Washington State’s 2026 Salary Threshold Increase: Why Nonprofits Must Plan Now (and What Happens If You Don’t)
Nonprofits are particularly vulnerable to employment-related claims—in fact, 85% of all nonprofit insurance claims stem from employment issues, and the majority of those involve wage and hour violations. That reality should make every Washington State nonprofit pay close attention to the upcoming 2026 salary threshold increase.
As salaries rise, many employees who were previously exempt will no longer meet the new threshold. That means they must be reclassified as nonexempt hourly workers, with strict overtime protections. This shift is not just a payroll update—it affects your culture, your budget, your compliance obligations, and your long-term risk exposure.
Too often, nonprofits assume they can “keep things the same” and simply ask newly hourly staff to continue doing the same workload they performed while salaried—only now writing “40 hours” on a timesheet.
This is one of the biggest wage-and-hour risk traps in the sector.
Let’s dig into why this matters and where things can go wrong.
The Salary Threshold Is Rising—Your Planning Should Too
Washington’s exempt salary threshold continues to outpace federal requirements. As 2026 approaches, many commonly exempt roles—program managers, volunteer coordinators, development officers, communications staff, and mid-level supervisors—may no longer qualify based on salary alone.
Organizations will face a choice:
Increase salaries to meet the new threshold, or
Reclassify employees to nonexempt (hourly)
If you don’t plan ahead—and restructure workloads—you risk falling into costly wage-and-hour violations.
The “Write Down 40 Hours” Trap
Picture this scenario.
It’s one I encounter frequently:
Your Program Manager becomes nonexempt in 2026. They've always worked 50–55 hours per week, but you can’t afford overtime. So they’re told:
“Just write down 40 hours, but keep up with everything you normally do.”
They’re dedicated to the mission, so they do it—at first.
But the dynamic changes. What felt manageable when salaried now feels like uncompensated labor. Resentment grows. Burnout creeps in. Maybe there’s conflict. Maybe a performance issue. Maybe they eventually resign—or you have to let them go.
Fast-forward a year or two.
You get a letter from the Department of Labor & Industries.
The former employee reports:
They consistently worked significant overtime
They were instructed to record only 40 hours
They never received overtime pay
L&I opens an investigation. They review records, interview staff, and reconstruct work expectations.
You may now face:
Back wages
Penalties for failure to pay overtime
Administrative fines
Damaged morale and reputation
All because the organization tried to operate as if nothing had changed.
I hear leaders say all the time:
“Oh, they would never report us.”
But you cannot predict what someone will do in a year or two—especially after conflict, burnout, job loss, or a change in personal circumstances.
It only takes one complaint.
This Is Not Just a Legal Issue—It’s an Ethical One
Nonprofits preach dignity and fairness. Asking hourly staff to perform unpaid overtime undercuts those values.
It’s not just risky.
It’s inequitable and unsustainable.
Intentionally or not, nonprofits can create environments where dedication is exploited. As the salary threshold changes, leaders have an opportunity—and responsibility—to correct course.
What Nonprofits Should Do Now to Prepare
1. Identify roles likely to be reclassified.
Review duties, salaries, and organizational needs.
2. Decide whether to raise salaries or convert roles to hourly.
Do not wait until the last quarter of 2025.
3. Budget realistically.
If someone becomes hourly, their duties must fit within 40 hours or your budget must cover overtime.
4. Redesign workloads—not just timesheets.
This may require redistributing tasks, hiring support, or scaling back nonessential work.
5. Train supervisors in managing hourly staff.
Break compliance, overtime rules, and remote-work boundaries require proactive training.
6. Update your policies and job descriptions.
Documentation is a key part of risk management.
7. Stop relying on goodwill to avoid risk.
Goodwill is not a compliance strategy.
Policies, planning, and ethical leadership are.
The Bottom Line
The salary threshold increase isn’t a minor adjustment—it’s a major compliance event that will shape how nonprofits operate in 2026 and beyond.
You can either:
Plan ahead, restructure workloads, and protect your organization
orMaintain “business as usual” and hope no one files a wage complaint
But hope is not a strategy.
Preparation is.
If your nonprofit needs help preparing for reclassification, updating policies, training supervisors, or forecasting budget impacts, I’d love to support you.
