Mark Harmsworth says the current increases in salary minimums are destroying jobs and reducing employees’ working hours
Mark Harmsworth
Washington Policy Center
If you are not an employer, you may not care about exempt and non-exempt employee salary ranges, but the continuing changes to employee overtime thresholds is causing many employers to lay off staff and seek to hire employees in other states.
Washington State requires employers to pay non-exempt employees (those employees that don’t meet several thresholds the state defines) overtime for every hour worked. Over the last few years, the minimum salary threshold to qualify as an exempt employee has been increased. This minimum salary is based on an arbitrary multiplier of the state minimum wage and 2,080 hours. The current multiplier is 2.0 and changes in 2028 to 2.5.
Since the minimum wage is currently $16.66 (January 2025), the exempt salary minimum is $69,305.60 and will increase to $93,340.00 by 2028. Just 5 years ago the threshold was $35,100.
For every salaried or hourly employee making less than the threshold and working over 40 hours a week, overtime payment is required. As the threshold has increased, employers are having to cut back on either staff hours, mentorship opportunities for younger staff members or entire positions. Many employees in senior positions today worked extra hours (including this author) when they were younger to gain experience and prove themselves ready for promotion.
For non-profit organizations, the problem is especially acute given the large number of volunteer hours their employees give to an organization.
Bill Tsoukalas, the Snohomish County Executive Director of the Boys and Girls Club brings the problem into sharp relief. The Boys and Girls Club provides before and after school hours activity for kids and is primarily funded through local donations. Over the last few years, Tsoukalas has seen overtime costs skyrocket, to the tune of several hundred thousand dollars per year, as the minimum threshold has increased.
“You can’t just shut the doors at 5pm to avoid paying overtime”, Tsoukalas says. “Parents get stuck in traffic or have other emergencies and we have to take care of the kids until they arrive to pick them up.”
When an employee is exempt, they can stay late and volunteer their time.
For a non-profit organization reliant on donations, the salary range requirement can only be met by laying staff off, reducing service hours or asking for more donations. In the case of the Boys and Girls Club, it’s a little of everything.
The problem is similar in the case of for-profit businesses. Employees that used to be exempt are now classified as non-exempt and overtime becomes mandatory. For employers that may have offered flexible working hours to allow employees to start later to meet family obligations, can no longer offer that flexibility as they cannot afford to pay overtime on the hours made up by the employee.
Washington legislators should revisit the salary range limits this upcoming legislative session and either suspend or repeal the proposed increase in salary minimums. The current increases are destroying jobs and reducing employees’ working hours.
Mark Harmsworth is the director of the Small Business Center at the Washington Policy Center.
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