What you must pay workers in Washington state

It’s time to take our annual look at the state-wide minimum wage in Washington, plus the cities with higher minimum wages such as Seattle and SeaTac.

This year, the bigger news may be who qualifies for overtime in Washington state, as new increase takes Washington above Federal requirements for the first time on January 1, 2021.

Read on to see all the changes for the New Year.

 

Washington state minimum wage for 2021

After taking a big 12.5% percent jump in 2020, the state-wide minimum wage moves up just 19 cents this year, to $13.69.

According to L&I, the state minimum wage is now set in line with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and will be announced on September 30 each year, to take effect on New Year’s Day.

Tacoma minimum wage for 2021

After setting its own minimum wage from 2016 to 2019, Tacoma was leapfrogged by the state-wide rate in 2020. Tacoma now follows the minimum wage for Washington state, above.

 

Cities in Washington State with a higher minimum wage

Seattle and SeaTac are the two cities that continue to set minimum wages higher than the rest of the state for 2020.

Seatac minimum wage for 2020

Transportation and hospitality workers in the City of SeaTac, including the airport, must earn at least $16.57, an increase of 23 cents from 2020.

Seattle minimum wages for 2020

Seattle has some very complex minimum wage laws.

Large employers in Seattle

As always, if your company has more than 500 employees, it’s actually very simple. Your minimum wage for 2021 is $16.69 per hour, an increase of 30 cents from 2020.

Small employers in Seattle

But, if you’re a small employer in Seattle (500 employees or less), you need to calculate the correct wage for each of your employees. The minimum wage in Seattle depends on whether you contribute to an employee’s health insurance and/or if an employee earns tips as part of their job. The contribution threshold for employers is $1.69/hour toward medical benefits or if the employee earns $1.69/hour in tips.

  • Employees working for a small employer (w/ healthcare benefit or tips) must earn $15 per hour ($1.50 increase from 2020).
  • Employees working for a small employer (no healthcare benefits or tips) must earn $16.69 per hour (94 cent increase from 2020).

 

Who gets overtime in Washington state

L&I announced new overtime rules in June, but you may not have noticed. That’s because the federal standard has been higher this year, so nothing really changed in the second half of the year.

This year, the bigger news may be who qualifies for overtime in Washington state, as new increase takes Washington above Federal requirements

However, changes are coming January 1, 2021, because now the Washington state rules will exceed federal rules for salaried employees, usually in white collar positions.

Large employers (more than 50 employees)

A salaried employee making at least 1.75 of the state minimum wage can be exempt from overtime.

Small employers (50 or less employees)

A salaried employee making at least 1.50 of the state minimum wage can be exempt from overtime.

Careful! Note that Seattle uses 500 employees as its break point between small and large businesses for minimum wage purposes. L&I uses 50 employees to split businesses between small and large for overtime rules.

Computer professionals

There’s yet another rule for computer professionals paid by the hour. Read more about that in this PDF file.

 

Help with minimum wage and overtime

Be sure to track each employee’s hours and wages properly, then keep those records on file. If there is an L&I claim, you might need this information in order to complete the wage calculation.

L&I has information pages on both overtime and minimum wage. And, for Approach clients, simply drop a line to the HR Help Desk, available in the Client Portal.