Washington Minimum Wage: a Guide For Small Businesses

Washington Minimum Wage: a Guide For Small Businesses

Paying people less than current minimum wage rates can set your business up for fines, lawsuits, and a bad reputation — even if it’s an honest mistake. 

Staying on top of minimum wage law is key. But regular changes at both the state and local levels make it hard to keep up with Washington’s minimum wage. What’s more, every wage hike means paperwork, number crunching, and adjusted budgets. 

That’s why we’ve written this guide simplifying Washington’s complex minimum wage laws for small business owners. We’ll explain everything you need to know to stay up to date with the current statewide and local minimum wage and get ready for upcoming changes to base pay rates. Then, we’ll show you how to lay the groundwork for a compliant, thriving business that can weather wage hikes.

Understanding Washington’s minimum wage 2024

Washington state has one of the highest minimum wage rates in the US — and some cities mandate even higher base pay for workers. That means there’s extra pressure on businesses to stay up to date, prioritize compliance, and budget for increased labor costs.

Let’s break down exactly what small business owners need to know. 

Current state minimum wage in Washington 

The statewide minimum wage in Washington is $16.28 per hour as of January 1, 2024.

Overtime kicks in after 40 hours of work in a fixed 7-day workweek. So according to Washington labor laws, most employees will need to be paid 1.5 times their normal hourly wage for any overtime hours, meaning overtime hours will cost you $24.42 at minimum pay rates.

Seattle: $19.97/hr for large employers (501+)

$19.97 per hour for small employers (500 or fewer) if they don’t pay at least $2.72 per hour toward the employee’s medical benefits or the employee doesn’t earn at least $2.72 per hour in tips

$17.25  for small employers (500 or fewer employees) if they do pay at least $2.72  per hour toward the employee’s medical benefits or the employee earns at least $2.72 per hour in tips

SeaTac Hospitality and Transportation Industry : $19.71/hr.

Tukwila:  $20.29/hr

Exceptions to the minimum wage in Washington state

Though the base rate applies to most workers across the state, there are some exceptions. 

For example, 14 or 15-year-old employees can be paid 85% of the minimum wage, which works out at $13.84 per hour for 2024.

Businesses can also apply for a sub-minimum wage certificate allowing them to pay less than minimum wage in certain circumstances. These include: 

  • On-the-job trainees, with the correct certification, can be paid 85% of the minimum wage (that’s $13.84 per hour, in line with current wage rates). 

  • In certain cases, student workers and learners, with a certificate from their educational institution, can be paid 75% of the minimum wage (which comes to $12.21).

  • Employers registered with an approved apprenticeship program can submit a request to pay apprentices less than the standard minimum wage. 

It’s important to note that in general, there is no exception to the minimum wage for tipped workers in Washington, and no tip credit available for employers. The Department of Labor and Industries mandates that servers, bar staff, hairdressers, and other tipped professions must receive the standard hourly minimum wage, in addition to any gratuities or service charges they are entitled to. 

Local minimum wage rates 

On top of statewide regulations, some cities in Washington mandate higher minimums based on their elevated cost of living. 

Specifically, Seattle and SeaTac enforce their own minimum wage rules.

Seattle minimum wage 2024

Depending on employer size, Seattle mandates a minimum wage between $17.25 and $19.97 per hour in 2024. 

Large employers with over 500 workers must pay at least $19.97.

Right now, in Seattle, small employers can pay a minimum wage of $17.25  provided they also pay at least  $2.72 per hour toward medical benefits or the worker earns at least $2.72 per hour in tips. However, by 2025, employers will no longer be able to count tips or medical benefit contributions as part of the minimum wage. 

Under Seattle’s Minimum Wage Ordinance, the city adjusts its wage floor on January 1st every year based on inflation. 

SeaTac minimum wage 2024

The City of SeaTac enforces a special minimum wage for hospitality and transportation workers, which works out at  $19.71 per hour for covered employees, as of Jan 1, 2024.  

Hospitality and transportation employers should take note that this minimum increases each year in line with the Consumer Price Index (CPI) of the year before. 

How small businesses can navigate minimum wage changes 

Shifting minimum wage laws can create challenges for small business compliance and profitability. Use these five tips to make sure you’re paying your people correctly and fairly while offsetting the impact of rising labor costs.

1. Stay up to date with minimum wage regulations

Regularly check the official Washington Department of Labor and Industries webpage to make sure you’re informed on upcoming changes to minimum wage rates. You can also subscribe to their newsletter to make sure you don’t miss anything. 

If there are proposed changes to wage legislation that haven’t gone through yet, you may even be able to shape the final law by responding to public calls for comments and explaining how the proposals affect small businesses like yours. 

Make sure you also sign up for updates from your city/county government on upcoming minimum wage changes. Local laws mandate the highest wages in Washington, so it’s important to make sure you’re prepared for the increases, especially in cities like Seattle and SeaTac. 

2. Analyze the true cost of wage hikes

Calculate the total payroll costs across all affected staff members to understand exactly what minimum wage changes will cost your business. Add the figures into your budget for the year to see if there’s a shortfall you’ll need to make up in other ways. 

3. Audit processes to cut costs 

Look to cut down on spending where possible to deal with higher pay rates. You may want to get strategic about your employee scheduling, making sure you’re not rostering in unnecessary team members during off-peak times.  

Time tracking is another great way to stay on top of labor costs. Time clock tools help you cut down on wage theft and identify time sinks that make your business less efficient. Homebase time clock and scheduling features can even alert you when your people are approaching overtime limits, so you can make sure you’re not paying high overtime costs unless they’re really necessary. 

4. Display workplace posters

Make sure you’re fully compliant with Washington labor laws by displaying the mandated posters prominently in your workplace informing employees of their rights. 

Washington employers aren’t currently required to display a Washington minimum wage poster, but they are required to display a federal minimum wage poster. That doesn’t mean they only have to pay the federal minimum wage rate, though — the Washington or local city minimum wage rate still applies. 

5. Document everything

Rigorously document all compliance-related information, including hours worked, pay rate, overtime, breaks, and employee status modifications. Thorough paper trails protect businesses. 

Dedicated software for payroll processing and timesheets can make this process easy. 

Homebase supports small business compliance

Trying to manually adapt to changing minimum wage hikes takes valuable time from small business owners, especially if multiple locations are involved. 

Homebase provides easy-to-use automated solutions and customized support, which streamlines the process and protects you from blind spots. 

With Homebase, you can: 

  • Automatically apply the right wage rules for each location

  • Handle overtime calculations automatically, based on timesheets and local regulations

  • Receive alerts on upcoming minimum wage and compliance changes

  • Stay on top of hours worked with mobile time clocks and detailed timesheets

  • Feel confident your timesheet-based payroll calculations are correct and compliant 

  • Get personalized advice from HR pros 

Remember, investing in your employees through compliant wages is not just a legal obligation — it’s a key part of building a successful business.

By letting Homebase handle the minimum wage paperwork, you can focus on growing your company and team.