Panel: higher salary thresholds and payroll rules are straining small employers and nonprofits

Panelists at the Washington Policy Center forum said recent minimum-wage and salary-exemption changes are creating administrative burdens and cost pressures for small businesses and nonprofits.

Mark Armstrong, a small-business owner, explained how changes in the exempt/qualifying salary tests force employers to pay overtime and invest in new payroll systems, increasing recurring costs. He said the qualifying multiplier is rising (he cited a current factor he described as 2.25, rising to 2.5) and that the 2028 salaried exempt threshold will be “more than $93,000 a year,” increasing payroll liabilities for employers who previously classified staff as exempt.

Nonprofit impact: Armstrong described a local Boys & Girls Club example where payroll rose significantly after compliance changes, forcing staff reductions; he also noted added administrative expenses (a payroll system costing about $500 a month) and employee time spent filling timesheets instead of service delivery.

Worker trade-offs and regulation: Rep. April Berg and Rep. Monica Stonier said the policy goal—higher wages and better living standards—is important but must be balanced with lessening administrative burdens that fall disproportionately on small employers. Berg framed the solution as coupling tax policy with regulatory reform to reduce compliance costs and called for efforts to make compliance easier for small employers.

Implication: Panelists said lawmakers should pursue measures that reduce employer administrative overhead and explore targeted supports for nonprofits and low-margin businesses while preserving worker protections.