Washington's Minimum Wage Set To Rise in 2025 – Here's What Employers Need To Know

Washington's minimum wage is set to increase to $16.66 per hour starting January 1, 2025, as announced by the Washington State Department of Labor & Industries (L&I). This change reflects a 2.35% increase from 2024 (as we discussed here), when the minimum wage rate was $16.28 per hour, driven by rising housing and food costs.

The minimum wage is the driver for a number of other increases to certain wage and salary thresholds. Other local cities have also implemented even higher minimum wage rates. Employers should be aware of these updates and prepare for the changes effective January 1.

Salary Threshold for Exempt Employees

For 2025, small employers with up to 50 Washington state employees must pay overtime-exempt Washington employees at least twice the minimum wage, which equates to $1,332.80 per week ($69,305.60 annually), up from the previous salary threshold which was $1,302.40 per week ($67,724.80 annually). Large employers, with 51 or more Washington state employees, must pay overtime-exempt Washington employees at least 2.25 times the minimum wage, or $1,499.40 weekly ($77,968.80 annually).

Exempt Computer Professionals

Computer professionals in Washington can be classified as exempt if paid either on a salary basis (meeting the state threshold cited above) or if paid on an hourly basis at a rate that also changes annually. For the latter hourly rate, starting in 2025, the hourly rate for exempt computer professionals will be set at 3.5 times the minimum wage, which equals $58.31 per hour. This is an increase from the previous rate of $56.98 per hour.

Enforceability of Non-Compete Clauses

The enforceability of non-compete agreements will also be affected. In 2025, employees must earn at least $123,394.17, and independent contractors must earn $308,485.43, for such agreements to be valid, compared to the previous thresholds of $120,599.99 and $301,399.98, respectively.

Local Cities Require Even Higher Minimum Wage Rates

Several cities will implement higher local minimum wages starting January 1, 2025. Employers in these areas should ensure compliance with city-specific regulations.

• Seattle:
  • The minimum wage rate will increase to $20.76 per hour for all employers, regardless of size. Small employers will no longer be able to count tips and/or payments toward an employee's medical benefit plan toward an employee's minimum compensation requirements under Seattle's Minimum Wage Ordinance. Note, this applies to each hour employees work within Seattle. An employee who is based outside of Seattle and performs work in Seattle on an occasional basis is covered by this ordinance in a two-week period only if the employee performs more than two hours of work for an employer within Seattle during that two-week period.
  • Rideshare Drivers:
    • Rideshare drivers will also experience a pay increase. For trips within Seattle, drivers will earn a minimum of 68 cents per passenger platform minute and $1.59 per mile, or $5.95 per trip, whichever is greater.
    • For trips outside of Seattle, drivers will earn 39 cents per passenger platform minute and $1.34 per mile, or $3.45 per trip, whichever is greater.
• SeaTac's minimum wage will increase to $20.17 per hour for Hospitality and Transportation workers. Note, this applies to employers that operate within SeaTac.
• Tukwila:
  • For mid-size employers (15 to 500 employees worldwide or over $2 million of annual gross revenue in Tukwila), the minimum wage rate will increase to $20.10 per hour on January 1, 2025. On July 1, 2025, mid-size employers must increase their minimum wage rate to $21.10 per hour.
  • For large employers (more than 500 employees worldwide), the minimum wage rate will increase to $21.10 per hour on January 1, 2025.
  • Note, this applies to employees who perform work within the City of Tukwila.
• Renton:
  • From January 1, 2025, to June 30, 2025, the minimum wage rate will increase to $18.90 per hour for mid-size employers (15 to 500 employees worldwide or over $2 million of annual gross revenue in Renton). From July 1, 2025, to December 31, 2025, the minimum wage rate will increase to $19.90 per hour.
  • On January 1, 2025, the minimum wage rate will increase $20.90 per hour for large employers (more than 500 employees worldwide).
  • Note, this applies to employers where revenue is generated from sales made, services performed, and other business activities that occur within Renton.
• Bellingham:
  • From January 1, 2025, to April 30, 2025, the minimum wage rate will increase to $17.66 per hour.
  • From May 1, 2025, to December 31, 2025, the minimum wage rate will increase to $18.66 per hour.
  • Every year after, starting in 2026, the city minimum wage will be set at $2.00 above the applicable Washington state minimum wage effective on January 1 every year.
  • Note, this applies to employers with employees who are performing work within Bellingham.
• Burien:
  • On January 1, 2025, Level 1 employers (all employers, including franchisees, that employ more than 500 full-time employees in King County or franchisors who employ more than 500 full-time employees in the aggregate) must pay employees an hourly minimum wage of at least $4.50 over the Washington state hourly minimum wage.
  • On July 1, 2025, Level 2 employers (all employers, including franchisees, that employee 21-499 full-time employees in King County) must pay employees an hourly minimum wage of at least $3.50 over the Washington state hourly minimum wage.
  • Level 3 employers (employers with 20 or fewer full-time employees) are exempt from this ordinance.

Note, this applies to each hour employees work within Burien. An employee who is based outside of Burien and performs work in Seattle on an occasional basis is covered by this ordinance in a two-week period only if the employee performs more than two hours of work for an employer within Burien during that two-week period.

Key Takeaways for Employers

• Review Payroll Practices: Employers should review and adjust payroll systems to ensure compliance with the new state and local minimum wage and salary thresholds. This may require adjusting employees from exempt to non-exempt status and communicating those changes to employees.
• Understand Local Regulations: Employers in cities with higher local minimum wages must adhere to city-specific requirements.
• Plan for Budget Adjustments: The increase in wages may impact overall business budgets. Employers should plan for these changes and consider how they might affect pricing, staffing, and other financial aspects of the business.
• Evaluate Non-Compete Agreements: With changes in the enforceability thresholds for non-compete agreements, employers should review existing contracts to ensure they meet the new requirements.

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