Pennsylvania Proposes Changes to Exempt Employee Salary Threshold
Pennsylvania employers may be facing major changes with the State’s wage and hour regulations. The most important change could be an amendment to the Salary Threshold for overtime within the Pennsylvania Minimum Wage Act (PMWA). The Pennsylvania Department of Labor & Industry (L&I) recently published proposed regulations for public comment that, if adopted, would significantly increase the Salary Threshold over the next three years. L&I is accepting public comments on the proposal until August 22, 2018.
Under the current PMWA, an employee qualifies for the executive, professional, or administrative exemption to overtime if his/her pay meets the Salary Threshold of $250.00 per week ($13,000 annually). However, as a practical matter, this Pennsylvania threshold has been inapplicable for some time because it is below the federal threshold required by the Fair Labor Standards Act (FLSA) – $455 per week ($23,660). Pennsylvania’s current proposal is intended to increase the salary threshold well above the FLSA requirement, raising the minimum Salary Threshold over the next three years as follows:
- Year 1 (2020) - $610 per week / $31,720 annually.
- Year 2 (2021) - $766 per week / $39,832 annually.
- Year 3 (2022) - $921 per week / $47,892 annually.
The proposal also includes an automatic increase in the minimum salary level every three years according to the weekly of earnings of full-time non-hourly workers in the Northeast Census Region, as published by the U.S. Department of Labor (DOL).
Pennsylvania’s proposal may sound familiar, as the DOL attempted, unsuccessfully, to adopt a similar proposal in 2016. The DOL proposed an increase in the minimum salary level to $921 weekly, effective December 1, 2016. However, a Federal District Court in Texas issued a nationwide injunction, halting implementation of the new salary levels, on November 22, 2016 in Nevada v. U.S. Dep’t of Labor, 4:16-CV-00731 (E.D. Tx. 11/22/16). The District Judge granted the injunction after deciding that the DOL overstepped its bounds with the regulation. The proposal from L&I discusses the unsuccessful federal rule, but does not discuss how this proposal fits within L&I’s legislatively authorized powers.
As written, the proposal may present a sizable financial burden on employers. Buchanan Ingersoll & Rooney’s Labor & Employment attorneys, along with its Government Relations Professionals, are actively monitoring developments and are available to assist employers across the Commonwealth with the submission of comments to meet the August 22nd deadline.