In 2025, there will be a new minimum wage and minimum salary threshold for workers to be exempt from overtime and other requirements in Washington. If you have not reviewed your nonprofit’s wages and employee classifications yet, now is the time to do so to stay in compliance. In this post, we’ll review some important things you need to know.
Important Note: This information is for educational purposes only and does not constitute legal or technical advice. If you are unsure about anything covered in this blog post, we suggest that you contact the appropriate agency, employment attorney, or human resources specialist.
Minimum Wage
Effective 1/1/2025, the minimum wage in Washington State will be $16.66. Employers must pay employees the minimum wage for all hours worked, including opening and closing a business, required trainings, and meetings.
Some cities have higher minimum wage rates than Washington state. Bellingham, Burien, Renton, SeaTac, Seattle, and Tukwila will have higher minimum wages than the state in 2025.
Overtime Exemption
Most employees who work more than 40 hours in a 7-day work week must be paid overtime. Overtime pay must be at least 1.5 times the employee’s regular hourly rate. Washington’s overtime rules determine which employees can be classified as exempt, meaning they are not required to be paid overtime or provided other protections under the Minimum Wage Act.
In order to be classified as exempt from overtime and other requirements, an employee must meet a salary basis test, a salary threshold test, and a job duties test.
- Salary basis test: The employee must be paid a predetermined, fixed salary
- Salary level test: The employee’s salary must be more than a minimum specified amount. For 2025, the minimum salary threshold is:
- $1,332.80/week ($69,305.60) for small employers (1-50 employees)
- $1,499.40/week ($77,968.80) or large employers (51 or more employees)
- Duties test: The employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations. The test is applied to an employee’s job duties, not their job title. Find more information about each job duties test:
Employees that do not meet all three of these tests (salary basis, salary level, and duties) are considered nonexempt. Nonexempt employees may be paid an hourly wage or a salary, but must be paid overtime for hours worked over 40 hours per week.
Rising Salary Threshold
In 2020, L&I updated the rules for exempt workers creating an eight-year implementation schedule that incrementally raises how much more than minimum wage salaried employees must be paid to be exempt from overtime until it reaches 2.5 times the minimum wage in 2028. Refer to L&I’s salary threshold implementation schedule for projected salary thresholds through 2028.
L&I has also created an overtime exempt salary budget tool to help employers plan for payroll costs. This tool can be used to help determine if an employee’s salary meets the minimum salary threshold and estimate overtime pay if it does not. Starting 1/1/2025, the tool will reflect the 2025 thresholds.
Employer Options
If your nonprofit has exempt employees with salaries below the minimum salary threshold, there are options to consider, including:
- Maintaining exempt status – Pay exempt employees at least the new salary threshold and assure they meet the job duties tests.
- Converting formerly exempt salaried employees to nonexempt salaried employees – Continue paying employees their current salary and pay overtime for all hours worked over 40 hours in a workweek. Provide other Minimum Wage Act protections. All nonexempt employees must track their time.
- Converting formerly exempt salaried employees to nonexempt hourly employees – Pay employees on an hourly basis and pay overtime for hours worked over 40 hours in a workweek. Provide other Minimum Wage Act protections.
Remember, you will have to revisit employee classifications and keep pace as the minimum salary threshold rises annually through 2028.
Learn More
Check out the recording of the Navigating Minimum Wage and Salary Threshold Changes for Your Nonprofit webinar from November 14, 2024 to learn more about these minimum wage and overtime rules and what your nonprofit can do.
You can also register for monthly webinars, including a webinar on EAP Overtime exemptions, on the L&I Workshops and Training page.
If you have questions about specific situations at your organization, email L&I’s Employment Standards Outreach Team at [email protected].