Washington’s minimum salary for overtime-exempt employees rose to $1,541.70 a week — $80,168.40 a year — effective January 1, 2026, according to the state Department of Labor & Industries (L&I). For small employers, that’s a roughly 15.7% jump from the prior threshold, and it marks the first year small and large employers in Washington are held to the exact same number.
Table of Contents
What happened
L&I sets the state’s overtime-exempt salary threshold each year as a multiple of the state minimum wage. For 2026, the multiplier climbed to 2.25 times Washington’s $17.13 hourly minimum wage, which works out to $1,541.70 per week, or $80,168.40 annually, according to L&I and confirmed by multiple employment-law and staffing sources including Pace Staffing Network and DZA CPAs.
The bigger structural change: Washington had been phasing in higher thresholds on two separate tracks — a faster schedule for employers with 51 or more employees, and a more gradual one for small employers with 1–50 workers. As of January 1, 2026, those two schedules have converged. Every employer in the state, regardless of size, must now meet the same $80,168.40 salary floor to classify an employee as exempt from overtime.
The state’s plan is to keep raising the multiplier through 2028, when it’s set to reach 2.5 times minimum wage, meaning this number will keep climbing in future years as Washington’s minimum wage rises.
Why it matters
Meeting the salary threshold is necessary but not sufficient. Washington also requires exempt employees to pass a duties test — for executive, administrative, professional, outside sales, or computer professional roles — that has been streamlined into a single test more closely aligned with the federal standard, per DZA CPAs’ summary of the rule.
Employers also have to watch for a mismatch between state and federal rules: where Washington’s threshold is higher than the federal Fair Labor Standards Act minimum (as it now clearly is), businesses must apply whichever threshold is more favorable to the employee — which in Washington’s case is almost always the state number.
What this means for small business owners
For any Washington small business with salaried employees classified as exempt, this is the moment to pull payroll records and check every exempt salary against $80,168.40 a year. An employee who was correctly classified as exempt in 2025 under the old small-employer schedule may have fallen below the new, converged 2026 threshold without anyone noticing — and misclassification exposes a business to back overtime pay, penalties, and potential wage claims.
This is also a good trigger to re-run the duties test alongside the salary check. A salary bump alone doesn’t fix a misclassification if the employee’s actual day-to-day responsibilities don’t meet the executive, administrative, or professional duties test either.
Washington’s exempt threshold is “set at 2.25 times the minimum wage so as the minimum wage increases, so will the exempt threshold,” per DZA CPAs’ 2026 breakdown of the rule.
The bottom line
Washington closed the gap between small and large employer overtime rules in 2026, and the new $80,168.40 threshold applies to everyone. If you haven’t audited your exempt-employee salaries against this number yet, mid-year is a good time to do it — before the state’s next scheduled increase arrives in 2027 on the way to the 2028 target of 2.5 times minimum wage.
