As reported by the Pennsylvania Chamber of Business and Industry (see here), the planned significant increases to the salary threshold for exempt executive, administrative, and professional (“EAP”) employees under the Pennsylvania Minimum Wage Act (“PMWA”) will not go into place this fall.
As you may recall (see our blog post here), last October, the Pennsylvania Department of Labor and Industry (“DOLI”) finalized new regulations that set in motion periodic increases in the EAP exempt salary threshold under the PMWA. The goal was to dramatically expand the range of employees eligible for overtime pay. Those PA increases were designed to surpass the current federal salary threshold under the Fair Labor Standards Act (“FLSA”) and looked like this:
$35,568 ($684 per week) effective 10/3/2020 (which matched the FLSA threshold that was effective 1/1/2020—see our prior post here);
$40,560 ($780 per week) to be effective 10/3/2021;
$45,500 ($875 per week) to be effective 10/3/2022; and
On 10/3/2023, and every third year thereafter, the minimum salary will experience automatic adjustments.
However, as part of an overall budget deal reached last week between Governor Wolf and the Republican-controlled legislature, the DOLI regulations will be repealed. This “gift” comes through a one-sentence provision in the budget-related legislation.
As a result, at least for now, the PA salary threshold will not increase in October (or in the foreseeable future) and will continue to match the current threshold under the FLSA … unless/until the Biden administration’s Department of Labor follows through on its latest plan to further increase the federal salary level for the EAP exemptions.
Stay tuned—you just never know what the government might do, especially in the budget process.
Finally, the Pennsylvania Department of Labor and Industry (“Department”) formalized its leap to modernize and streamline its regulation governing the executive, administrative, and professional (“EAP”) exemptions (and the outside sales exemption) from the minimum wage and overtime requirements of the Pennsylvania Minimum Wage Act. To confirm, yes, the Commonwealth is leaving the U.S. Department of Labor’s recent rule in the dust! See our last blog post on this from February here, as well as the ones from July 2018 and January 2018.
Although the Department took great pains to better—but not fully—align its requirements with those under the Fair Labor Standards Act (“FLSA”), the hallmarks of this new regulation are the new salary threshold increases:
$35,568 ($684 per week) effective 10/3/2020 (which matches the FLSA threshold that was effective 1/1/2020—see our prior post here);
$40,560 ($780 per week) effective 10/3/2021;
$45,500 ($875 per week) effective 10/3/2022; and
On 10/3/2023, and every third year thereafter, the minimum salary will change to match the 10th percentile of wages for Pennsylvania workers who work in exempt EAP positions.
For all of those employers with employees based in Colorado, we wanted to update you on some sweeping changes to Colorado wage and hour laws that went into effect on March 16, 2020. As you know, employers generally must comply with both state and federal wage and hour laws—essentially meeting the requirements that are most protective of employees. To date in Colorado, the state law’s applicability has been limited—but that’s not going to be the case any longer.
The new law, known as the Colorado Overtime & Minimum Pay Standards (“COMPS”) Order #36, replaces all prior Colorado Minimum Wage Orders. The most significant changes include: (1) extending Colorado’s wage and hour laws to even more employers than before; (2) adjusting the salary thresholds required for eligibility under the federal overtime exemptions for executive, administrative, and professional employees; (3) changing employee rest period requirements and requiring meal periods; (4) clarifying the definition of “time worked” for purposes of being considered “compensable time”; (5) imposing new posting and distribution requirements that will require changes to employee handbooks; (6) creating new earnings statement requirements that may require payroll to update your earnings statements; and (7) modifying the calculation of overtime so that it is based not only on a weekly basis, but on a daily and consecutive hourly basis too. More details are below, and a copy of the COMPS Order can be found here. Continue reading “Colorado Goes “Wage & Hour” Crazy—Enhances Employee Protections a la California”
Just yesterday, the Pennsylvania Supreme Court issued a decision in a case involving the “fluctuating work week” (“FWW”) method of paying overtime that has been percolating in the Commonwealth courts for almost six years. The Pennsylvania high court held that, although the U.S. Supreme Court has confirmed the validity of the FWW method under the Fair Labor Standards Act (“FLSA”), Pennsylvania has not incorporated it into state law; and its use in Pennsylvania is therefore not permitted.
The case is Chevalier v. General Nutrition Centers Inc. In it, the Pennsylvania Supreme Court upheld a $1.7 million judgment against General Nutrition Centers (“GNC”) in favor of a class of former store managers who had alleged they were shorted on overtime pay. GNC had used the FLSA’s FWW method, which allows employers to pay employees whose hours fluctuate from week to week a salary that is intended to compensate them for all of the hours worked each week. If the employees work more than 40 hours in a week, then the designated salary is divided by the total number of hours worked that week to calculate the “regular rate,” which is then divided in half and multiplied by the number of overtime hours to compensate the employees for the additional overtime pay due.
Okay, enough math for this blog—basically, the FWW method allows employers to pay overtime at a “half-time” rate because the underlying salary pays for all straight time due for the hours worked. (Note for math geeks: the FWW method causes employees to see a lower effective hourly rate and overtime rate as they work more hours.) This “half-time” method of paying overtime pay conflicts with the Pennsylvania Minimum Wage Act’s requirement that overtime compensation be 1.5 times the regular rate of pay—at least that’s what the state supreme court found.
So, as a side note for Pennsylvania employers, there’s no need to concern yourselves with the brand-new proposed rule on the FWW method issued earlier this month by the U.S. Department of Labor.
Our “simple” advice moving forward: Don’t use the FWW method for employees in Pennsylvania.
Just when you thought it was safe to go back in the water, the U.S. Department of Labor (“DOL”) reappears to address an issue that has most American employers on edge: How far will it expand the scope of who is eligible for overtime pay? After taking what seems like forever, the Trump DOL—despite the government shutdown—has apparently now completed its long-awaited revised new rule to reset the minimum salary threshold for employees subject to the Fair Labor Standards Act’s white collar exemptions.
We all remember the Obama DOL’s effort to expand overtime eligibility to four million currently-exempt employees by increasing the salary minimum by more than double, to $47,476 (which was blocked by a federal judge in Texas). The real question for now is, what has the Trump DOL decided is the “correct” new salary level? All signs point to a figure in the low to mid-$30,000s. We should find out very soon.
For now, sources are reporting that the finalized proposed new rule is about to be submitted (maybe today) to the White House’s Office of Information and Regulatory Affairs (“OIRA”) for review. This is the first step in the process before the proposed rule is released to the public for comment. Though the federal government is currently shut down, the White House is working. The last agenda issued by the DOL stated that this new rule would be released in March, so they seem to be on track for that.
So … stay tuned— “Same Bat time, same Bat channel!” More to come.
New Jersey’s minimum wage will increase by 25 cents, from $8.60 to $8.85 per hour, effective January 1, 2019. For non-exempt employees making the minimum wage, employers will be required to pay an overtime rate of $13.28 for every hour worked over 40 in a work week, to comply with the State’s minimum wage requirements.
Employers should be aware that one of Governor Phil Murphy’s top legislative priorities is to increase the minimum wage to $15 per hour. Although the Legislature passed a $15-an-hour minimum wage bill in 2016, which was vetoed by then-Governor Chris Christie, neither Governor Murphy nor the Legislature has communicated a path forward to get another bill on the table.
As wage payment violations carry significant penalties in New Jersey, you should contact a member of Blank Rome’s labor & employment practice group if you have any questions about compliance with New Jersey’s minimum wage increase or any other wage and hour issues.