WASHINGTON: Minimum wage and exempt salary increase in 2023

The state of Washington has announced increases in the minimum wage rate and the exempt salary thresholds for employees, effective January 1, 2023. These increases impact several state wage requirements that you’ll want to be aware of if you have employees in Washington. The cities of Seattle and SeaTac also have higher minimum wage requirements that are increasing in 2023. Here’s what we know about these rate increases:

Statewide minimum wage: The statewide minimum wage rate for nonexempt (overtime-eligible) workers will rise to $15.74 per hour (up from $14.49), effective January 1, 2023. Details are available on the Department of Labor and Industries (L&I) Washington minimum wage webpage. Seattle and SeaTac require a higher minimum wage rate for employees working within city limits (see below).

Exempt salary: As a result of the minimum wage increase for nonexempt employees, the minimum salary for white-collar workers who are exempt from overtime will increase as of January 1, 2023, as well. Small employers with 1-50 employees must pay exempt employees a salary of at least $1,101.80 per week ($57,293.60 per year). Large employers with 51 or more employees must pay exempt employees a weekly salary of at least $1,259.20 ($65,478.40 per year). For a helpful chart, see L&I’s salary implementation threshold schedule.

The salary threshold under federal law is only $684 per week, so employers in Washington must pay at the higher state level. The threshold salary is required regardless of how many hours an exempt employee works in the week, so even a part-time employee must be paid at this new higher salary (not a prorated portion of it) to satisfy the overtime exemption. L&I has created an online overtime resource center to assist employers in understanding these salary requirements, including charts, fact sheets, workshops, and webinars.

Exempt computer professionals: The minimum salary rate for exempt computer professionals who are paid hourly will also increase as of January 1, 2023. All employers who choose to pay their exempt computer professionals an hourly rate rather than the salaried exempt rate described above must pay them at least 3.5 times the state minimum wage, which works out to $55.09 per hour in 2023. See L&I’s Administrative Policy ES.A.9.6 (Exemption from Minimum Wage Act Requirements for Computer Professional Employees).

Noncompete Agreements: Washington law prohibits noncompete agreements with employees who earn less than the state’s annual threshold. The salary threshold is adjusted for inflation each year by L&I, and will increase from $107,301.04 (the 2022 rate) to $116,593.18 for 2023. See our Legal Guide, Noncompetition Agreements, for guidance on additional requirements in Washington.

Seattle minimum wage: The City of Seattle is increasing its minimum wage requirement to $18.69 per hour for most employers. Seattle’s minimum wage rates apply to all nonexempt employees for all hours they work within the city limits. The specific minimum wage requirements for 2023, shown on the city’s minimum wage webpage, will be:

• $18.69 per hour (up from $17.27 per hour) for large employers (more than 500 employees worldwide); or
   
• $18.69 per hour for smaller employers (500 or fewer employees) who don’t pay at least $2.19 per hour toward an employee’s medical benefits and/or if the employee doesn’t earn at least that much per hour in tips; or
   
• $16.50 per hour (up from $15.75 per hour) for employees of smaller employers who receive medical benefits worth at least $2.19 per hour or earn at least that much per hour in tips.

Employers are required to provide a written notice to each employee working in Seattle before any change in their wage rate or other terms of employment. An explanation of this requirement and a sample notice form can be found on Seattle’s wage theft ordinance webpage. If you will be adjusting wages in light of the minimum wage increases, make sure you notify any affected workers. A new 2023 version of the required workplace poster is available online.

SeaTac minimum wage: The City of SeaTac also maintains its own minimum wage rate covering certain transportation and hospitality employees working within the city. The city hasn’t yet announced the 2023 rate for those employees. Their current minimum wage is $17.54 per hour. This rate is subject to mandatory annual adjustments which are usually announced in October or early November. Watch future newsletters for an update on the increased rate for 2023.

Tips: The minimum wage rates in both Seattle and SeaTac continue to be higher than the statewide rate in Washington. Remember that employees must be paid at the highest minimum wage rate that applies to them. While written notice of these pay increases isn’t required except for Seattle employees, advance written notice is certainly a best practice for employee retention and morale. For more information on overtime exemptions in Washington, see our Legal Guide, State Laws on the White Collar Exemption from Overtime. If you have questions about which rates apply to your employees or whether they are exempt, contact your Vigilant Law Group employment attorney.