State vs. Federal “White-collar” Overtime

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Common questions about state vs. federal "white-collar" (management) overtime pay

The following information applies only to the executive, administrative, professional, computer-related and outside sales jobs that are exempt from minimum wage and overtime requirements under both state and federal laws.

• When is overtime pay required under Washington law?

  Most workers that are paid hourly are entitled to be paid time-and-one-half their regular rate of pay for any time worked over 40 hours in a seven-day workweek. Some salary- or commission-based workers also must be paid overtime.

  State and federal regulations both address which workers are exempt from (not entitled to) overtime pay requirements. The federal overtime rules changed in August 2004.

• Which overtime rules should a business follow — state or federal?

  Businesses are required to follow the rule that is most favorable to each specific affected worker. It is essential that businesses review both state and federal laws on the particular exemption to determine whether the exemption may be applied.

• Do the federal overtime rules also change Washington State policies covering who is exempt from overtime-pay requirements?

  No. L&I does not plan to amend its regulations in response to changes in federal overtime laws.

• How can I determine whether state or federal overtime requirements apply?

  Overtime exemptions are determined on a case-by-case basis, so it is important to review the details about the particular circumstances and compare them against the federal rules. Please check with the Washington State Department of Labor and Industries Employment Standards office, the U.S. Department of Labor or a qualified consultant to determine how the specific circumstances are affected.

  Here are some basic guidelines:

  • Businesses must comply with both state and federal overtime rules. Where differences exist between Washington State and new federal overtime rules, the business must follow the rule that is most favorable to the worker.

    In other words…

    If, prior to Aug. 23, 2004 (when the new federal regulations took effect), a business was required to pay overtime to a worker, in most cases that worker still must be paid overtime now. That worker’s status likely will not change because state regulations, which are very similar to the old federal regulations, have not changed.

    If, prior to Aug. 23, 2004, the business was not required to pay overtime to a salaried worker, and that worker earns less than $455 per week, the business should review the status of that worker under the new federal regulations by checking with the U.S. Department of Labor at their toll-free number: 1-866-487-9243.

  • Washington State overtime rules generally follow the federal overtime rules in effect prior to August 23, 2004. Because the federal rules changed, there are some cases in which the federal rules are more favorable to workers, and some in which the state rules are more favorable.
  • The federal rule changes affect white-collar workers only. Traditional blue-collar workers who perform manual labor, even if highly skilled, must be paid overtime under both state and federal rules.
  • Workers not affected by these overtime-exemption rules include construction trades, production workers, probation and parole officers, and park rangers. The new rules also do not apply to first responders such as police, firefighters, paramedics, EMTs, ambulance personnel, rescue workers, and HAZMAT workers. These workers must actually perform the physical duties required, such as fighting fires, solving crimes, helping crime or accident victims, etc.
• What are the differences between state requirements and the federal rules?

  Washington State has separate rules for determining who can be considered exempt from overtime-pay requirements. Prior to the new federal rules, state and federal requirements were nearly identical. The federal rules have, in some cases, changed who in Washington State can be considered exempt from overtime. Notable differences include:

  
  Minimum salary requirement:

  • Washington's minimum salary for overtime-exempt workers is $250 per week.
  • The new federal rules raise the federal minimum. It previously was as little as $155 per week, but now is $455 per week.

  The new federal minimum salary of $455 per week will apply to most workers in Washington.

  Please remember that the minimum salary requirement for exempting a worker from overtime is only ONE FACTOR in determining whether a worker is exempt. Other requirements must be met in addition to the minimum salary, and state requirements in those areas may be the most favorable to your particular worker even though you use the federal minimum salary standard. Make sure to check both state and federal requirements.

  
  $100,000-per-year salary cap: Under the new federal rules, white-collar positions paying more than $100,000 per year are exempt from overtime pay if the worker has performed at least one duty in an executive, administrative, or professional function job. Washington does not have such a requirement, so state regulations are the most favorable to workers in this case.

  To learn more about the multi-part federal definitions for what constitutes executive, administrative, and professional duties, please go to the U.S. Department of Labor site on the Internet at: www.dol.gov/esa/regs/compliance/whd/fairpay/fs17a_overview.htm

  
  Outside sales workers: Under the new federal rules, an outside sales worker who is exempt from overtime is defined as one who:

  • Customarily and regularly is engaged away from his/her employer's place or places of business;
  • Has a primary duty of making sales or obtaining orders or contracts for services or the use of facilities for which the client or customer will pay a consideration.

  Washington State rules define an overtime-exempt outside sales worker as one who:

  • Is customarily and regularly engaged away from his/her employer's place or places of business;
  • Is engaged in making sales, obtaining orders or contracts for services or use of facilities or demonstrating products or equipment for sale;
  • Is paid a guaranteed salary, commission, or fee payment (or combination);
  • Controls his/her total hours worked each week;
  • Spends no more than 20 percent of his/her time doing inside office work not related to outside sales.
• Are there notable differences between state and federal requirements other than determining who is eligible for overtime pay?

  Yes. In addition to overtime requirement changes, the federal rule also affects deductions from salary that a business can impose upon a worker who violates organizational policies on workplace safety:

  • The federal rule allows an employer to impose unpaid disciplinary suspensions of one or more full days for workplace-conduct rule infractions.
  • Washington State allows an unpaid disciplinary suspension in increments of less than one week only for violations of safety rules of major significance. Unpaid disciplinary suspensions for non-major safety violations cannot be in less than full-week increments.
• For workers who are paid overtime, do the federal rules change the way a firm must administer that pay?

  Changes in federal overtime rules, which became effective in August 2004, affected who is exempt from overtime pay. If a business determines that a worker still must be paid overtime, it does not need to change the way it pays overtime.

• What are state requirements that cover when and how overtime is paid?

  If workers are eligible for overtime pay, check the Washington Administrative Policies listed below for guidance on payment of overtime. The Department of Labor and Industries enforces overtime pay requirements based on these policies.

• Where can I go to get more information or to ask questions?

  Interpretation of the federal overtime rules: The federal government has fact sheets addressing frequent questions about the new rule. They can be found at www.dol.gov/fairpay, or by contacting the USDOL toll free at 1-866-487-9243 for detailed information.

  State overtime rules should apply if the state rule is most favorable to the worker.
  If you have detailed questions about how to determine this, you are welcome to:

  • Contact the L&I office nearest you.
  • Send an e-mail to L&I's Employment Standards section at conw235@LNI.wa.gov.
  • Call the L&I Central Office in Tumwater at 360-902-5316.
  • Find more information about state labor regulations, plus the texts of laws and regulations, at the Workplace Rights Wages.LNI.wa.gov main page.

Download or print these helpful fact sheets:

New Federal Overtime Regulations - 2004: How they apply to Washington State (37 KB PDF) - Gives the same general information about the effect of the new federal overtime rules in Washington as discussed on this web page.

Comparison: Washington State and new federal overtime rules (44 KB PDF) - A chart providing more detailed information about the most notable differences between state overtime rules and the new federal rules.

For more detail, see L&I Admininistrative Policies:
Minimum Wage Act Applicability (ES.A 1) (150 KB PDF)
- Outlines when and to whom the state Minimum Wage Act applies. State overtime laws are included in the Minimum Wage Act.
Overtime (ES.A.8.1) (161 KB PDF)
- Interprets when overtime is due and how it is paid, and when it is not due.
How to Compute Overtime (ES.A.8.2) (57 KB PDF)
Salary Basis for White Collar Workers (ES.A.9.1) (106 KB PDF)
- Defines what constitutes a salaried worker.
Retail or Service Exception (ES.A.10.1) (25 KB PDF)
- Explains how a retail or service employee could be exempt from overtime if the position meets specific circumstances.
Q&A on Retail/Service Exception (ES.A.10.2) (16 KB PDF)
Examples of Retail/Service Businesses (ES.A.10.3) (21 KB PDF)

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