Filed under: Private Business

June 11, 2024

By Christie Streit, CPA

With a vote of 7-2, King County Council passed their unincorporated King County minimum wage ordinance. The law raises the minimum wage to $20.29 beginning January 1, 2025, with annual increases to match inflation.

The minimum wage increase does have a carve out for certain businesses, including the following:

  • Employers with 16 to 499 employees will pay $2 less than the proposed minimum wage ($18.29) effective January 1, 2025. This $2 deduction will decrease by $1 annually on Jan. 1 each year along with the inflation increases. This rule also applies to employers with 15 or fewer employees and annual gross revenue of more than $2 million.
  • Employers with 15 or fewer employees who have an annual gross revenue of less than $2 million will pay $3 dollars less than the proposed minimum wage. This $3 deduction will decrease by $0.50 annually on Jan. 1 each year along with the inflation increases.

The minimum wage excludes total compensation, meaning that it does not include things like tips, gratuities, bonuses, and money paid by an employer toward an employee’s health benefit plan.

Prior to this ordinance, cities within unincorporated King County were individually setting minimum wage as long as the minimum wage was in excess of Washington State’s minimum wage, which is $16.28 per hour effective January 1, 2024. Certain cities already had minimum wage at (or near) the new minimum wage that will be in effect January 1, 2025 (such as Seattle at $19.97, SeaTac at $19.71, and Tukwila at $20.29).

The impact on businesses with a significant labor component will be a huge adjustment. For example, a restaurant in Woodinville is going from $16.28 to $20.29, resulting in a cost-of-labor increase of approximately 25%. The cost of labor for a minimum wage employee will be more than double the amount from 10 years ago (minimum wage in 2015 was $9.47).

The massive hike in minimum wage gives rural areas in King County the highest minimum wage in the nation.

© Clark Nuber PS, 2024. All Rights Reserved.

This article contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.