New Pennsylvania Overtime Rule Went Into Effect October 3
On October 2, Department of Labor & Industry Secretary Jerry Oleksiak announced Pennsylvania’s new overtime rule became effective when the final, approved regulation is published in the PA Bulletin on Saturday, October 3, 2020.
“Tomorrow marks the first update to the commonwealth’s overtime regulations in more than four decades,” said Secretary Oleksiak. “The modernized regulation will expand eligibility for overtime to 143,000 people and strengthen overtime protections for up to 251,000 or more. This final rule ensures that employees who work overtime are fairly and fully compensated for their labor in accordance with the original intent of the Pennsylvania Minimum Wage Act.”
L&I updates the Minimum Wage Act’s regulations to expand eligibility for overtime and strengthen protections for Pennsylvanians. The final rule updates the salary threshold to reflect current wages paid to Pennsylvanians working in executive, administrative, and professional occupations.
It also ensures that the duties tests for executive, administrative and professional workers more closely align to those in the Fair Labor Standards Act’s (FLSA) federal overtime regulations.
The FLSA regulations update that took effect on January 1, 2020, raised the federal overtime salary threshold to $35,568.
While Pennsylvania’s overtime rule aligns more closely with the FLSA, L&I has set the minimum salary threshold at $45,500 and the increase will be phased in three steps:
— $684 per week, $35,568 annually (per federal rule), on January 1, 2020;
— $780 per week, $40,560 annually on October 3, 2021; and
— $875 per week, $45,500 annually on October 3, 2022.
Starting in 2023, the salary threshold will adjust automatically every three years.
Pennsylvania’s new overtime rules also allow 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.
Eligible for Overtime
— With a few exceptions, all hourly employees who work more than 40 hours per week
— Most salaried employees who work more than 40 hours per week and earn less than the salary threshold regardless of their job duties
— Most salaried employees who do NOT perform executive, administrative, or professional duties, regardless of how much they are paid
Not Eligible for Overtime
— Salaried employees who perform executive, administrative, or professional duties and make more than the salary threshold per year
— Other occupations exempted by the Minimum Wage Act
The Pennsylvania Minimum Wage Act Exemption requires employers to pay their employees at a rate of not less than $7.25 an hour for all hours worked and an overtime rate of 1.5 times the employee’s regular rate of pay for all hours worked above 40 in a workweek.
However, 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.