By Lacey Gordon, Esquire
Earlier this month, on October 3, 2020, Pennsylvania Department of Labor & Industry published its final rule expanding Pennsylvania’s Minimum Wage Act regulations for overtime pay. The increase is the first for Pennsylvania in more than four decades.
Pennsylvania’s Overtime Rule updates salary thresholds to reflect current wages paid to Pennsylvanians in executive, administrative and professional occupations and updates the duties tests for these occupations.
Updates to Salary Threshold
Pennsylvania’s Overtime Rule increases the minimum salary salaried executive, administrative, and professional workers must earn in order to be exempt from overtime pay. This increase will be phased in over three steps:
$684 per week ($35,568 annually) effective (per federal rule) as of January 1, 2020;
$780 per week ($40,560 annually) effective October 3, 2021; and
$875 per week ($45,500 annually) effective October 3, 2022.
Starting in 2023, the salary threshold will adjust automatically every three years.
Pennsylvania’s Overtime Rule also allows up to 10 percent of the salary threshold to be satisfied by nondiscretionary bonuses, incentives, and commissions that are paid annually, quarterly or more frequently.
Updates to Duties Tests
The Minimum Wage Act provides an exemption from both minimum wage and overtime pay for employees employed in a bona fide executive, administrative, or professional capacity. To qualify for the exemption, employees must meet certain tests regarding their salary and their job duties.
In addition to the salary threshold update, Pennsylvania’s Overtime Rule also updates the duties tests for executive, administrative, and professional workers to more closely align with U.S. Department of Labor’s federal overtime regulations.
But What About Federal Law?
Pennsylvania employers will need to follow both the federal overtime rules and the overtime requirements of Pennsylvania’s Minimum Wage Act. Where there are differences between the two laws, Pennsylvania employers must follow the rule that provides the greater benefit to the employee.