Payroll Washington, Unique Aspects of Washington Payroll Law and Practice
This article presents an overview of payroll law in Washington. The state has a unique system, which is based on the federal Fair Labor Standards Act (FLSA). Some types of businesses are exempt from reporting certain information and the needs of their employees, while there are some other requirements that apply to all employers.
Besides explaining these requirements, this article also discusses how Washington law applies to contracts between employers and employees and employment litigation. Other topics discussed in this blog post include wage rates, overtime pay eligibility, deductions from wages for taxes, what records must be maintained by employers about payment for employee time worked and payment for employee time not worked as well as exemptions from minimum wage requirements.
The Law
Washington employers are subject to laws which require certain information to be reported for each employee and for the total number of hours worked in a workweek. The state has its own law, separate from the federal Fair Labor Standards Act (FLSA). Because the state's system is different than that of all other states, it is necessary to understand what is required under Washington law. This article discusses these requirements and how they apply to employers and employees in Washington.
An employer must report basic information about each employee, including name, address, social security number and occupation. In addition, the employer has obligations under Washington law with respect to overtime pay as well as minimum wage requirements and are discussed below.
Reporting Requirements
Employers in Washington must provide each employee with a "Payroll Record" and a "Notice of Labor Law Posting" at the time of hiring or no later than the first day of employment. An employer must give these records to each employee within 7 days after: (1) completion of an initial payroll; and (2) any change that affects their employment status. Usually, this means giving them to the employee on payday or a pay stub for that pay period. The wage rate for each job, deductions from wages and other employer-employee information must be stated on the record. Official Washington Labor Law Posting
Each employee's wage rate, including the specific hourly rate, must be stated on his or her record and included on any paychecks provided. The wage rate required by Washington law is called the "official Washington wage rate". Employers are required to post this information in a prominent place at each place of employment and to notify employees of this requirement by posting it in a conspicuous location where the employee will see it.
The employer may use an industry-wide wage rate from the Washington State Department of Labor and Industries (L&I) to establish an official Washington wage rate. These rates are available at the Washington Department of Labor and Industries website. The department also makes industrial wage rates available on its website.
The official Washington wage rate is used to determine the state minimum wage, a requirement discussed in detail below.
Overtime Pay
Washington law affects how employers may calculate overtime pay under the federal Fair Labor Standards Act (FLSA). For non-exempt employees, it requires that employers follow the FLSA requirements. All employees are entitled to receive overtime pay if they work more than 40 hours in any workweek and do not have any other employment arrangements with their employer (such as working for more than one employer at a time or being paid on a piecework basis).
The FLSA requires employers to pay employees one and one-half times the employee's regular rate of pay for working more than 40 hours in any workweek. The regular rate of pay is the rate that must be used to determine how much an employer must pay the employee for overtime hours. The "regular rate" usually depends on what the employee earns for a normal 40-hour workweek but does not have to include health benefits, bonuses or commissions.
Employers in Washington may use one of two methods to calculate regular rates for overtime purposes: (1) total earnings divided by total hours worked; or (2) "either total hourly earnings or total daily straight-time earnings" divided by hours worked per day. The methods used to calculate the regular rate of pay for overtime purposes must be the same as those used to compute the regular rate of pay for nonovertime hours.
Additional rules regarding calculating overtime are discussed in the Employment Law section below.
Minimum Wage Requirements
Washington has a state minimum wage, which is separate from the federal minimum wage and is $9.32 per hour. In October 2015, it was increased by 88 cents per hour because of an inflation adjustment required by state law. The state statute also provides that employers must give employees this notice:
The Washington State Minimum Wage Act requires employers to pay all employees at least $9.32 per hour, beginning January 1, 2017. [If the employer is subject to the federal Fair Labor Standards Act (29 U.S.C. section 201 et seq.), then the employer must pay at least $7.25 per hour, beginning January 1, 2017.]
The Washington State Minimum Wage Act requires employers to pay all employees at least $9.47 per hour beginning January 1, 2017. [If the employer is subject to the federal Fair Labor Standards Act (29 U.S .C . section 201 et seq.), then the employer must pay at least $7 .25 per hour beginning January 1 , 2017. ]
Washington has specific requirements for the calculation of minimum wage amounts: (1) non-exempt employees must be paid all minimum wage compensation when due; and (2) if an employer owes $50 or more in wages, they must be paid within 24 hours after it is due. Employment Law
Washington employers are subject to laws which require certain information to be reported for each employee and for the total number of hours worked in a workweek. The state has its own law, separate from the federal Fair Labor Standards Act (FLSA). Because the state's system is different than that of all other states, it is necessary to understand what is required under Washington law. Both systems are discussed in more detail below.
If an employee is not exempt from the overtime pay requirements under the Fair Labor Standards Act (FLSA), then he or she is entitled to overtime and must be paid: (1) one and one-half times his or her regular rate of pay for all hours worked in excess of 40 hours in a workweek; and (2) all wages due within 72 hours after the end of the workweek. The actual number of hours worked each week could be lower because an employee's regular rate may be calculated on an hourly, a daily or a piecework basis.
The state minimum wage statute defines "regular rate" as an employee's "total earnings divided by total hours worked."
Employees are entitled to the payment of all wages due within 72 hours after the end of the workweek. Washington employers must post a clear notice at each place of employment, and keep this printed notice posted until it is no longer required. The employer must also give a copy of this printed notice to each employee at the time the employee is hired or on his or her first pay period.
Conclusion
In October 2015, the Washington State Department of Labor and Industries finalized a new rule setting the state's minimum wage at $11.00 per hour starting January 1, 2016. The new rule also raised the multiplier used to calculate the required minimum rate for tipped employees to $3.37 per hour, effective January 1, 2017.
The Seattle Minimum Wage Ordinance amended sections 14 and 15 of Seattle Municipal Code (SMC) to raise Seattle's minimum wage beginning April 1, 2015.