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deal reached last week between Governor Wolf and the Republican-controlled legislature, the DOLI regulations will be repealed.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.
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).
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. Continue reading “PA Approves White Collar Salary Threshold Increases—Leaves FLSA in the Dust”
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.