’s Minimum Wage will increase to $16.28 per hour—up from 2023’s rate of $15.74.
Likewise, the minimum salary required for an employee to be exempt under the Executive, Administrative, and Professional exemptions (commonly referred to as the “white collar” exemptions) will increase this year as a result of inflation and also the phase-in adjustment for smaller employers.
In 2024, all Washington employers (regardless of size) will have to pay a weekly salary of $1,302.40 (annually, $67,724.80) to treat an employee as exempt from overtime and other requirements.
Computer Professionals can be exempt either under the minimum salary requirement, or alternatively, if they are paid at least $56.98 per hour for all hours worked.
As a reminder, white collar exemptions also require that an employee meet a duties test, in addition to being paid at least the applicable required minimum salary.
To enforce a noncompetition provision against a former employee, the employee’s annualized taxable income [Box 1 W-2 income] at termination must meet the state minimum level of approximately $120,560 in 2024. To enforce a noncompetition provision with an independent contractor, the 2024 compensation level will be approximately $301,400.
Note, the cities of Seattle, SeaTac, and Tukwila each have higher minimum wages than the state.
- SeaTac’s 2024 minimum wage (which applies to Hospitality and Transportation workers) rises to $19.71 per hour.
- For one more year, Seattle will have two different minimum wage rates depending on the size of the employer and whether the employee receives tips or medical benefits:
- Large employers (501+ employees worldwide): $19.97.
- Small employers (up to 500 employees worldwide): $17.25/hour if the employee receives $2.72 per hour in tips or the employer pays $2.72 per hour toward the employee’s medical benefits. Otherwise, the small employer must pay $19.97 per hour.
- Tukwila is also phasing in new minimum wage rates and currently has separate minimum wages depending on the size of the employer:
- Large employers (more than 500 employees worldwide): For 2024, the minimum wage will be $20.29 per hour.
- Mid-size employers (either 15-500 employees worldwide or over $2 million annual gross revenue in Tukwila): January – June 2024, the minimum wage will be $18.29. July – December 2024, the minimum wage will be $19.29.
- Small employers (fewer than 15 employees and less than $2 million annual gross revenues): no Tukwila minimum wage.
Employers must have their payroll systems ready to begin using the correct new minimum wage rates for work performed on January 1, 2024, and thereafter.
Likewise, employers need to determine whether to raise salary levels in order to keep treating an employee as exempt, or instead transfer that employee to non-exempt status with hourly pay. Remember, if an employee is transitioned from exempt to non-exempt, the employee then becomes subject to the Washington Paid Sick Leave requirements, and rest and meal break requirements. It may also impact the employee’s benefits, depending on whether the employer provides different benefits to exempt and non-exempt employees. If an employer decides to transition an employee from exempt to non-exempt, the employee needs to be notified of that change in status, and, if needed, trained in the employer’s timekeeping rules, before January 1, 2024, and preferably at least two weeks in advance.
The legal issues impacting this topic are and will continue to be ever-changing (Employment Law in Motion!), and since publication of this blog post, new or additional information not referenced in this blog post may be available.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.