Washington Supreme Court Alters State's Agricultural Exemption in the Minimum Wage Statute
On November 5, 2020, the Washington Supreme Court altered a 60-year provision of Washington’s Minimum Wage Statute when it issued its decision in Martinez-Cuevas v. DeRuyter Brothers Dairy. The court held that the agricultural overtime exemption at RCW 49.46.130(2)(g), which exempted agricultural employers from paying overtime at a rate of 1.5 times the regularly hourly rate, violated article I, section 12 of the Washington State Constitution as applied to dairy workers. While the decision does not invalidate the agricultural overtime exemption for all agricultural workers in Washington, Justice Gonzalez’s concurrence strongly signaled that the exemption’s future is far from certain and argued that any decision should be applied retroactively.
In Martinez-Cuevas, the court cited long hours and dangerous work conditions to dairy workers to find that the Washington legislature lacked reasonable grounds for granting the overtime exemption to agricultural employers, as applied to dairy workers. Chief Justice Stephens, in her dissent, pointed out that the majority’s reasoning could be applied to most agricultural employers.
The court did not state whether the decision would be applied retroactively because that issue was not before them. If the decision were to be applied retroactively, affected employers would have to pay affected employees half of the regular hourly rate for all overtime hours they worked for the last three years.
While this ruling does not apply to all agricultural employers in Washington, those employers should start planning now for that possibility. Here are some suggestions:
- Evaluate your current compensation arrangements and potential effects if the Martinez-Cuevas outcome were applied to all agriculture employers in the future.
- For employers considering pay rate adjustments, prepare now. Adjustments can include modifying the hourly rate so that it can be split between a regular hourly rate and an overtime rate of one-and-a-half times the hourly rate, so long as the regular hourly rate is at least the current minimum wage.
- If you pay a piece rate or flat rate for work, carefully calculate the hours and work—including all rest breaks and non-productive time—to determine a regular hourly rate of pay and then an overtime rate. Then consider if adjustments to the piece rate or flat rate work need to be made.
- If you make any pay rate adjustments, provide notice to the employee before making the adjustment. The notice should be easily accessible and in a language appropriate for the employee. If possible, obtain their signed acknowledgement of the pay rate adjustment.
- Ensure that all employees are paid at least the minimum wage rate. The current minimum wage in Washington is $13.50, increasing to $13.69 on January 1, 2021.
- Any pay rate adjustments should be evaluated based upon business needs and applied consistently throughout the organization.
- The new salary basis and executive/administrative/professional overtime regulations went into effect this year. If you have any individuals whom you believe qualify under these exemptions, re-evaluate them to ensure they meet the new standards, particularly the increased salary amounts effective January 1, 2021.
- Review your employment handbooks and consider what, if any, additional policies you might want about the use of overtime.
This does not constitute legal advice and you should consult with an attorney as to how this ruling applies to your business.
- Stephanie BerntsenShareholder