REMINDER: Pennsylvania Repealed the Increase to the Exempt Employee Salary Threshold

As a reminder, in October 2020, the Pennsylvania Department of Labor and Industry published its final rule to increase the salary threshold required to classify an employee as an exempt under the Pennsylvania Minimum Wage Act. The rule increased the threshold for an exempt employee to $684 per week ($35,568 annually) effective Oct. 3, 2020; $780 per week ($40,560 annually) effective October 3, 2021; and to $875 per week ($45,500 annually) effective October 3, 2022.

These increases are no longer in effect following a compromise during the 2021-2022 state budget negotiations. In June 2021, Governor Wolf agreed to repeal the final rule relating to the threshold increases in exchange for additional funding for public schools. The repeal of the final rule, known as “2021 Act 70” became law on July 9, 2021.

2021 At 70 not only removed the 2020 final rule and restore the salary threshold to its pre-2020 levels, but repealed the entire regulatory framework for defining executive, administrative, and professional exemptions under the Pennsylvania Minimum Wage Act. As such, employers are required to look to the federal Fair Labor Standards Act to determine if an employee falls within an exemption. The FLSA also increased its salary threshold for exempt employees to $684 per week ($35,568 annually), so employers will continue to have to meet that standard to classify employees as exempt under the executive, administrative or professional exemptions. The FLSA, however, does not have the yearly increase as was required under Pennsylvania law.

Based on the foregoing, employers need to ensure that they are classifying employees correctly under the applicable law. For questions about this or any other labor and employment law topic, please do not hesitate to contact the attorneys at Hoffman & Hlavac. To stay updated on key labor and employment developments that affect your workplace, subscribe to our blog and follow us on social media.