PA Approves White Collar Salary Threshold Increases—Leaves FLSA in the Dust

Jason E. Reisman

Boom—take that, Pennsylvania employers!

As a result of Governor Wolf’s battle with the Pennsylvania Republican-controlled legislature being at an impasse over a potential state minimum wage increase, the Governor pressed the Commonwealth’s Independent Regulatory Review Commission (“IRRC”) to approve his administration’s previously proposed increase to the salary threshold for the so-called “white collar exemptions” under the Pennsylvania Minimum Wage Act (“PMWA”). Last week, the IRRC voted 3-2 to approve the proposed rule—which is the last regulatory step before the increases to the salary threshold would become effective (though it is unclear at this time when the rule will formally be effective, as we believe it first requires review and approval from the Attorney General).

Background

Governor Wolf first introduced the proposed salary threshold increase in the summer of 2018, after facing repeated rejections of his efforts to raise the Commonwealth’s minimum wage from the federal minimum of $7.25 per hour to at least $12 per hour. The proposed rule has had somewhat of a long and winding road to get to today—but, nonetheless, it now appears primed for implementation.

Employers saw a glimmer of hope this past fall, when the Pennsylvania Senate signed off on a bill that would have raised the minimum wage to $9.50 per hour over a period of time, in a compromise move with the Governor and to head off any salary threshold increases. As part of the compromise, the Governor placed the new rule on hold temporarily and canceled a vote of the IRRC. However, the Pennsylvania House has not been quite so cooperative, refusing to take action on the bill. So, the administration placed the rule back on the IRRC docket for a vote.

New Rule’s Salary Thresholds

Although originally projecting an intent to not only raise the threshold but also to ensure the PMWA and Fair Labor Standards Act (“FLSA”) more closely align with each other for the white collar exemptions, the final rule doesn’t quite accomplish that goal—there remain some stark differences between the state and federal laws, including the Commonwealth still failing to recognize a separate computer professional exemption or the highly compensated employee exemption, both of which exist under the FLSA. Further, the new Pennsylvania rule increases the salary thresholds far beyond the new increase brought by the FLSA for 2020—here are the scheduled salary increases coming for Pennsylvania employers:

      • $35,568 ($684 per week) for 2020 (which matches the FLSA);
      • $40,560 ($780 per week) for 2021;
      • $45,500 ($875 per week) for 2022; and
      • For 2023, and every third year thereafter, the minimum salary will change to match the 10th percentile of all Pennsylvania workers who work in salaried exempt positions. Yikes!

Looking Ahead

Hopefully, for the sake of employers who may find these scheduled increases to be unreasonable and out of touch with reality, the battle between Governor Wolf and the Pennsylvania House will ease and open the door to further discussions, leading to a more realistic discussion about an increase to the minimum wage, while somehow taking this new salary threshold rule off the table. Fingers crossed!

And, just because there’s no real harm in wishful thinking, maybe the hoped-for renewed talks will also address the continuing discrepancies between the Pennsylvania wage and hour law and the FLSA, which are disturbing to many employers in the Commonwealth. Maybe the members of the Pennsylvania legislature will set a good example for compromise, so that their colleagues down I-95 in D.C. will take heed. Again, fingers crossed!

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