Pennsylvania Governor Tom Wolf announced his administration's plan to update state overtime pay regulations, including a substantial increase in the salary an employee must earn to be exempt from overtime pay under state law. Under the proposal, the salary threshold would increase over the next four years from the current federal minimum of $23,660 ($455 per week) for professional, executive, and administrative employees to $47,892 ($921 per week) in 2022. According to the announcement, the change is expected to result in 460,000 more Pennsylvania employees, or roughly 7 percent more of the workforce, being eligible for overtime pay.
The proposed rule, expected to be released by the Pennsylvania Department of Labor and Industry in March, appears designed to more gradually reach the salary levels that had been adopted by the U.S. Department of Labor and would have taken effect in December 2016—until they were enjoined by a federal court in Texas. The U.S. Department of Labor has since sought comment on how to replace those proposed rules.
To aid compliance, the proposed Pennsylvania rule is also expected to clarify the duties tests for professional, executive, and administrative employees. After a public comment period, the proposed rule will need approval from a five-member board appointed by the Governor. Legislative approval is not required. The rule-making process is likely to take several months to complete.
The Commonwealth's planned regulatory overhaul serves as a reminder for employers that federal overtime rules merely set a "floor" of required minimum protections for employees, and state law can provide greater rights. Employers must comply with state overtime rules, in addition to the federal Fair Labor Standards Act, to avoid liability for their pay practices.
Ballard Spahr's Labor and Employment Group routinely assists employers in navigating the FLSA and its intersection with state wage and hour laws, including conducting wage and hour audits for employers and defending wage and hour class and collective actions, as well as individual claims.
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