Federal Way residents and businesses will see an increase in the Washington state minimum wage to $17.73 per hour, effective January 1, 2027. This adjustment represents a 3.5 percent rise from the current rate, as announced by the Washington State Department of Labor & Industries (L&I) on September 30. The increase not only sets a new baseline for hourly pay but also modifies the minimum salary requirements for employees who are exempt from overtime regulations.
State law mandates that L&I determine the upcoming year’s minimum wage by utilizing the federal Bureau of Labor Statistics’ Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This calculation involves a comparison of the CPI-W from August of the preceding year to August of the current year, with the minimum wage then adjusted according to the observed percentage change. This ensures that the state's minimum wage keeps pace with economic shifts as measured by consumer prices for urban wage earners.
The new minimum wage also establishes specific provisions for younger workers. Employers are permitted by law to pay workers who are 14 and 15 years old 85 percent of the standard minimum wage. Beginning January 1, 2027, this rate for younger employees will be $15.07 per hour, ensuring a proportional wage for this age group.
Currently, Washington state’s minimum wage stands at $17.13 per hour. This figure significantly exceeds the federal minimum wage, which has remained unchanged at $7.25 per hour since July 24, 2009. While several cities and areas within Washington currently maintain minimum wages higher than the state standard—including Seattle, SeaTac, Tukwila, Renton, Bellingham, Everett, Burien, and unincorporated King County—the state-mandated increase will apply broadly across Federal Way and other jurisdictions that do not have their own higher local rates.
Beyond hourly pay, the wage increase also affects the criteria for overtime-exempt workers, particularly those employed by large businesses. For large employers, defined as those with 51 or more employees, the minimum salary threshold for overtime-exempt status is set to increase. Currently, these workers must earn at least 2.25 times the state minimum wage to be exempt from overtime pay. With the new minimum wage, this multiplier will rise to 2.5 times the minimum wage. Consequently, an employee at a large business must earn a minimum of $1,773 per week, equivalent to $92,196 annually, to qualify as overtime-exempt under state law starting January 1, 2027.
Small businesses, characterized as having up to 50 workers, will experience a delayed adjustment to their overtime-exempt salary requirements. These businesses will not see an increase in the overtime-exempt multiplier until 2028. At that time, their multiplier is also scheduled to increase from 2.25 to 2.5 times the minimum wage, aligning them with the requirements for larger employers in the subsequent year.
This statewide adjustment aims to provide a living wage for workers while setting clear guidelines for employers across various business sizes in Federal Way and throughout Washington.
