Overtime exemption

AN ACT Relating to creating a narrow exemption from overtime 1
provisions for certain nonprofits and small businesses; amending RCW 2
49.46.130; and creating a new section. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. (1) Washington's nonprofit organizations 5
improve the lives of thousands of Washingtonians and are a part of 6
the state's economy. Nonprofit organizations serve communities in a 7
variety of ways, such as supporting veterans, stewarding the 8
environment, supporting performing arts and education, fostering and 9
supporting families, promoting economic development, and much more.10
(2) Small businesses also are a significant part of the state's 11
economy and are an important part of communities across the state.12
(3) The legislature recognizes that due to the nature and 13
structure of smaller nonprofits and small businesses, these entities 14
and their ability to continue to meet their communities' needs are 15
being jeopardized by the state overtime rules for exempt employees. 16
When fully implemented in 2028, the minimum salary to be classified 17
as a salaried exempt employee will be two and a half times the 18
statewide minimum wage for a 40-hour week, which is estimated to be 19
approximately $93,000 a year and the highest salary threshold in the 20
nation. Therefore, the legislature is creating a narrow exemption 21
H-0370.1
HOUSE BILL 1184
State of Washington 69th Legislature 2025 Regular Session
By Representatives Schmidt, Couture, Jacobsen, Eslick, Klicker, and
McClintock
Prefiled 01/07/25. Read first time 01/13/25. Referred to Committee
on Labor & Workplace Standards.
p. 1 HB 1184
from overtime provisions to allow more flexibility to these entities 1
and their salaried employees. 2
Sec. 2. RCW 49.46.130 and 2021 c 249 s 2 are each amended to 3
read as follows: 4
(1) Except as otherwise provided in this section, no employer 5
shall employ any of his or her employees for a workweek longer than 6
forty hours unless such employee receives compensation for his or her 7
employment in excess of the hours above specified at a rate not less 8
than one and one-half times the regular rate at which he or she is 9
employed. 10
(2) This section does not apply to: 11
(a) Any person exempted pursuant to RCW 49.46.010(3). The payment 12
of compensation or provision of compensatory time off in addition to 13
a salary shall not be a factor in determining whether a person is 14
exempted under RCW 49.46.010(3)(c); 15
(b) Employees who request compensating time off in lieu of 16
overtime pay; 17
(c) Any individual employed as a seaman whether or not the seaman 18
is employed on a vessel other than an American vessel;19
(d) Seasonal employees who are employed at concessions and 20
recreational establishments at agricultural fairs, including those 21
seasonal employees employed by agricultural fairs, within the state 22
provided that the period of employment for any seasonal employee at 23
any or all agricultural fairs does not exceed fourteen working days a 24
year; 25
(e) Any individual employed as a motion picture projectionist if 26
that employee is covered by a contract or collective bargaining 27
agreement which regulates hours of work and overtime pay;28
(f) An individual employed as a truck or bus driver who is 29
subject to the provisions of the Federal Motor Carrier Act (49 U.S.C. 30
Sec. 3101 et seq. and 49 U.S.C. Sec. 10101 et seq.), if the 31
compensation system under which the truck or bus driver is paid 32
includes overtime pay, reasonably equivalent to that required by this 33
subsection, for working longer than forty hours per week;34
(g) Any individual employed as an agricultural employee. This 35
exemption from subsection (1) of this section applies only until 36
December 31, 2021; 37
(h) Any industry in which federal law provides for an overtime 38
payment based on a workweek other than forty hours. However, the 39
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provisions of the federal law regarding overtime payment based on a 1
workweek other than forty hours shall nevertheless apply to employees 2
covered by this section without regard to the existence of actual 3
federal jurisdiction over the industrial activity of the particular 4
employer within this state. For the purposes of this subsection, 5
"industry" means a trade, business, industry, or other activity, or 6
branch, or group thereof, in which individuals are gainfully employed 7
(section 3 (h) of the Fair Labor Standards Act of 1938, as amended 8
(Public Law 93-259)); 9
(i) Any hours worked by an employee of a carrier by air subject 10
to the provisions of subchapter II of the Railway Labor Act (45 11
U.S.C. Sec. 181 et seq.), when such hours are voluntarily worked by 12
the employee pursuant to a shift-trading practice under which the 13
employee has the opportunity in the same or in other workweeks to 14
reduce hours worked by voluntarily offering a shift for trade or 15
reassignment; ((and))16
(j) Any individual licensed under chapter 18.85 RCW unless the 17
individual is providing real estate brokerage services under a 18
written contract with a real estate firm which provides that the 19
individual is an employee. For purposes of this subsection (2)(j), 20
"real estate brokerage services" and "real estate firm" mean the same 21
as defined in RCW 18.85.011; and22
(k)(i) Any individual employed by a nonprofit organization or 23
small business and who is paid a predetermined fixed salary of not 24
less than 1.5 times the minimum wage prescribed in RCW 49.46.020 for 25
a 40-hour workweek and meets the duties-related criteria for 26
exemption under RCW 49.46.010(3)(c).27
(ii) For the purposes of this subsection (k):28
(A) "Nonprofit organization" means an organization described in 29
section 501(c)(3), (5), and (6) of the internal revenue code of 1986, 30
as amended, that: (I) has no more than 50 full-time equivalent 31
employees at any one physical worksite; or (II) delivers essential 32
services, such as child care or shelter programs, and is required to 33
maintain a certain staffing level due to state-mandated staffing 34
ratios; or (III) operates a 24-hour, seven day a week program that 35
requires continuous 24-hour, seven day a week staffing to meet 36
critical community needs, such as emergency shelters, respite care, 37
group homes, and publicly funded behavioral health services;38
(B) "Small business" means any business entity, including a sole 39
proprietorship, corporation, partnership, or other legal entity, that 40
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is owned and operated independently from all other businesses, and 1
that has a total of 50 or fewer full-time equivalent employees.2
(3) No employer shall be deemed to have violated subsection (1) 3
of this section by employing any employee of a retail or service 4
establishment for a workweek in excess of the applicable workweek 5
specified in subsection (1) of this section if: 6
(a) The regular rate of pay of the employee is in excess of one 7
and one-half times the minimum hourly rate required under RCW 8
49.46.020; and 9
(b) More than half of the employee's compensation for a 10
representative period, of not less than one month, represents 11
commissions on goods or services. 12
In determining the proportion of compensation representing 13
commissions, all earnings resulting from the application of a bona 14
fide commission rate is to be deemed commissions on goods or services 15
without regard to whether the computed commissions exceed the draw or 16
guarantee. 17
(4) No employer of commissioned salespeople primarily engaged in 18
the business of selling automobiles, trucks, recreational vessels, 19
recreational vessel trailers, recreational vehicle trailers, 20
recreational campers, manufactured housing, or farm implements to 21
ultimate purchasers shall violate subsection (1) of this section with 22
respect to such commissioned salespeople if the commissioned 23
salespeople are paid the greater of: 24
(a) Compensation at the hourly rate, which may not be less than 25
the rate required under RCW 49.46.020, for each hour worked up to 26
forty hours per week, and compensation of one and one-half times that 27
hourly rate for all hours worked over forty hours in one week; or28
(b) A straight commission, a salary plus commission, or a salary 29
plus bonus applied to gross salary. 30
(5) No public agency shall be deemed to have violated subsection 31
(1) of this section with respect to the employment of any employee in 32
fire protection activities or any employee in law enforcement 33
activities (including security personnel in correctional 34
institutions) if: (a) In a work period of twenty-eight consecutive 35
days the employee receives for tours of duty which in the aggregate 36
exceed two hundred forty hours; or (b) in the case of such an 37
employee to whom a work period of at least seven but less than 38
twenty-eight days applies, in his or her work period the employee 39
receives for tours of duty which in the aggregate exceed a number of 40
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hours which bears the same ratio to the number of consecutive days in 1
his or her work period as two hundred forty hours bears to twenty-2
eight days; compensation at a rate not less than one and one-half 3
times the regular rate at which he or she is employed.4
(6)(a) Beginning January 1, 2022, any agricultural employee shall 5
not be employed for more than 55 hours in any one workweek unless the 6
agricultural employee receives one and one-half times that 7
agricultural employee's regular rate of pay for all hours worked over 8
55 in any one workweek. 9
(b) Beginning January 1, 2023, any agricultural employee shall 10
not be employed for more than 48 hours in any one workweek unless the 11
agricultural employee receives one and one-half times that 12
agricultural employee's regular rate of pay for all hours worked over 13
48 in any one workweek. 14
(c) Beginning January 1, 2024, any agricultural employee shall 15
not be employed for more than 40 hours in any one workweek unless the 16
agricultural employee receives one and one-half times that 17
agricultural employee's regular rate of pay for all hours worked over 18
40 in any one workweek. 19
(7)(a) No damages, statutory or civil penalties, attorneys' fees 20
and costs, or other type of relief may be granted against an employer 21
to an agricultural or dairy employee seeking unpaid overtime due to 22
the employee's historical exclusion from overtime under subsection 23
(2)(g) of this section, as it existed on November 4, 2020.24
(b) This subsection applies to all claims, causes of actions, and 25
proceedings commenced on or after November 5, 2020, regardless of 26
when the claim or cause of action arose. To this extent, this 27
subsection applies retroactively, but in all other respects it 28
applies prospectively. 29
(c) This subsection does not apply to dairy employees entitled to 30
back pay or other relief as a result of being a member in the class 31
of plaintiffs in Martinez-Cuevas v. DeRuyter Bros. Dairy , 196 Wn.2d 32
506 (2020). 33
(8) For the purposes of this section, "agricultural employee" 34
means any individual employed: (a) On a farm, in the employ of any 35
person, in connection with the cultivation of the soil, or in 36
connection with raising or harvesting any agricultural or 37
horticultural commodity, including raising, shearing, feeding, caring 38
for, training, and management of livestock, bees, poultry, and 39
furbearing animals and wildlife, or in the employ of the owner or 40
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tenant or other operator of a farm in connection with the operation, 1
management, conservation, improvement, or maintenance of such farm 2
and its tools and equipment; (b) in packing, packaging, grading, 3
storing or delivering to storage, or to market or to a carrier for 4
transportation to market, any agricultural or horticultural 5
commodity; or (c) (([in])) in commercial canning, commercial 6
freezing, or any other commercial processing, or with respect to 7
services performed in connection with the cultivation, raising, 8
harvesting, and processing of oysters or in connection with any 9
agricultural or horticultural commodity after its delivery to a 10
terminal market for distribution for consumption. An agricultural 11
employee does not include a dairy employee. 12
(9) For the purposes of this section, "dairy employee" includes 13
any employee engaged in dairy cattle and milk production activities 14
described in code 112120 of the North American industry 15
classification system. 16
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