• In 2021, the state of Washington raised the minimum salary amount for executive, administrative, and professional workers to remain exempt from overtime.

Pennsylvania

Duties test: Under Pennsylvania law, executive, administrative, and professional employees may not spend more than 20 percent of their time (or more than 40 percent for executive or administrative employees of retail or service establishments) performing duties that do not qualify for the exemption.

In addition, the state’s criteria for the outside sales exemption requires the employee to spend more than 80 percent of work time away from the employer’s place of business, and not spend more than 20 percent of hours worked on duties not directly related to making sales (although incidental work counts toward the exemption).

Finally, Pennsylvania law does not reference an exemption for computer employees (although workers in that field might meet the professional tests), nor does the state law recognize the “highly compensated employee” rule for those earning more than $107,432 per year.

Washington

Minimum salary: Increases to the state minimum salary level for white-collar exempt employees began to be phased in July 1, 2020. On this date, the salary threshold increased to $675 per week ($35,100 per year). The salary threshold will incrementally climb through January 2028, when it is expected to reach about $1,603 per week (about $83,356 per year).

Salaried executive, administrative and professional workers, and computer professionals must earn a salary above a minimum specified amount to remain exempt. That amount rose in 2021.

The salary thresholds are now based on a multiplier of the minimum wage, and increased January 1, 2021. Because the new state thresholds will be more favorable than the federal threshold of $684/week ($35,568/year), Washington employers will have to adhere to state thresholds in 2021.

In 2021, those thresholds are:

• For small businesses with one to 50 employees, an exempt employee must earn a salary of at least 1.5 times the minimum wage, or $821.40 a week ($42,712.80/year).
• For large businesses with 51 or more employees, an exempt employee must earn a salary of at least 1.75 times the minimum wage, or $958.30 a week ($49,831.60/year).

For large businesses with 51 or more employees, an exempt employee must earn a salary of at least 1.75 times the minimum wage, or $958.30 a week ($49,831.60/year).

There are also changes in the thresholds for exempt computer professionals paid by the hour.

Duties test: Updates to Washington’s rules that spell out what type of workers don’t have to receive overtime pay took effect July 1, 2020. The rules establish criteria for certain workers to be considered exempt from getting overtime pay and other protections under the State Minimum Wage Act.

The July update primarily affects the part of the rules known as the “job duties test.” In general, it helps determine which workers are considered executive, administrative, and professional employees, as well as computer professionals and outside salespeople. Workers who fit into these categories based on duties they perform, and earn more than the required salary threshold, can be considered exempt.

Although Washington state previously used two job duties tests to determine if an employee could be classified as exempt, effective July 1, 2020, the state began using a single test aligned more closely with federal standards. The test for each exemption spells out what duties an employee must perform to be classified as exempt, regardless of the employee’s job title or job description.

The state does not recognize the “highly compensated employee” category for those earning more than $107,432 per year.

Deductions: Washington generally follows federal rules in effect before the 2004 revisions. The state therefore does not allow unpaid disciplinary suspensions of less than one week but does allow deductions for violations of major safety rules (which was part of the older federal rule).

Wisconsin

Duties test: Wisconsin law requires that executive, administrative, and professional employees cannot spend more than 20 percent of working time (or 40 percent for executive or administrative employees of retail or service establishments) engaged in duties not directly and closely related to duties that meet the exemption. In other words, they would have to spend at least 80 percent of their time engaged in exempt duties (or at least 60 percent for retail and service employees).

In addition, the outside sales exemption requires spending 80 percent of working time away from the employer’s place of business.

Finally, state law does not include the “highly compensated employee” category for those earning more than $107,432 per year (and therefore may not recognize it).

Minimum wage: Wisconsin law has one other unusual provision. While the state generally recognizes the same exemptions as federal regulations (executive, administrative, professional, outside sales), the state only applies these exemptions in the overtime law, not in the minimum wage law. Therefore, while exempt employees do not have to be paid overtime, they still have to be paid minimum wage. The minimum required salary will usually satisfy this requirement, however.

As of April 18, 2014, outside sales employees are exempt from the minimum wage, making Wisconsin law consistent with federal law. Another change at that time removed the state requirement to keep records of hours worked by exempt employees, though employers may choose to keep such records anyway.