Representatives from the business community say that while they appreciate efforts made by the Department of Labor and Industries (L&I) to update its overtime rules, they are concerned about how the changes might affect career progression and are asking for a careful approach to scheduling and hiring that avoids additional cost.
Members from the retail and hospitality sectors agree that L&I should refrain from making state-wide changes to the salary threshold and instead wait until early 2019 when the Federal Department of Labor updates its threshold nationwide.
The Department of Labor and Industries (L&I) is proposing to raise the salary threshold for overtime to between two and two-and-a-half times the state minimum wage for a 40-hour work week, with a projected implementation date of Jan. 1, 2020. The current draft specifies that any employee earning between $56,160 and &70,200 or less would be required by law to receive overtime, paid sick leave, minimum wage and other benefits afforded under the Minimum Wage Act.
L&I has taken stakeholder comments on the proposed changes since March, and held several statewide feedback sessions in November. The department will now prepare its draft rules before releasing them and accepting public comments on the updated version.
Greater Yakima Chamber of Commerce CEO Verlynn Best told Lens: “As the chamber of commerce, the most important thing is that we want everyone to be paid fairly and equally, but sometimes when you try to legislate this sort of stuff it muddies the water.”
She added that employers have indicated to her that the wording of the proposed changes is not overly clear. Best said that complications of legislation potentially creates issues related to scheduling that would likely cause employers to either schedule less hours or cut back on employees to work around the new law.
“The problem as far as cost goes is when we complicate and start mandating the rules to employers and companies…there is a cost to doing that. Sometimes the cost is that rather than scheduling someone for an eight hour shift I may reschedule them for six hours.”
At the end of the day, those employees receive a six hour shift instead of what they would normally get, which hurts that workforce, she continued.
“It ends up costing the employees as much as the employers because we become much more conscious of how we are scheduling. Most companies are going to avoid overtime if they can; it’s the reality of good business.
“We are always trying to attract new businesses to our community,” said Best. ‘Is this a piece of legislation that will invite them in or will they say, ‘Gee, Idaho doesn’t have these laws, maybe I should move there?’”
In comments made by Washington Retail Association (WRA) Chief Operating Officer Tammie Hetrick and contract lobbyist Bruce Beckett on L&I’s second version of its pre-draft rules, the WRA disagrees with L&Is decision to connect the salary threshold to the minimum wage.
“Using an automatic connection to the state’s minimum wage will hinder employers’ ability to offer positions to train employees and for employees to gain valuable experience on their career path. We urge L&I to drop this concept from the rule proposal,” they wrote.
Instead, WRA suggests that L&I not implement a “state specific salary threshold…tied to a politically established wage level” and instead wait for the Federal Department of Labor to update the salary threshold across the country.
Hetrick and Beckett add that “It’s misleading to assume that raising the salary threshold will increase the compensation for currently exempt employees.”
They added that it is also important to ensure that the same rules apply for every employer in all areas of the state to prevent confusion caused by different phase-in times for different business sizes.
Nicole Vukonich, State Communications Manager for Washington Hospitality Association (WHA), told Lens that WHA appreciates L&I modernizing its overtime law, however the association is “absolutely opposed” to the second version of the pre-draft rules because it would create a wage gap. The proposal includes a salary threshold which advises that management positions should make 200 to 250 percent of what entry-level workers make.
Also, the association is asking for at least four years before changes are made to give hospitality businesses time to acclimate because the current implementation date of Jan. 1, 2020 is shared with the implementation of a $13.50 state minimum wage and the start of Paid Family and Medical Leave benefits.
Vukonich said WHA is most concerned about how these rules might affect the hospitality career ladder.
“The model L&I is proposing…we have two classes of employees; hourly workers and highly compensated executive management. That is just not the case. Our industry is full of positions to meet the needs and skill levels of employees in every stage of their career…,” said Vukonich, adding that nine out of 10 operators started at entry-level positions and went up the career ladder.
She added that the jobs in the early and middle management are important for preparing for upper level management.
“We would like to see that pathway continue uninterrupted for the owners and operators of tomorrow. If the rules were to pass, operators would either need to drastically increase early and middle management career positions or demote employees back to hourly positions.”
WHA is concerned that implementation of the changes would mean that most hospitality companies would have to change their business model and figure out how to diminish the cost burden, she said.
“Ultimately, every business will have to decide what makes sense for them and their employees once these rules are adopted.”