Washington’s Minimum Wage and Salary Thresholds Are Going Up—Here’s What Employers Need to Know

On September 30, 2025, the Washington State Department of Labor and Industries (L&I) announced upcoming increases to the state minimum wage and salary thresholds for exempt employees, effective on January 1, 2026.

Employers should take note because these increases will impact non-compete agreements, independent contractor classifications, and special pay rules for younger workers and rideshare drivers. With the steady rise in litigation related to non-compete agreements and employee and independent contractor classifications, these updates add more urgency for employers to act.

Here’s a breakdown of the key changes—and what you should be doing now to stay compliant.

Key Changes at a Glance

1. Minimum Wage

Washington currently holds the nation’s highest state minimum wage at $16.66/hour—more than double the federal minimum. Effective January 1, 2026, the state minimum wage will increase to $17.13/hour, reflecting a 2.8 percent increase.

Reminder: Cities like Seattle and Bellingham often set their own higher local minimum wages.

2. Overtime Exemption Salary Thresholds

To qualify as exempt from overtime, employees must meet a minimum salary threshold, as well as a job duties test. The minimum salary threshold is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) and applies to executive, administrative, professional, and computer professional roles.

• Starting January 1, 2026, all Washington employers must pay exempt employees at least 2.25 times the state minimum wage, equivalent to $80,168.40/year.
• The threshold will continue increasing annually through 2028, when it reaches 2.5 times the minimum wage.

3. Non-Compete Agreement Thresholds

Following the January 2025 decision in David v. Freedom Vans LLC, Washington employers must now closely scrutinize non-compete agreements for both substance and salary compliance.

Effective 2026, non-competes are only enforceable if workers earn above the following thresholds:

• Employees: $126,858.83/year
• Independent Contractors: $317,147.09/year

Non-compete agreements falling below these income levels are void and unenforceable under state law.

4. Special Minimum Wages

L&I’s latest guidance also includes new wage rules for young workers and rideshare drivers, effective 2026:

• Young workers (ages 14–15):
  Employers may pay 85 percent of the minimum wage:
  → $14.56/hour in 2026
• Rideshare Drivers:
• Seattle: $0.70/min + $1.63/mile, or $6.12 minimum per trip
• Rest of Washington: $0.40/min + $1.38/mile, or $3.55 minimum per trip

What Employers Should Do Now

Here are five practical steps employers should take to prepare for the changes:

1. Review Pay for Hourly Employees
   Ensure that minimum wage earners will be paid at least $17.13/hour by January 2026.
2. Audit Exempt Employee Salaries
   Evaluate all exempt positions to confirm salaries meet the new $80,168.40/year threshold.
3. Reassess Non-Compete Agreements
   Review existing non-competes to ensure enforceability under the 2026 income thresholds.
4. Monitor Local Wage Ordinances
   Be aware of local minimum wage laws—Seattle, SeaTac, Tukwila, and others often set higher standards than the state.
5. Update Internal Documents
   Revise employee handbooks, offer letters, job descriptions, and contracts. Provide training for HR and payroll staff on the new rules.

Final Thoughts

Washington’s wage and employment laws continue to evolve—and the cost of non-compliance can be high. Whether you’re a startup or a large employer, it’s crucial to stay ahead of these changes. With major shifts already scheduled through 2026, proactive planning is your best defense.

Need support reviewing your pay practices or employment agreements? Our Employment Law team is here to help with compliance audits, handbook updates, and strategic guidance.