Question: We’re considering converting many positions from exempt (salaried) to nonexempt (hourly) because of how high Washington’s exempt salary threshold will be next year. Are there any ways to get around the salary requirement? If we’re forced to reclassify a role as nonexempt, what should we be aware of and how should we communicate the change to the employee?
Answer: Unfortunately, there aren’t any ways to get around the salary requirement and maintain exempt status. If you decide to reclassify any employees, you’ll need to ensure compliance with all the usual nonexempt wage and hour requirements moving forward, and a clear, straightforward explanation of that is best.
Wage and hour laws require employers to track and pay for all hours worked, pay overtime, and provide rest and meal periods for all nonexempt employees. To be exempt from those requirements, an employee’s job duties and salary payments must meet specific exemption criteria under the law, including, for most exemptions, a minimum weekly salary. As we recently reported, Washington’s minimum weekly salary for exempt executive, administrative, and professional employees is about to balloon to $1,773.00 a week ($92,196.00 a year) for employers with 51 or more employees, and $1,595.70 a week ($82,976.40 a year) for smaller employers, starting January 1, 2027. For more information on the exemption requirements, see the Washington section of our Legal Guide, State Laws on the White Collar Exemptions from Overtime.
Facing the Salary Threshold Decision
You’re not alone. We’re hearing from many members that they can’t justify such a large salary increase for some positions or simply can’t afford the salary threshold for large numbers of roles. While that’s understandable, there just aren’t other options. If the exemption you’re using for the role requires the minimum salary (as most do), either that salary must be paid or the employee is nonexempt.
Managing the Compliance Risks of Reclassification
If you choose to reclassify the position to nonexempt, compliance with all wage and hour obligations is key. Sometimes when employers reclassify a position to nonexempt, those obligations get missed. For example, the employee is changed to an hourly wage and paid overtime, but a system isn’t put in place to track all hours worked or ensure proper rest and meal periods are taken. It can be difficult to enforce these wage and hour requirements for an employee who has been in an exempt position for years, but the risks are significant. Surging wage and hour class action lawsuits alleging rest and meal period violations are one example of the very real risk of expensive legal liability.
Communicating the Change to Affected Employees
You may be anticipating that the change to nonexempt status is a message employees don’t want to hear, and you’re probably right. Few employees relish a change that requires more deliberate time tracking and recordkeeping, and it may feel like a step backward in schedule flexibility. The best approach is to explain the reason for the change and provide a clear and complete list of the new wage and hour policies and expectations that will apply. One simple reason you could give for the change in status is that once the changes in state law take effect on January 1, the employee’s position will no longer meet the state’s criteria for exempt status.
Members: For more help on this issue, contact your dedicated Vigilant Law Group employment attorney.
Employers facing complex challenges like this can benefit from Vigilant membership, gaining access to ongoing, dedicated support for legal and employment matters. Connect with our team to discuss your specific workplace needs.
