Getting It Right in 2020 - What Washington Employers Need To Know PDF

Getting It Right In 2020:
What Washington Employers Need to

Know
Presented by:
Scott Prange
Phone: (206) 247-7022
Email: sprange@fisherphillips.com
fisherphillips.com
ON THE FRONT LINES OF WORKPLACE LAW TM
Agenda
• White Collar Exemptions

• Piece-Rate Pay
• Pay Equity + Salary History Ban
• Paid Family and Medical Leave
• Non-Competes
• Arbitration Agreements
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White Collar Exemptions
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• General Rule
➢ Under federal/state law, most employees

must be paid at least minimum wage
(whichever higher) and overtime at rate
of 1.5 times regular rate
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• Exemptions
➢ Several “white collar” exemptions, where

employees exempt from receiving
minimum wage and overtime
➢ Exemptions narrow; employer must
prove employee “plainly and
unmistakably” exempt. Mitchell v.
PEMCO Mut. Ins. Co., 134 Wn. App.
723, 730-31 (2006).
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• Exemptions
➢ Federal/state exemptions do not always

overlap
➢ Where federal/state law both ply
exemptions, most protective for
employee applies
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• Exemptions
➢ To qualify for most exemptions, two tests

must be met:
1) Salary Threshold
2) Job Duties Test
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• New Federal + State Tests
➢ Starting January 1, 2020, new

federal/state salary thresholds and
modified job duties tests apply
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➢ From January 1, 2020, employers must

follow new federal salary thresholds for
overtime exemptions at $35,568/year
($684 per week)
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➢ However, from January 1, 2021,

employers must follow state salary
threshold (depending on size), which will
surpass the federal at $43,004/year
($827/week)
Federal 2021
Washington
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• New Federal Salary Thresholds

▪ New (January 1, 2020) ▪ Old
➢Salary Threshold ➢Salary Threshold
$35,568/year
($684/week) $23,660/year ($455/week)
➢Adjustments ➢Adjustments
Every 3 years No
➢Bonuses
10% of salary threshold ➢Bonuses
can be meet with No
nondiscretionary bonus ➢Highly Compensated
payments, incentives,
commissions Employees
➢Highly Compensated $100,000
Employees
$107,432 (including at
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• New Federal Job Duties Test
➢ No significant changes
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• New Washington Salary Thresholds
➢ First change since 1976

➢ From January 1, 2020 -
• Determined by employer’s size + multiple of state’s current
minimum wage for 40-hour workweek
▪ Employer’s size determined by total number of state-
based employees regardless if full/part time
▪ New statute provides multiple of state’s minimum wage for
40-hour workweek
• Salary threshold cannot be met by counting payment of non-
discretionary payments, e.g. incentive payments, bonuses,
commissions
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➢ From 2020 to 2028, state’s minimum salary threshold will

increase incrementally at start of each year:
• For employers with 50 or fewer employees, increase is
slower than that for those with more than 50
• By 2028, threshold same for all employers regardless of size,
and all salaried employees exempted from overtime will earn
2.5 times minimum wage
➢ After 2028, threshold will increase only if minimum wage is
adjusted for inflation
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➢ Likewise, for computer professional exemption, new minimum

hourly wage thresholds apply:
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• Washington Job Duties Test
➢ Main ”white collar” exemptions mostly now conform with federal law
➢ Still no highly compensated employee exemption

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• New Washington Job Duties Test
➢ For teachers – payment required on salary or fee basis, but without

minimum pay rate. Federal salary threshold would then kick in.
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• New Washington Job Duties Test
➢ For academic administrators – salary must be at least equal to

entrance salary for teachers in educational establishment involved.
Federal salary threshold would then kick in.
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➢ For outside salespeople – salary but no minimum pay rate.
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➢ Agricultural workers – no change.
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➢ Agricultural workers
• Under RCW 49.46.130, most agricultural workers working on
farm still exempt from overtime, including:
▪ Soil cultivation
▪ Raising a crop – including harvesting any agricultural or
horticultural commodity
▪ Handling livestock – including raising, shearing, feeding,
caring for, training, and management of livestock, bees,
poultry, furbearing animals, and wildlife
▪ Farm operations – including management, conservation,
improvement, or maintenance of a farm, its tools and
equipment
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• Additionally, other agricultural workers still exempt from overtime
if:
▪ In packing, packaging, grading, storing, or delivering any
agricultural or horticultural commodity
▪ In commercial canning, freezing, or processing any
agricultural or horticultural commodity including its delivery to
a terminal market for distribution for consumption
▪ In the cultivation, raising, harvesting, and processing of
oysters, including delivery to a terminal market for distribution
for consumption
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• Martinez-Cuevas v. Deyruyter Brothers Dairy, Inc. and
Washington State Dairy Federation and Washington State Farm
Bureau, on appeal from Yakima Superior Court, No. 96267-7
(2019)
▪ Pending @ Supreme Court
▪ Decision expected 2020
▪ Will determine if agricultural workers entitled to overtime
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➢ Planning Ahead
▪ Take opportunity to make sure that

each employee is classified properly
▪ List all employees, noting each’s
classification as either “exempt” or
“non-exempt”
▪ For each, analyze whether exemption
applies respective of both salary paid
and job duties
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➢ Planning Ahead
▪ Identify employees needing to be

reclassified from “exempt” to “non-
exempt,” because they are or will be
paid less than salary threshold or no
longer meet job duties test
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➢ Planning Ahead
▪ Calculate financial feasibility and costs

of raising these employees’ pay to new
salary threshold to make exempt versus
reclassifying as non-exempt and paying
overtime
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➢ Planning Ahead
▪ If reclassification necessary, prepare

meaningful employee communications
▪ This includes sharing necessary
changes in company policies,
management training, presenting unified
message on how and why changes are
going to be implemented, and positive
individual communications to
reclassified employees who will now
need to keep track of their hours
worked, take required breaks, and may
have change to their benefits
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➢ Planning Ahead
▪ Seek legal advice

▪ New rules are complex, and employers
who do not adhere may be liable for
serious financial penalties, including
unpaid overtime claims
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Piece-Rate Pay
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Piece-Rate Pay
Piece Rate Pay
➢ Employee paid wages based on production (total number of pieces

produced), includes payment by commission
➢ Typically, employee provided incentives to produce more efficiently
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Piece-Rate Pay
Piece Rate Pay

▪ Non-Agricultural ▪ Agricultural
➢Sampson v. Knight ➢Carranza v. Dovex Fruit Co.,
Transportation, 2:17-cv- 190 Wn. 2d 612 (2018)
00028 (2019)
▪ Washington’s Minimum ▪ Washington’s Minimum
Wage Act + WAC 296- Wage Act:
121-021: ✓Permits workweek
✓Permits workweek averaging
averaging ✓Requires payment for rest
✓Requires payment for breaks
rest breaks
✓Does not require ✓Requires payment for
payment for activities activities outside of piece-
outside of piece-rate rate work
work
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Piece-Rate Pay
Piece Rate Pay
▪ Non-Agricultural
Must Satisfy
Minimum
Wage
Total Wages
$13.50/hour
Total Hours Worked
(Piece Meal + This Is
Activities Outside Regular Rate
Piece Meal Work) for Calculating
Overtime
• Minimum Wage Paid For Rest Breaks;
Rest Breaks Count as “Hours Worked”
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Piece-Rate Pay
Piece Rate Pay
▪ Agricultural
Total Wages Must Satisfy

Minimum
Total Hours Worked Wage
(Only Piece Meal) $13.50/hour
• Minimum Wage Also Must Be Paid

For Rest Breaks + Activities
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Pay Equity + Salary History Ban
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RCW 49.58 (2019)
The legislature finds that despite existing equal pay laws, there
continues to be a gap in wages and advancement opportunities
among workers in Washington, especially women . . .
The long held business practice of inquiring about salary history

has contributed to persistent earning inequalities; Historically,
women have been offered lower pay than men for the same jobs
even where their levels of education and experience are the same
or comparable.
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RCW 49.58 (2019)
State’s pay equity statute provides for:
1) Fair Compensation
2) Salary History Ban
3) Disclosure of Salary/Wage Range
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RCW 49.58 (2019)
1) Fair Compensation
➢Prohibits discrimination b/w “similarly employed” employees
based on gender unless “bona-fide” job-related factor
➢Can’t prohibit employees from inquiring about or discussing
wages
➢No retaliation
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RCW 49.58 (2019)
2) Salary History Ban

➢Employers prohibited from requesting current or potential employee’s
previous salary or wage history
➢Employers may confirm if current or potential employee voluntarily
discloses
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RCW 49.58 (2019)
3) Disclosure of Salary/Wage Range

▪ New Employee ▪ Promotion/Transfer
➢On job offer, upon ➢If no salary range or wage scale,
employee’s request, employer must provide salary
employer must expectation or minimum wage
provide salary or prior to posting the position or
minimum wage for making promotion or transfer
position ➢If salary range or wage scale,
employer must provide upon offer
of promotion or transfer upon
employee’s request
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RCW 49.58 (2019)
Similarly Situated
If:
➢ Work for same employer

➢ Performance of job requires
similar skill, effort, and
responsibility
➢ Jobs performed under similar
working conditions
*Job titles alone not determinative

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RCW 49.58 (2019)
Bona Fide Job Factors
Include:
➢ Education, training, or experience

➢ Seniority system
➢ Merit system
➢ System that measures quantity or
quality of production
➢ Regional differences in
compensation
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RCW 49.58 (2019)
Compensation
Includes:
➢ Discretionary and
nondiscretionary wages, e.g.
commissions, bonuses
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Best Practices:
➢ Update employee handbook, policies

➢ Train management and human resources
professionals
➢ Ensure employment documents, e.g.
applications are compliant
➢ Never inquire about current or potential
employee’s salary or wage history; avoid
confirming former employee’s
➢ Seek legal advice when in doubt
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Paid Family and Medical Leave
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WA PFML
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WA PFML
➢ Covered Employers
• Most employers – no size threshold
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WA PFML
➢ Covered Employees
• Employers exempt if:
✓ Federal agencies
✓ Federally recognized tribes
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WA PFML
• However, employers may opt for:
✓ Voluntary plan that meets or exceeds the state

plan’s benefits
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WA PFML
• Employees eligible if:
✓ Localized in state;
✓ They work in state at least 820 hours in first 4
of the last 5 completed calendars, looking back
from the day they intend to take leave. For
2020, lookback will be just 4 quarters.
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WA PFML
• Employees exempted if:
✓ Federal employees;
✓ Not localized in state;
✓ Covered by CBA in existence before October
19, 2017 (unless reopened, renegotiated, or
expired);
✓ Self-employed
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WA PFML
➢ Premiums
• Total premium = .4% of employee’s gross wages:
✓ Employer shares 63% of premium (if more

than 50 employees);
✓ Employee shares 37% of premium
❖ ESD calculates number of employees

based on average headcount over previous
4 quarters; For new employees, after 2nd
quarter
❖ Employers with less than 50 employees
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WA PFML
➢ Employer Duties
• Employer must use gross wages to calculate
premiums which includes:
✓ Salary, hourly wages, cash value of goods and

services given in place of money,
commissions, piecework, bonuses, gifts,
prizes, meals and lodging, PTO, holiday pay,
vacation leave, sick leave, bereavement leave,
separation pay, stocks, stipends, per diems
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WA PFML
➢ Employer Duties
• Employer must:
✓ Every quarter, report to ESD via Secure

Access Washington all employee hours
worked, wages paid, and premiums withheld
✓ Every quarter, remit to ESD employer +
employee share of premiums
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WA PFML
➢ Employer Duties
Reporting Quarter Report Due

Q1: January, February, March April 30
Q2: April, May, June July 31
Q3: July, August, September October 31
Q4: October, November, December January 31
❖For 2019, Q1 and Q2 reports were due August 31st
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WA PFML
➢ Employer Duties
• Employer must provide notice:
✓ Must post ESD standard notice in work

common area, e.g. break room
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WA PFML
➢ Employer Duties
• If employer failed to withhold in 2019:
✓ May still remit employer/employee share

without penalty;
✓ Responsible for employer + employee share;
can’t retroactively withhold employee’s share
✓ Must give one pay period’s notice before
withholding
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WA PFML
➢ Penalties
• If employer fails to remit premiums:
✓ 1st Occurrence: Warning letter

✓ 2nd Occurrence: $75
✓ 3rd Occurrence: $150
✓ 4th + Occurrence: $250
✓ Entire amount of premiums + interest: 1%
compounded monthly; if willful, plus penalty in
same amount
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WA PFML
➢ Employer Duties
• Employer must provide employee notice of their
PMFL rights if they become aware that employee
is out for reason that would qualify as family or
medical leave (or combination):
✓ For a duration of 7 consecutive days of work;

✓ Notice must be sent by 5th business day
following the 7th day;
✓ Employer must use notice provided by ESD
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WA PFML
➢ Covered Leave
• Employee may take leave for:
✓ Bonding with child (newborn, adopted, foster);

✓ Care of own serious medical condition or
injury;
✓ Care for family members’ serious medical
condition or injury;
✓ Certain military-related events, e.g. pre- and
post-deployment activities, and related
childcare issues
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WA PFML
➢ Amount of Leave
• Employee may take an amount of leave up to:
✓ 12 weeks for family or medical leave;

✓ 16 weeks for combined family and medical
leave;
✓ Up to 18 weeks if serious medical condition
during pregnancy
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WA PFML
➢ Employee Notice
• Employee must provide:
✓ If practical, 30 day’s notice;

✓ If not practical, as much advance notice as
possible
✓ If ESD determines employee did not provide
adequate notice, employee’s benefits will be
denied for a period of time equal to the number
of days notice insufficient
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WA PFML
➢ Employee Applies To ESD

• Employee submits application to ESD to claim
benefits:
✓ Employee must wait 7 days before applying to

ESD (accept birth or placement of child);
✓ ESD provides employer first notice;
✓ Employer has 18 days after first notice to
contest claim;
✓ ESD will send employer second notice
indicating that claim was either approved or
denied
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WA PFML
➢ Employee Applies To ESD

• Employee’s application to ESD must be supported
by adequate documentation as provided by the
regulations
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WA PMFL
➢ Usage
• Employee may:
✓ Take consecutive or intermittent leave;

✓ Use in 8-hour intervals
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WA PFML
➢ Amount of Benefit
• Employee may be eligible for:
✓ Maximum weekly benefit of $1,000, adjusted

annually to 90% of state’s minimum wage;
✓ Minimum benefit of $100
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WA PFML
➢ Interaction With Other Leaves

• General Rule
✓ Employer can’t require employee exhaust

other types of leave before using PMFL
✓ There are strict penalties for doing so
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WA PFML

• Employers may not require that employees delay
applying for PFML until PTO exhausted
• Employees can’t typically use PFML and state
PST at the same time
• Employees not eligible for PFML if on
unemployment or workers’ compensation
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WA PFML

• FMLA and PFML run concurrently if eligibility
aligns
• However, FMLA and PFML may run consecutively
if:
✓ PMFL used for family member not covered by

FMLA
✓ PMFL used for eligibility not covered under FMLA
✓ FMLA used in 2019 for pregnancy; PFML used in
2020 for bonding
✓ PMFL application delayed
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WA PFML

• Employees can’t typically use PFML and state
PST at the same time
• Employees not eligible for PFML if on
unemployment or workers’ compensation
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WA PFML

• Employees can use PMFL and PTO, vacation or
sick time at same time, if they choose (check
policy); PTO, vacation, or sick time can be used to
“top off”
• Employees can use PMFL and short-term
disability at same time (check policy)
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WA PFML
➢ Job Protection
• Employers with 50+ employees must:
✓ Restore employees returning from PFML to

same or equivalent position if employee
employed at least 12 months and worked at
least 1,250 hours during last 12 months
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WA PFML
➢ Job Protection
• Employers may be required under other laws to
return the employee to the same or equivalent
position such as:
✓ ADA
✓ Always seek legal advice
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WA PFML
➢ Health Benefits
• Not yet clear if employer must maintain health
benefits during PFML leave – regulations still
forthcoming
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WA PFML
➢ Hypo #1
• A storm hits Washington. An employer in Oregon
dispatches employee who typically lives and
works in Oregon to help with repair work.
Employee works temporarily in Washington for
one week, and then returns to work in Oregon for
the employer.
• Is the employee covered?
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WA PFML
➢ Hypo #2
• 1/1/20: Susana gives birth and applies for PFML
benefits. Job protection starts running under
FMLA and PFML.
• 3/25/20: Susana’s FMLA leave expires; she is still
receiving PFML benefits.
• 4/22/20: Susana stops receiving PFML benefits
and is entitled to job restoration
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WA PFML
➢ Hypo #3
• 2/3/20: Ricardo’s mother-in-law is hospitalized.
Ricardo takes paid family leave under PFML.
• 4/27/20: Ricardo’s PFML benefits end, PFML job
protection expires.
• 6/1/20: Ricardo’s spouse is in a biking accident.
Ricardo takes caregiving leave under FMLA.
• 8/24/20: Ricardo’s job protection under FMLA
expires.
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Best Practices:
➢ Update employee handbooks, policies

➢ Give employees notice
➢ Ensure compliant postings
➢ Train management
➢ Put tracking systems into place
➢ Seek legal advice
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https://bit.ly/35U9cMd
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Non-Competes
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Non-Competes
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Non-Competes
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Non-Competes
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Non-Competes
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Non-Competes
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Non-Competes
HB 1450 (2019), adding Chapter RCW 49
The legislature finds that workforce mobility is important to

economic growth and development. Further, the legislature finds
that agreements limiting competition or hiring may be contracts of
adhesion that may be unreasonable.
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Non-Competes
Effective January 1, 2020 . . . [a] noncompetition covenant is void

and unenforceable against an employee unless the employer
meets strict requirements at the time of enforcement
❖ Presumption noncompetition covenant NOT valid and

UNenforceable
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Non-Competes

• Employees • Independent Contractors
➢Disclosure ➢Disclosure
▪ Disclosed to employee in ▪ N/A
writing no later than
acceptance of job offer,
➢Salary Threshold
unless additional ▪ $250,000 (adjusted
consideration provided annually for inflation)
➢Salary Threshold ➢Term
▪ $100,000 (adjusted ▪ Less than 18 months
annually for inflation) (over 18 months
➢Term presumed invalid)
▪ Less than 18 months (over
18 months presumed
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Non-Competes
Non-Compete?
Does not include:
➢ Non-solicitation agreements
➢ Confidentiality agreements
prohibiting use of trade secrets
➢ Business sale agreements
➢ Franchise agreements
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Non-Competes
Salary Thresholds
➢ Salary threshold determined by

compensation reported to
employee on box one of W2 -
this excludes compensation
deferred for tax purposes
➢ Each September 30th, salary
threshold adjusted annually for
inflation using CPI-W
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Non-Competes
Park Bench Leave
➢ Non-compete void and

unenforceable on “layoff” without
payment unless compensation
given to employee equivalent to
base salary at time of termination
for period of enforcement minus
compensation earned through
subsequent employment during
period of enforcement
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Non-Competes
Moonlighting
➢ Can’t restrict employee earning

less than 2 X minimum wage from
having additional job
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Non-Competes
Forum
➢ Forum for non-compete must be

Washington
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Non-Competes
Retroactivity
➢ Remember, existing non-

competes must comply with new
requirements at time of
enforcement; if not, they may not
be enforceable
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Non-Competes
Damages
➢ Even if Court “blue pencils,” employer

loses
➢ Actual damages or $5,000/violation
plus reasonable attorneys’ fees and
costs
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Non-Competes
Best Practices:
➢ Ensure non-compete strictly meets

requirements
➢ Give employee non-compete well before
commencing work; ensure employee
executes
➢ Separate from employee handbook; use
stand-along arbitration agreement
➢ Ensure employee has been given adequate
consideration:
• New employees: Job is enough
• Current employees: a promotion, raise,
one-time discretionary bonus
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Arbitration Agreements
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PROCEDURAL + SUBSTANTIVE
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Adler v. Fred Lind Manor, 153 Wn.2d. 331 (2004)
Substantive unconscionability involves cases where a clause or

term in the contract is alleged to be one-sided or overly harsh.
“Shocking of the conscience,” “monstrously harsh,” and
“exceedingly calloused” are terms sometimes used to define
substantive unconscionability.
Procedural unconscionability is “the lack of a meaningful choice,”

considering all the circumstances surrounding the transaction
including the manner in which the contract was entered, whether
the party had a reasonable opportunity to understand the terms of
the contract, and whether the important terms were hidden in a
maze of fine print.
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Burnett v. Pagliacci Pizza, 194 Wn.2d. 1001 (2019) (currently on

appeal; decision expected in 2020)
Court asked if employer’s arbitration agreement unconscionable:
1) Did employee receive and sign arbitration agreement before

commencing work?
2) Did employee have meaningful opportunity to read and understand
before signing?
• Was it buried in employee handbook?
• Was it in one document or split among many?
3) Was arbitration agreement supported by adequate consideration?
4) Did employee have chance to opt out?
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Best Practices:
➢ Give employee arbitration agreement well

before commencing work; ensure employee
executes
➢ Separate from employee handbook; use
stand-along arbitration agreement
➢ Ensure employee has been given adequate
consideration:
• New employees: Job is enough
• Current employees: promotion, raise,
one-time discretionary bonus
➢ Give employee chance to opt-out
➢ Seek legal advice
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Thank You
Please Follow Me On Linkedin:
Presented by:
Scott Prange
Phone: (206) 247-7022
Email: sprange@fisherphillips.com
fisherphillips.com

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Getting It Right in 2020 - What Washington Employers Need To Know PDF

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Getting It Right In 2020:

What Washington Employers Need to

• White Collar Exemptions

➢ Under federal/state law, most employees

➢ Several “white collar” exemptions, where

➢ Federal/state exemptions do not always

➢ To qualify for most exemptions, two tests

• New Federal + State Tests

➢ Starting January 1, 2020, new

• New Federal + State Tests

➢ From January 1, 2020, employers must

• New Federal + State Tests

➢ However, from January 1, 2021,

• New Federal Salary Thresholds

• New Federal Job Duties Test

• New Washington Salary Thresholds

➢ First change since 1976

• New Washington Salary Thresholds

➢ From 2020 to 2028, state’s minimum salary threshold will

• New Washington Salary Thresholds

• New Washington Salary Thresholds

➢ Likewise, for computer professional exemption, new minimum

• Washington Job Duties Test

➢ Still no highly compensated employee exemption

• New Washington Job Duties Test

➢ For teachers – payment required on salary or fee basis, but without

• New Washington Job Duties Test

➢ For academic administrators – salary must be at least equal to

• Washington Job Duties Test

➢ For outside salespeople – salary but no minimum pay rate.

• Washington Job Duties Test

➢ Agricultural workers – no change.

• Washington Job Duties Test

• Washington Job Duties Test

• Washington Job Duties Test

▪ Take opportunity to make sure that

▪ Identify employees needing to be

▪ Calculate financial feasibility and costs

▪ If reclassification necessary, prepare

▪ Seek legal advice

Piece Rate Pay

➢ Employee paid wages based on production (total number of pieces

Piece Rate Pay

Piece Rate Pay

Piece Rate Pay

Total Wages Must Satisfy

• Minimum Wage Also Must Be Paid

RCW 49.58 (2019)

The long held business practice of inquiring about salary history

RCW 49.58 (2019)

State’s pay equity statute provides for:

RCW 49.58 (2019)

RCW 49.58 (2019)

2) Salary History Ban

RCW 49.58 (2019)

3) Disclosure of Salary/Wage Range

RCW 49.58 (2019)

➢ Work for same employer

*Job titles alone not determinative

RCW 49.58 (2019)

Bona Fide Job Factors

➢ Education, training, or experience

RCW 49.58 (2019)