21 Dec WA State Employment Policy Changes for 2023

There are some new changes to Washington State employment rules that will go into effect the fourth quarter of 2022 or in 2023.

Occupational Code Reporting is Now Required

Starting the fourth quarter of 2022, a law passed in 2019 by the WA State Legislature requires employers to report SOC codes in their quarterly reports for unemployment insurance. SOC Is a system used by federal agencies to classify workers into occupational categories for the purpose of collecting, calculating, and disseminating data. Employers that fail to report the SOC code of a worker will be subject to the incomplete report penalty. These penalties range from $75.00- $250.00 depending on the amount of tax due on the incomplete report. For more information go to the WA ESD Website.

Increases to the Minimum Wage

Washington state raised the minimum wage in 2023 and plans to do so every year according to the Consumer Price Index. The minimum wage in Washington will increase to $15.74 on Jan. 1, 2023. Younger workers, ages 14 or 15, can expect to be paid $13.38 an hour (85% of the standard minimum wage).

But if your business is in Seattle, the requirements are different. It’s one of a handful of cities across the country that has a plan to phase in a $15 minimum wage (San Francisco was the first to get there). When it comes to wages, Seattle delineates businesses by size: 500 employees or fewer and more than 501 employees.

Beginning Jan. 1, 2023, businesses with over 501 employees are required to pay $18.69 an hour, regardless of if they pay toward medical benefits. Seattle businesses with 500 or fewer employees must pay $16.50 an hour if they pay $2.19 an hour toward medical benefits and/or their employee earns $2.19/hour in tips. If that’s not the case, then the business must pay $18.69 an hour.

Keep in mind that other counties, cities, and towns may have their own minimum wage laws. You should do the research to determine which local wage laws may apply to you.

Here are some links to key information:

• Small and Large Employers Chart
• Overtime Rules Fact Sheet
• New Salary Threshold Implementation Schedule

Salary Range Required in Job Postings

Beginning January 1, 2023, employers with at least one employee based in Washington and 15 or more employees total will be required to post a wage scale or salary range in job postings. Postings must also include a general description of all the benefits and other compensation, like bonuses, paid time off, or profit-sharing, offered for that position. These requirements only apply to job postings that include qualifications for applicants.

According to a draft administrative policy from the Washington State Department of Labor & Industries (L&I), employers must disclose pay information in postings for remote work that could be performed by a Washington-based employee. Employers can’t avoid the requirement to post a pay range by stating they won’t accept Washington applicants in a job posting. While administrative policies don’t have the force of law, they generally indicate how the regulatory agency (L&I) will interpret and enforce the law. Also keep in mind that this is only a draft document and could change before it’s finalized.

The draft policy also addresses other issues, including what constitutes a job posting, examples and explanations of salary ranges, and more. You can read the draft administrative policy here.

The law is not applicable to transfers for current employees if there is no job posting, but employers will still need to disclose this information to employees they offer an internal transfer or promotion to if asked (as required by current law).

Broader Implications
The intent of the requirement to post pay scales in job postings is to promote pay equity and to help close the wage gap for those who are disadvantaged in the job market through no fault of their own. While the approach may feel drastic to private employers, it has been used successfully in the public sector for many years. In fact, after the initial rough patch (which may require a fair bit of work from employers who don’t have established pay structures), these pay transparency requirements are likely to streamline hiring, compensation, and talent development processes and make your business run more efficiently.

Job postings with pay ranges are shown to get significantly more applicants, so while this new requirement may feel burdensome, it will likely provide you with a tactical advantage over competitors in other states, as well as those who choose not to comply or who provide ranges that are so broad as to be meaningless. You’re also in good company—by the end of 2023, it’s estimated that 25% or more of all private employers will be required to post pay ranges with their job ads.

What to Expect
You should anticipate that employees will see your job ads and react to the pay scales provided there.

If the ranges you post in ads seem too wide, employees and applicants may think you’re not acting in good faith. This will breed distrust and could potentially lead to employees or applicants reporting you for failure to comply with the law. If the ranges are reasonable but you have current employees outside of those ranges, that will likely lead to some immediate feedback.

In many cases, employees will begin discussing this new information with their coworkers. Discussing wages is protected by both federal and Washington law, so employers should not attempt to stop or prevent these conversations or punish employees for having them. The result of this sharing may be that employees discover one-off or systematic pay inequality, in which case you may have issues with morale, turnover, union organizing, or lawsuits.

Even if your pay choices are perfectly logical across the board, employees will often not understand why a job like theirs has a lower pay range than a different type of job in your organization. While you’re not required to provide employees with explanations for why you’ve selected the pay ranges that you have, for the sake of morale, retention, and your reputation as an employer, you should be prepared to provide a rationale for your choices.

What to Do Now
Don’t panic. If you don’t have documented pay ranges, start working on them. You may want to consider hiring outside help if you don’t already have a basic, defensible pay structure and detailed job descriptions.

If you are preparing for this on your own, here are some tips:

• Each job description should have a designated pay range.
• Within each pay range, you should have an explanation of how an employee moves from the bottom of the range to the top.
• If you know that you’ll be advertising pay ranges that are above what you pay your current employees for the same work, strongly consider providing them with raises to bring them into that pay range (failure to do so could easily lead to pay equity claims).

If you are already aware of pay equity issues or become aware of them, start correcting them as soon as possible. You may want to consult with an employment attorney in Washington to strategize how to limit your liability.