Washington employee benefits and HR rules

Is your organization compliant with Washington's employment laws?

If your organization is based in Washington or you employ Washington workers, you need to know which benefits and HR rules apply to you. This guide will provide a general overview of Washington state’s regulations and guidelines for small to medium size businesses.

Topics covered in this guide include:

• What are employees' rights in Washington?
• What are employers required to provide in Washington?
• Health insurance in Washington
• Wages laws in Washington state
• Other employment and HR laws in Washington
• Which state agencies oversee employment laws in Washington?

What are employees' rights in Washington?

Washington guarantees workers many rights under state and federal law. If you have or plan to hire employees in the state, you’ll need to know what protected rights your employees have, no matter the size of your organization.

Washington state workers' rights include:

• Freedom from retaliation for exercising a protected right or filing a complaint about their employer to the state
  • Employers can’t terminate, suspend, demote, reduce hours, reduce pay, or deny a promotion to an employee in retaliation for the above.
• Employees are entitled to the state minimum wage, including overtime and paid sick leave
• Freedom from discrimination in the workplace, including sexual harassment
• Equal pay and opportunities
• The right to rest breaks
  • You must allow employees to take at least a ten-minute paid rest break for every four hours worked.
  • You can only require employees to work up to three consecutive hours without a break.
  • Employers can’t require their workers to stay onsite during their breaks.
    
• The right to meal breaks
  • Employers must provide at least 30 minutes for meal breaks when employees work more than five hours in a shift.
  • Meal breaks must start between the second and fourth hours of the worker’s shift.
  • Meal breaks are unpaid unless employers require their workers to remain on duty or at the work site.
• The right to bathroom breaks
  • Employers must provide their employees with “reasonable access” to bathrooms during working hours. You can’t restrict bathroom use to only scheduled breaks.
• Employers can only hold certain employees to a non-compete agreement
  • Employers can hold employees earning at least $116,593.18 annually to a non-compete agreement (while non-compete agreements for employees earning less than that amount are void).
  • You can hold independent contractors earning $291,482.95 or more annually to a non-compete agreement.
    
• Employers must protect “isolated workers” such as janitors, security guards, and housekeepers from sexual harassment by:
  • Adopting a sexual harassment policy
  • Providing mandatory training to staff
  • Providing resources for reporting harassment and assault
  • Providing panic buttons to certain workers

Additionally, rideshare drivers have new rights and protections as of 2023:

• The right to written notice of minimum per mile, per minute, and per trip rates
• The right to paid sick leave
• The right to workers’ compensation
• Employers can’t retaliate against a driver who exercised their state rights

Locally required employee benefits

Seattle requires employers to pay employees all compensation owed to them. This includes any business expense reimbursements, such as remote work costs.

Providing employee stipends is an excellent way employers in Washington can reimburse their workers for business expenses while offering perks that their employees love. You can offer stipends for wellness, remote work, professional development, transportation, and more.

Seattle and Tacoma both have their own paid sick leave laws. While state law already requires employees to earn one hour per 40 hours worked, Seattle and Tacoma have additional requirements.

In Seattle, employees of an organization with 250 or more full-time equivalent employees (FTEs) accrue one hour of paid sick leave per 30 hours worked. Additionally, employers with 50-249 FTEs must allow up to 56 unused hours to carry over annually. This increases to 72 hours for organizations with 250 or more FTEs. 

In Tacoma, employees may also use their paid sick leave for bereavement leave or to care for dependents when a public official closes their school or daycare for any reason.

What benefits aren't required by law in Washington state?

Washington doesn’t require employers to offer most benefits. This includes paid vacation time, bereavement leave, paid holidays, life insurance, and health insurance. While the state doesn’t require employers to offer these benefits, they can help you attract and retain employees, improve job satisfaction, and boost employee morale. 

Popular employee benefits include professional development opportunities, tuition reimbursement, commuter benefits, childcare benefits, health insurance, and more.

Health insurance in Washington

While the state doesn’t require health insurance, federal law does. Organizations with 50 or more full-time equivalent employees (FTEs) must provide health insurance benefits with minimum essential coverage (MEC) to satisfy the Affordable Care Act’s (ACA) employer mandate.

Offering health benefits to your employees is an excellent way to attract and retain top talent. According to PeopleKeep’s 2022 Employee Benefits Survey Report, 87% of employees value health insurance, and 92% of employers offer it. You could lose top job candidates and employees to your competitors by not offering health benefits.

While traditional group health insurance is a popular option, rising premium costs have made it challenging for small to medium size businesses to offer the benefit. 

Thankfully there are alternatives available to small businesses that can’t offer group coverage due to minimum contribution or participation requirements or the high price of insurance premiums.

Health reimbursement arrangement (HRA)

A health reimbursement arrangement (HRA) is an employer-funded health benefit that allows you to reimburse your employees tax-free for their qualifying medical expenses. With a stand-alone HRA such as a qualified small employer HRA (QSEHRA) or an individual coverage HRA (ICHRA), you can reimburse employees for their individual health insurance monthly premiums.

You simply offer your employees a monthly allowance for their medical expenses. Employees then submit requests for reimbursement and provide proof of their eligible expenses. 

With an HRA, you have complete control over your benefit and budget while giving your employees more freedom to choose how they want to spend their allowance.

You can also satisfy the federal regulations for applicable large employers (ALEs) with an ICHRA. 

Learn more about each HRA

An HRA is a more affordable health benefits solution than group health insurance in Washington state. That’s because, according to Ideon, individual health insurance premiums are cheaper than group premiums in most counties.

Health and wellness stipends

You can also offer your workers stipends for health and wellness expenses. A health stipend is a fixed allowance offered to your employees to help pay for their healthcare expenses. A health stipend isn’t a formal benefit, so you have complete control over which expenses are eligible for reimbursement.

However, health stipends are taxable. They also don’t satisfy the ACA’s employer mandate for organizations with 50 or more FTEs. This makes HRAs a better option for most organizations.

You can also offer a wellness stipend to reimburse your workers for gym memberships, wellness mobile apps, fitness trackers, and more. Offering a wellness stipend alongside an HRA or group health insurance policy allows you to create a more holistic wellness program.

Wage laws in Washington

Wages and salaries in Washington are subject to various state laws. We’ve compiled the essential requirements to know below.

Minimum wage laws

Washington has a state minimum wage that exceeds the federal minimum wage.

In 1998 voters approved Initiative 688, which required the Department of Labor and Industries to make cost-of-living adjustments each year through 2016. In 2016, voters approved Initiative 1433 to increase the minimum wage to $13.50 by 2020 and reestablish annual cost-of-living increases.

Some workers are exempt from the minimum wage requirements, including the following:

Local minimum wage laws

In addition to the Washington state minimum wage, you may be subject to paying more if you have employees in certain cities. 

Overtime pay

You must pay overtime to employees in Washington state who work more than 40 hours per week. The state overtime hourly rate is 1.5 times the employee’s regular rate of pay. The state doesn’t require overtime pay if an employee works more than eight hours per day unless they surpass 40 per week. 

The following employees are eligible for overtime pay:

• Most hourly workers, including piece rate and commission employees
• Some salaried employees
• Only certain executive, administrative, and professional employees are exempt
• Agricultural and dairy workers

The following employees are exempt from overtime pay:

• Employees exempt from the Minimum Wage Act
• Agricultural workers employed less than 13 weeks during the previous calendar year who commute daily and work as hand harvest pieceworkers
• Executive, administrative, professional, computer professional, or outside sales workers
• Volunteers for educational, charitable, religious, government, or non-profit organizations
• Newspaper vendors or carriers
• Employees of railroad or pipeline companies subject to the Interstate Commerce Act
• Forest protection and fire prevention workers
• Employees who must reside or sleep at their workplace
• Crew of non-American ships
• Farm interns
• Junior ice hockey players
• Independent contractors
• Employees who request time off as a substitute for overtime pay
• Workers employed as “seamen”
• Seasonal employees of agricultural fairs
• Unionized motion picture projectionists
• Truck or bus drivers who are subject to the Federal Motor Carrier Act
• Airline workers who work overtime because they voluntarily traded shifts

Paychecks

Employers must pay their employees at least once per month on a regularly scheduled basis. 

If an employee quits their job or an employer fires them, they must receive their final paycheck. Employers must pay employees their final paycheck by the next regularly scheduled payday. State labor laws prohibit employers from withholding final pay if employees don’t return tools or equipment. Instead, employers must follow deduction rules.

Tips

Employers may pay all tips to their employees. Employers can’t take any tips for company use or use them to pay wages. You can establish a tip pool for all your employees to share. But you can’t include any salaried managers or business owners. 

Rounding practices and the seven-minute rule

If your organization uses a rounding system for calculating clock in and out times, you can’t use 15-minute increments for rounding. Instead, you must use the seven-minute rule. This means that if employees are up to seven minutes late for work and you use a rounding system, you must pay them for that entire 15-minute period. However, if employees are more than seven minutes late, you can round their pay to the next quarter hour.

The same rules apply to the end of an employee’s shift. You must pay them for the full shift if they clock out seven minutes early. However, if they clock out eight minutes early, you can stop payment to the nearest quarter hour.

Here’s an example of employee clock-in times under the rounding system: 

While rounding can apply to clock in and out times, they don’t apply to meal or rest breaks. Employees can take their full 30-minute lunch break or 10-minute breaks.

Deductions

Employers in Washington are only allowed to make certain deductions from wages without permission.

Allowed wage deductions include:

• Any deductions required by state or federal law
• Deductions that are necessary to cover any medical, surgical, or hospital care
• Deductions for any court order, judgment, bankruptcy proceeding, child support, trustee process, or wage attachment

With permission, employers may deduct:

• Federal income taxes, Medicare taxes, Social Security, and workers’ compensation
• Court-ordered wage garnishments
• Deductions for medical, surgical, or hospital care

Employers can’t deduct from an employee’s wages to cover cash register shortages, reimbursements for a customer’s bad check or card payment, customer theft, or damage to company equipment.

Washington state pay transparency law

You must disclose your wage scale or salary range in any job postings. You must also share any benefits or additional compensation you’re offering to employees. The law applies to any organization engaging in business in the state, not just Washington-based employers. As long as you have an employee in the state or a remote job opening where a Washington-based employee can apply, you must include your pay details.

You must include any retirement plan options, PTO policies, paid holidays, bonuses, profit-sharing, stock options, or any other forms of compensation you plan to offer to your new hire. 

Other HR and employment requirements in Washington

In addition to employee benefits, compensation, and employee rights, there are other unique HR rules you need to know about.

Industrial Welfare Act recordkeeping requirements

All non-agricultural employees in Washington must keep employment records. This includes the names of your employees, their addresses and occupations, dates of employment, and their rates of pay. You must also document the amount paid to each employee per pay period and the number of hours worked.

You must keep these records for at least three years.

Employees can request to see the original records at any time, and employers must provide them for inspection within ten business days.

Minimum Wage Act recordkeeping requirements

The state Minimum Wage Act also requires employers to keep employment records. Most of the rules are the same as the Industrial Welfare Act, but there are some differences.

You must also keep a record of:

• Employee birth dates if they are a minor
• Time and day that an employee’s workweek begins (work schedule)
• Any tips, gratuities, and service charges paid to employees
• Paid sick leave

Itemized pay statements

You must provide employees with itemized pay statements showing the number of hours or days worked, their rates of pay, gross wages, and any deductions taken from their pay.

Washington Fair Chance Act

Under state law, you can’t ask about a job candidate’s criminal history on a job application, during an interview, or by other methods. You can’t conduct a background check or ask about criminal history until you’ve determined if the candidate is qualified for the position.

Department of Safety and Health (DOSH) requirements

Employers nationwide must comply with laws administered by the Occupational Safety and Health Administration (OSHA). However, Washington has a federally-approved state plan that employers must abide by.

Employers must:

• Report all work-related incidents that result in an employee’s death or in-patient hospitalization to DOSH within eight hours.
• Report any incidents that result in non-hospitalized amputation or loss of an eye within 24 hours
• Document any work-related injuries or illnesses that meet certain criteria
• Display OSHA Form 300A in workplaces from February 1 through April 30 each year
• Provide and keep a workplace free of known safety hazards
• Stop employees from entering any unsafe workspace
• Prohibit alcohol and drugs in the workplace
• Control all chemical agents
• Protect employees from biological agents

Smoking and tobacco use

Washington prohibits employers from allowing their workers to smoke in the workplace. Employees must smoke outside, at least 25 feet from any entrances, exits, or windows. Employers must also display no-smoking signs at each building entrance.

Washington Law Against Discrimination (WLAD)

Organizations with eight or more employees in Washington must follow WLAD guidelines. Under the law, employers can’t take adverse action against their employees due to age, sex, marital status, sexual orientation, race, creed, color, national origin, military status, or physical or mental disability.

Required state display posters

If you have a physical presence in Washington state, you must display certain posters that inform your employees of their rights.

Required posters include:

• Industrial Welfare Act poster
• Anti-discrimination poster
• Domestic violence poster
• Job Safety and Health Law poster
• Minimum wage poster
• Notice of injury poster
• Paid Family and Medical Leave Act poster
• Unemployment benefits poster
• Your rights as a worker poster

Which state agencies oversee employment laws in Washington?

The Washington State Department of Labor & Industries is the regulatory authority for employment and HR laws in Washington. However, there are other departments and agencies involved with employment laws. 

Washington agencies involved with employment law include:

• Department of Labor & Industries (L&I)
• Division of Occupational Safety and Health (DOSH)
• Responsible for administering and enforcing the Washington Industrial Safety and Health Act (WISHA)
• Employment Security Department
• Human Rights Commission

Frequently asked questions