Pennsylvania Raises Salary Threshold for Overtime Exemption
Monday, October 5, 2020
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Posted by: Gregg Robertson
Harrisburg – The Pennsylvania Department of Labor & Industry (L&I) announced that Pennsylvania's new overtime rule is effective on Saturday, October 3, 2020. While having no immediate impact on the overtime exemption threshold, the new regulation will
raise the threshold for overtime exemption in two annual increments, starting on October 3, 2021, then automatically every three years after that.
This new regulation marks the first update to the Commonwealth's overtime regulations in more than
four decades. The regulation will expand eligibility for overtime to 143,000 people and strengthen overtime protections for up to 251,000 or more.
The federal FLSA regulations update that took effect on January 1, 2020, raised the federal overtime
salary threshold to $35,568. While Pennsylvania's overtime rule aligns more closely with the FLSA, L&I has set the minimum salary threshold at $45,500 and the increase will be phased in three steps:
- $684 per week, $35,568 annually (per federal rule), on January 1, 2020;
- $780 per week, $40,560 annually on October 3, 2021; and
- $875 per week, $45,500 annually on October 3, 2022.
Starting in 2023, the salary threshold will adjust automatically every three years.
Pennsylvania's new overtime rules also allow up to 10 percent of the salary threshold to be satisfied by nondiscretionary bonuses, incentives, and commissions that
are paid annually, quarterly or more frequently.
Eligible for Overtime
- With a few exceptions, all hourly employees who work more than 40 hours per week
- Most salaried employees who work more than 40 hours per week and earn less than the salary threshold regardless of their job duties
- Most salaried employees who do NOT perform executive, administrative, or professional duties, regardless of how much they are paid
Not Eligible for Overtime
- Salaried employees who perform executive, administrative, or professional duties and make more than the salary threshold per year
- Other occupations exempted by the Minimum Wage Act.
Exemptions
The Pennsylvania Minimum Wage Act Exemption requires employers to pay their employees at a rate of not less than $7.25 an hour for all hours worked and an overtime rate of 1.5 times the employee's regular rate of pay for all hours
worked above 40 in a workweek.
However, the Minimum Wage Act provides an exemption from both minimum wage and overtime pay for employees employed in a bona fide executive, administrative, or professional capacity. To qualify for the exemption,
employees must meet certain tests regarding their salary and their job duties.
For more information go to the L&I website.
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