Pennsylvania Issues New White Collar OT Regulations
As you may recall, late last month, the U.S. Department of Labor (“DOL”) announced its final rule on the long-awaited “white collar” overtime regulations under the Fair Labor Standards Act (“FLSA”). The new regulations, which are scheduled to go into effect on January 1, 2020, raised the salary threshold necessary to satisfy the “salary basis” prong of the executive, administrative, and professional exemptions under the FLSA from $455/week to $684/week (which, on an annualized basis, comes out to $35,568/year).
Pennsylvania employers, however, must also be aware oftheir obligations to comply with state wage and hour law. Earlier today, the Pennsylvania Department of Labor & Industry (“L&I”) announced its final rule on the white collar exemptions to the Pennsylvania Minimum Wage Act (“PMWA”). L&I’s new regulations also raised the salary threshold necessary to satisfy the “salary basis” prong of the executive, administrative, and professional exemptions under the PMWA to: $684/week on January 1, 2020; $780/week ($40,650/year) in 2021; and $875/week ($45,500/year) in 2022. Starting in 2023, the salary threshold amount under the PMWA will adjust automatically every three (3) years. There is no such “automatic escalator” provision in the DOL’s final rule.
Barring judicial intervention, Pennsylvania employers who want to keep their executive, administrative, and professional employees exempt from minimum wage and overtime in 2021 and beyond will need to comply with the higher salary thresholds under the PMWA regulations. This is because, in this context, federal law (i.e., the FLSA) sets a “floor” rather than a “ceiling.” The states are free to set a standard higher than the “floor”; Pennsylvania has done just that.
In light of these rapidly-approaching changes to the “white collar” exemptions under federal and Pennsylvania law, employers should review their job descriptions and pay practices to ensure that employees are properly classified as exempt or non-exempt. It is a common misconception among both employers and employees that paying an employee a salary means that he/she is not entitled to overtime. Violations of state and federal wage and hour laws can be expensive for employers, as these statutes provide for attorney’s fees and liquidated damages to prevailing plaintiffs!
For any questions about this or any other labor and employment topic, please do not hesitate to contact the attorneys at Hoffman & Hlavac.