Over the course of the coming years, employers and employees will be significantly impacted by the changes to the federal Fair Labor Standards Act (FLSA) and Washington State Minimum Wage Act (MWA) related to the classification of employees as exempt or nonexempt. The changes to the FLSA took effect January 2020, but the Washington State changes begin in July 2020 and continue annually to 2028.
Employers should forecast financial ramifications for changes in labor costs necessitated by changes in the rules. Employers should also weigh the cost of raising employee salaries above the new threshold against the cost of reclassifying employees as nonexempt and paying overtime.
Once this analysis is completed, employers may determine how to best communicate with employees whose classification will need to be changed from exempt to nonexempt as a result of the increasing salary threshold.
It is important to let affected employees know that the organization conducted an impact analysis of the new regulations, looked at budgetary information, and considered the influence of other factors before determining what changes would be made within the organization.
Depending on whether an employee is being affected, employers may use the following messages when communicating with employees:
Washington employers must keep in mind the need to re-evaluate the classification of employees as the salary threshold continues to increase to 2028. To see the schedule of when and to what amount the salary threshold will increase under the Washington MWA, please see the implementation schedule: https://www.lni.wa.gov/forms-publications/F700-207-000.pdf
Some employees will be happy about the change, while other employees may be upset about moving to a nonexempt status. Make sure that reclassified employees know they are not being demoted. Be clear that these changes are based on changes to federal and state law.
Read about a few other legal updates in 2020 here.