HB 1184
In CommitteeHouse
Overtime exemption
Creating a narrow exemption from overtime provisions for certain nonprofits and small businesses.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill adds a new narrow overtime exemption for salaried employees at qualifying small nonprofits and small businesses in Washington, allowing them to use a lower salary threshold—1.5 times the state minimum wage—to classify employees as exempt from overtime, instead of the much higher salary level required under state rules starting in 2028. The goal is to preserve flexibility for smaller organizations facing rising compliance costs.
- Creates a new exemption from overtime rules for salaried employees of qualifying small nonprofits and small businesses.
- Allows exemption if the employee is paid a fixed salary of at least 1.5 times the state minimum wage for a 40-hour week (approximately $21.21/hour × 1.5 = $31.82/hour, or about $66,186/year) and meets the standard duties test for exemption.
- Defines 'small nonprofit' as a 501(c)(3), (5), or (6) organization with ≤50 full-time equivalent employees at one site, or those providing essential services (e.g., child care, shelters) or running 24/7 programs.
- Defines 'small business' as any entity with ≤50 full-time equivalent employees, owned and operated independently.
- Does not change the existing exemption for other workers (e.g., commissioned salespeople, agricultural workers, law enforcement).
Who is affected
- Small nonprofits — Nonprofit organizations with 50 or fewer full-time equivalent employees at a single location, or those providing essential services like child care or shelters, or running 24/7 programs (e.g., emergency shelters, behavioral health services), may now use a lower salary threshold to classify employees as exempt from overtime.
- Small businesses — Businesses with 50 or fewer full-time equivalent employees (including sole proprietorships, partnerships, corporations) may now use a lower salary threshold to classify employees as exempt from overtime, increasing scheduling flexibility.
- Salaried employees at qualifying small nonprofits and small businesses — Salaried employees at qualifying small nonprofits and small businesses who earn at least 1.5 times the state minimum wage for a 40-hour week and meet executive, administrative, or professional duties may be exempt from overtime pay.
- Washington Department of Labor & Industries — The Washington Department of Labor & Industries will need to interpret and enforce the new exemption, including verifying eligibility and responding to complaints.
Pro/Con Analysis
Stronger case for benefits
Potential Benefits (5)
The exemption reduces compliance costs for small nonprofits and small businesses by allowing a lower salary threshold ($66k vs. projected $93k in 2028) to classify employees as exempt — helping preserve jobs and avoid layoffs in resource-constrained organizations.
Business & EmploymentRef: Sec. 1(3) & Sec. 2(2)(k)The bill explicitly includes sole proprietorships and independent businesses in the definition of 'small business', supporting micro-enterprises that may lack HR departments or legal resources to navigate complex overtime rules.
Business & EmploymentRef: Sec. 1(2) & Sec. 2(2)(k)(ii)(B)By tailoring the exemption to nonprofits delivering essential community services (e.g., child care, shelters), the bill acknowledges the unique operational constraints of mission-driven organizations that serve vulnerable populations and operate on tight budgets.
Business & EmploymentRef: Sec. 1(1) & Sec. 2(2)(k)(ii)(A)The inclusion of 24/7 programs (e.g., emergency shelters, respite care) recognizes staffing realities in critical services, where rigid overtime rules could disrupt continuity of care or force premature closures of essential programs.
Public SafetyRef: Sec. 2(2)(k)(ii)(A)(III)The bill’s fiscal impact is projected to be minimal, reducing potential strain on state enforcement resources and avoiding costly litigation over ambiguous overtime classifications in small nonprofits and businesses.
Local GovernmentRef: Fiscal Impact section
Potential Concerns (5)
The new exemption allows small employers to classify salaried employees as exempt from overtime if paid at least 1.5× minimum wage (~$66k/year), potentially reducing labor costs and increasing scheduling flexibility — but this also removes overtime protections for employees who may regularly work beyond 40 hours per week without additional compensation.
Business & EmploymentRef: Sec. 2(2)(k)(i)The exemption includes nonprofits providing essential services (e.g., child care, shelters) and 24/7 programs (e.g., behavioral health), which may rely on flexible staffing — but this may disproportionately affect lower-wage support staff in those settings who are salaried but not highly compensated and could be forced to work extra hours without overtime pay.
Business & EmploymentRef: Sec. 2(2)(k)(ii)(A)(II) & (III)The 50-employee cap applies per worksite, meaning multi-site organizations (e.g., regional nonprofits or chains of small businesses) may qualify for the exemption at each location — potentially benefiting larger employers with fragmented operations more than truly small, single-site entities.
Business & EmploymentRef: Sec. 2(2)(k)(ii)(A)(I) & (B)By allowing employers to exempt salaried employees from overtime without requiring additional compensation for hours over 40, the bill weakens the enforceability of overtime rights for a subset of workers — particularly those in roles with ambiguous duties or unclear exempt status.
Rights & LibertiesRef: Sec. 2(2)(k)(i)While intended to support 24/7 essential services, the exemption may strain staffing in high-risk sectors (e.g., behavioral health, shelters), where employees working long hours without overtime could face burnout and increased safety risks — though this is speculative and not directly quantified in the bill.
Public SafetyRef: Sec. 2(2)(k)(ii)(A)(II) & (III)
Who Is Most Affected
Small nonprofits with ≤50 FTEs at one site may gain scheduling flexibility and reduced compliance costs, but may also face pressure to increase workloads for salaried staff without additional pay.
Salaried employees earning ≥$66k/year in exempt roles may benefit from job stability in resource-limited organizations, but risk losing overtime pay if they regularly exceed 40 hours — especially those in lower-tier support roles.
Small businesses (≤50 FTEs) gain flexibility in compensation design and scheduling, but may face competitive pressure to avoid hiring non-exempt staff to stay under the 50-FTE threshold.
Employees in 24/7 essential services (e.g., shelters, behavioral health) may benefit from program continuity, but frontline staff working long shifts without overtime could face burnout and safety risks.
The Department of Labor & Industries gains enforcement responsibility for verifying eligibility and handling complaints, but the narrow scope and low projected caseload mean minimal added burden.