Washington’s L&I releases revised draft on overtime employment rules

November 26, 2018


The purpose of this bulletin is to update members about rulemaking activity by Washington State’s Department of Labor and Industries (L&I) regarding overtime pay eligibility for Executive, Administrative and Professional (EAP) workers. L&I has released a second “revised” draft of rules which determine the class of workers who are exempt from overtime pay obligations, among others. This bulletin outlines the latest proposed changes, ways for your hospital/health system to participate, and WSHA’s activity with this rulemaking.

Qualifying EAP workers are exempt from the overtime pay requirement. L&I’s proposed changes would increase the number of workers who are not exempt, and therefore eligible for benefits such as overtime pay.


All hospitals and health systems, as employers in Washington, are subject to this rulemaking.

L&I’s revised draft rules include changing the minimum salary threshold for exemption to between 2 and 2.5 times the state minimum wage, commencing January 1, 2020. In addition, L&I is seeking feedback on whether to phase-in implementation according to employer size and whether to incorporate a higher salary threshold for employers operating in higher wage cities.

L&I is seeking feedback on this revised draft in person at feedback sessions this week, as well as online or by email through December 14, 2018. The official proposed rules are expected in early 2019, as part of a formal rulemaking process. We encourage you to engage now if you feel strongly about the new proposal. Also, please let us know if your hospital is impacted and to what extent.

As discussed further below, WSHA has concerns about these draft rules, namely regarding compliance, increased litigation risk, and potential financial stress.

The proposed rulemaking applies to WAC 296-128-500 to 540, which define the categories of employees who are exempt from the provisions of the Washington State Minimum Wage Requirements and Labor Standards (formerly Minimum Wage Act), RCW 49.46, for being “employed in a bona fide executive, administrative or professional capacity or in the capacity of outside salespersons.”

Among the provisions that do not apply to EAP workers is the requirement that employers pay employees overtime pay at time and a half, if they work beyond 40-hours in a week.


  1. Review this bulletin and consider the revised draft rule’s impact on your hospital, particularly the financial ramifications of introducing the proposed minimum salary thresholds, a phased-in implementation based on hospital size, and higher salary thresholds based on the hospital location;
  2. Consider submitting a comment online or by email (EAPRules@Lni.wa.gov) by December 14, 2018; and, 
  3. Schedule permitting, consider attending a feedback session hosted by L&I this week:

November 27
10 a.m. – Overview
10:30 a.m. – 12:30 p.m. – Feedback Session
The Swedish Club, Stockholm Room
1920 Dexter Avenue N.
Seattle, WA 98109

November 28
10 a.m. – Overview
10:30 a.m. – 12:30 p.m. – Feedback Session
Hilton Garden Inn, Cascade Room
401 E. Yakima Avenue
Yakima, WA 98901

November 29
10 a.m. – Overview
10:30 a.m. – 12:30 p.m. – Feedback Session
L&I Vancouver Office
312 SE Stonemill Drive, Suite 120
Vancouver, WA 98684

More information on the feedback sessions and the rulemaking timeline is available here

Next Steps

WSHA is actively engaged with this rulemaking process. We commented with concerns on L&I’s first pre-proposal draft rules in October. We are considering whether to comment on this latest version of the draft rules, bearing in mind that hospitals/health systems may be impacted very differently and our comments may not be able to fairly capture every hospital’s concerns.

As such, we request your feedback about how the latest proposed changes could impact your hospital/health system.

Please consider the following:

  • The financial repercussions of implementing a salary threshold tied to the state minimum wage. What are your projections for the financial impact arising from a 2 to 2.5 times multiplier on the state minimum wage for 2020 and beyond? If your hospital is in a higher wage area, what are your projections applying this multiplier to the hourly wages set by local ordinances? Please break these numbers out in each category if providing information to WSHA.
  • The size of your workforce potentially impacted. In addition to employees who meet the definitions of a bona fide executive or administrative worker, hospitals should be mindful of the rule’s application to its professional workers. Under current administrative guidance, that category captures a potentially large swath of a hospital workforce including those employed in fields of nursing, accounting, actuarial computation, and various types of physical, chemical, and biological sciences, including pharmacy and registered or certified medical technology. Using a conservative estimate, and bearing in mind the 2 to 2.5 times multiplier, how many staff could become non-exempt employees?

In the meantime, WSHA is engaged with and stands firmly behind the Association of Washington Business (AWB) in its ongoing efforts to ensure that L&I’s rulemaking is consistent with federal standards and thoughtful to the business and community impacts that will result from revision to these rules.


Context for the current proposed changes. Since virtually all employers must comply with the Federal Labor Standards Act (FLSA) EAP rules, Washington state has not had a strong basis for updating its own EAP rules. Indeed, L&I has not meaningfully updated its EAP exemptions since 1976, including salary thresholds. However, in March 2018, L&I initiated rulemaking on the basis that the federal salary threshold failed to be raised. The Obama administration attempted to raise the FLSA salary threshold in 2016 to $970/week ($50,440/year) but that change never went into effect.   Currently, the federal EAP exempt salary threshold is $455/week in earnings ($23,660 year).

The Revised Pre-Proposal Draft Rule. The revised draft language is available here.  Five key concepts and considerations are as follows:

  1. Effective January 1, 2020, the creation of a salary exemption threshold 2 to 2.5 times Washington State’s minimum wage, set out in RCW 49.46. The figures are as follows:


2020 ($13.50/hr) 2021 and beyond
2 times $1080/wk – $56,160/annum TBD. The revised draft does not specify how annual increases will be calculated.
2.5 times $1350/wk – $70,200/annum


  1. Consideration a phased-in implementation of the new salary threshold based on employer size. The revised draft includes specific questions for stakeholders, including the following:

Assuming an effective date of January 1, 2020, should the department consider a phased-in implementation of the new threshold for employers based on employer size? What phase-in schedule should the department propose?

a. What method would you recommend to define employer size?
b. When would you recommend the updated threshold take effect for all employer sizes?

  1. Consideration of a higher salary threshold in higher-wage cities, counties or areas of the state. Another question for stakeholders is:

During a phase-in period and/or once the rule is fully implemented, should the department consider adopting a higher salary threshold in higher-wage cities, counties, or areas of the state?

a. What method would you recommend for defining which areas would be subject to a different threshold?
b. Would you recommend a different phase-in schedule apply to these higher-threshold areas? How should the implementation schedule differ?

A locally governed minimum wage could raise the salary threshold greatly. For instance, Seattle’s minimum wage could lead to the following salary thresholds:

Example – Seattle*
Multiplier Small Employers (<500 employees) Large Employers (>501 employees)
2 times $1200/wk – $62,400/annum $1280/wk – $66,560/annum
2.5 times $1,575/wk – $81,900 /annum $1600/wk – $83,200/annum


* The figures provided here are low for an effective date of 2020, and beyond. Effective January 1, 2019, Seattle’s hourly rate will be $16.00 for large employers and $15.00 for small employers, depending on whether the employer contributes to medical benefits and/or tips for the employee). In 2020, Seattle will raise the minimum wage rates by explicit rate increase (for small employers) or with reference to the rate of inflation measured by the Consumer Price Index for Urban Wage Earners and Clerical workers (CPI-W) (for larger employers).

All hospitals and health systems are encouraged to consider how their local minimum wage requirements may apply here.

  1. Addition of a definition of “primary duty” that applies across the EAP categories, and means the “principal, main, major or most important duty that the employee performs.” Each category of worker has specific “primary duties” to evaluate their exempt status. The proposed definition states that employees who spend more than 50% of their time performing exempt work will generally satisfy the primary duty requirement. The revised draft definition further states:

Time alone, however, is not the sole test, and nothing in this section requires that exempt employees spend more than 50 percent of their time performing exempt work. Employees who do not spend more than fifty percent of their time performing exempt duties may nonetheless meet the primary duty requirement if the other factors support such a conclusion. The burden falls on the employer to demonstrate that the employees meet the primary duty requirement.” (emphasis added)

  1. Consideration of whether or how the analysis of an exempt employee’s primary duty should differ from the analysis performed under the federal rules. The final question for stakeholders states:

What criteria for the duties tests, if any, should differ between the federal and state rules?

It is difficult to say how the duties analysis between the two regulatory schemes may differ. Initial review suggests the revised draft’s duties tests generally align with the federal tests. However, as discussed below, the federal Department of Labor intends to engage in rulemaking on its overtime exempt rules in March 2019. The potential alignment is therefore subject to change.

Potential Impact. As stated above, WSHA has concerns about the proposed changes, including:

  • Compliance issues, if L&I proceeds without reverence to federal EAP rulemaking plans;
  • Increased litigation risk, if employees and employers interpret the EAP exemption changes differently; and,
  • Potential financial stress, owing to increased overtime pay obligations and/or increased salary obligations.

One concern worth reiterating from our bulletin on the first draft of the proposed rules, and which we emphasized in our comment on that draft language, is the potential disconnect between state and federal standards. The federal Department of Labor intends to issue its new EAP proposed rule in March 2019. If L&I makes changes before the federal rulemaking process runs its course, hospitals could face discordant obligations, to say nothing of the need to review their practices around EAP exempt employees twice.

Background and References
EAP Pre-Draft Proposed Rule language
L&I Comments Page
RCW 49.46
WAC 296-128


Contact Us

Washington State Hospital Association
999 Third Avenue
Suite 1400
Seattle, WA 98104

Map / Directions

206.281.7211 phone
206.283.6122 fax


Staff List