… Effective October 3, 2020, the Pennsylvania Department of Labor & Industry (L&I) has updated Pennsylvania’s overtime rules to increase the salary threshold for qualifying under the Pennsylvania Minimum Wage Act (PMWA) as an exempt executive, administrative, and professional employee. The definitions of "primary duty," "customarily and regularly," "directly and closely related" or any of the other provisions of 29 C.F.R. View key toolkits, policies, research and more on HR topics that matter to you. The initial increase brought the Pennsylvania salary level up to the FLSA’s current salary level of $684 per week ($35,568 per year). The Pennsylvania Department of Labor and Industry (DLI) published its final rule to substantially increase the salary threshold for qualifying as an exempt executive, administrative and professional (EAP) employee under the Pennsylvania Minimum Wage Act (PMWA). § 541.500). 2021 Programs Now Available! Need help with a specific HR issue like coronavirus or FLSA? §§ 541.201-202). Pennsylvania's threshold first increased to $684 a week ($35,568 a year) in line with the new federal rules that went into effect on Jan. 1, 2020. On October 2, 2020, the Pennsylvania Department of Labor and Industry (DLI) announced that a new overtime rule would take effect as of October 3, 2020. And while the salary threshold changes will not exceed the current salary threshold under the FLSA until 2021, employers should review employee compensation levels to assess whether, and how, compensation will need to be revised or if reclassification is warranted to ensure compliance. Pennsylvania raises salary threshold for overtime compensation By: Stacy Wescoe October 2, 2020 4:47 pm New overtime rules were scheduled to go into effect Oct. 3 that change the salary threshold of those eligible to receive overtime compensation in Pennsylvania. As part of the compromise, the Governor placed the new rule on hold temporarily and canceled a vote of the IRRC. The L&I estimates that the new rules will extend overtime eligibility to 143,000 employees. The state's Independent Regulatory Review Commission (IRRC), which has the authority to … Eliminates the requirement that executive exempt employees "customarily and regularly" exercise discretionary powers. The PMWA establishes the requirements under which employers must pay employees not less than the minimum wage—$7.25 per hour—for all hours worked and overtime of 1.5 times an employee’s regular rate of pay for any hours worked in excess of 40 hours per workweek. The DLI will index the salary threshold on October 3, 2023, and every three years thereafter “to the weighted average 10th percentile wages for Pennsylvania workers who work in exempt [white collar] classifications.” Adopt the streamlined test for the EAP exemptions applicable to "highly compensated" employees (29 C.F.R. Pennsylvania's updated overtime salary threshold will be phased in over three steps: $684 per week, $35,568 annually, on October 3, 2020 (note: this is the current level required by federal law; it has been in effect since January 1, 2020 per federal regulations); }); if($('.container-footer').length > 1){ © 2020 Littler. After 2022, the threshold will be adjusted automatically … The salary threshold will then automatically be reset every three years starting October 3, 2023 based on the 10th percentile of wages in the exempt occupations in Pennsylvania, utilizing a Pennsylvania-specific data set. Copyright © 2020 Morgan, Lewis & Bockius LLP. var currentUrl = window.location.href.toLowerCase(); 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. The first salary step increase takes effect in 2021 to $780 a week, or $40,650 a year. The new minimum overtime salary threshold under the PMWA will be $45,500, with the increase phased in three steps: On October 3, 2021, the threshold will increase from $684 per week, or $35,568 annually, to $780 per week or $40,560 annually. Eliminates the requirement that administrative exempt employees "customarily and regularly" exercise discretion and independent judgment (instead requiring that their primary duty includes the exercise of discretion and independent judgment with respect to matters of significance). The updated rule also revises the duties tests applied to determine whether an employee qualifies as exempt from the PMWA’s overtime provisions under the executive, administrative, and professional exemption. The FLSA regulations update that took effect on January 1, 2020, raised the federal overtime salary threshold to $35,568. All rights reserved. The first salary step increase takes effect in 2021 to $780 a week, or $40,650 a year. }. The new minimum overtime salary threshold under the PMWA will be $45,500, with the increase phased in three steps: Under the rule, an employer may satisfy 10% of the salary amount through payment of non-discretionary bonuses. § 541.601). It is important to keep in mind that while L&I’s intent was to harmonize the PMWA’s duties tests with those under the FLSA, there are still important differences between the two, and therefore employers must consider both tests in assessing employee status. Employers should review their employees’ job duties and classifications to ensure compliance with the new duties tests under the PMWA. Include the FLSA's acknowledgement that "concurrent performance" of exempt and nonexempt work does not disqualify an employee from the executive exemption (29 C.F.R. The rule also brings the duties tests for executive, administrative, and professional workers into closer alignment with tests under the Fair Labor Standards Act (FLSA). To request permission for specific items, click on the “reuse permissions” button on the page where you find the item. Include any version of the FLSA's regulation exempting teachers, physicians and lawyers from the salary requirements (29 C.F.R. The regulation increases the EAP salary threshold under Pennsylvania law to: $684 per week ($35,568 annually) effective Oct. 3, 2020. October 2, 2020 4:51 pm “The modernized regulation will expand eligibility for overtime to 143,000 people and strengthen overtime protections for up to 251,000 or more. $780 per … Please enable scripts and reload this page. While the first increase merely aligns the PMWA's salary threshold with its federal Fair Labor Standards Act (FLSA) counterpart, the PMWA's salary threshold will soon significantly eclipse the FLSA standard. Starting in 2023 the salary threshold will then adjust automatically every three years. Try some practice questions! The weekly threshold for … Turn it on to take full advantage of this site, then refresh the page. Please log in as a SHRM member. The regulation increases the EAP salary threshold under Pennsylvania law to: Effective Oct. 3, 2023 (and each third year thereafter), the salary threshold would reset automatically to the 10th percentile of Pennsylvania workers who work in exempt EAP classifications. Pennsylvania’s new overtime rule has set the minimum salary threshold at $45,500, which will be phased in over three steps with the final threshold going into effect October 3, 2022: $684 per week, $35,568 annually, on January 1, 2021 (note: this is the current level required by federal law; it has been in effect since January 1, 2020 per FLSA regulations); The minimum weekly salary of $684 in effect through October 2, 2021 mirrors the minimum weekly salary required by federal law. W. John Lee On October 3, 2021, the threshold will increase from $684 per week, or $35,568 annually, to $780 per week or $40,560 annually. § 541.602 - .606). If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers: Philadelphia $875 per week ($45,500 annually) effective October 3, 2022. Members may download one copy of our sample forms and templates for your personal use within your organization. Please purchase a SHRM membership before saving bookmarks. The white-collar exemption salary threshold has now been increased to $684 per week ($35,568 annually) from the current threshold of $250 per week ($13,000 annually). For example, under the PMWA, the “outside sales” exemption is assessed on a quantitative basis and requires that employees spend more than 80% of their time making sales, whereas under the FLSA, the “outside sales” exemption is assessed on a qualitative basis and requires that employees’ “primary duty” is making sales. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. § 541.400). Year 2 (2021) - $766 per week / $39,832 annually. Include any version of the FLSA's regulation extending the administrative exemption to employees whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment (29 C.F.R. The rule now requires, as to administrative employees, that their primary duty “includes” exercising discretion and independent judgment, and as to executive employees, that their “primary duty is management of the enterprise or of a customarily recognized department thereof.” L&I intended these changes to bring the duties tests under the PMWA into closer alignment with the FLSA’s test, which uses the word “includes.”. Align the outside sales exemption under the PMWA with its federal counterpart (29 C.F.R. } Effective October 3, 2023 (and each third year thereafter), the salary threshold would reset automatically to the 10th percentile of Pennsylvania workers who work in exempt EAP classifications. On Oct. 2, 2020, the Pennsylvania Department of Labor and Industry (DLI) announced a new overtime rule that increases the salary threshold that must be satisfied for executive, administrative and professional (EAP) employees to qualify for an overtime wage payment exemption. JavaScript is turned off in your web browser. The definitions of "directly related to management or general business operations," "discretion and independent judgment"—all of which are relevant for the interpretation and application of the administrative exemption (29 C.F.R. Include any version of the FLSA's regulation exempting computer professionals who are paid on an hourly basis (29 C.F.R. $(document).ready(function () { What Employers Can Do If Workers Refuse a COVID-19 Vaccination, Virtual Mastering Your HR Generalist Role, Philadelphia’s Salary-History Ban Takes Effect Sept. 1, PNC Partners with Neighbors to Help Overcome Talent Shortfalls. Pennsylvania Raises Exempt Salary Threshold. § 541.106). For example, the rule: While DLI also committed to "look to federal law for guidance for interpreting its regulations," the rule differs from existing federal regulations in significant ways. The amended regulations would increase the white-collar exemption salary threshold from the current threshold of $250 per week ($13,000 annually) as follows: $684 per week ($35,568 annually) on the date the final rule is published in the Pennsylvania Bulletin As such, Pennsylvania employers will not need to account for any state-specific changes until October 3, 2021 when the minimum salary increases to $780 per week and then again on October 3, 2022 when the minimum salary increases to $875 per week. § 541.204). Corporate, Finance & Investment Management, Project Finance, Infrastructure & Natural Resources, Special Purpose Acquisition Companies (SPACs), Technology, Outsourcing & Commercial Transactions, Trademark, Copyright, Advertising & Unfair Competition, Trade Secrets, Proprietary Information & Noncompetition/Nondisclosure Agreements, ADA Public Accommodation and Accessibility Litigation & Counseling, Health and Welfare Plan Design & Administration, Individual Employee Litigation & Arbitration, Workplace Government Relations and Regulation, Congressional & Independent Commission Investigations, Financial Services Counseling & Litigation, Healthcare Litigation & Regulatory Counseling, Washington Strategic Government Relations & Counseling, White Collar Litigation & Government Investigations, Pennsylvania Raises Salary Threshold, Updates Duties Tests With New Overtime Rule. Paid on an hourly basis ( 29 C.F.R you want to proceed with deleting bookmark these specified are. 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