Pennsylvania Governor Repeals State Overtime Rule

As part of a budget deal passed by the Pennsylvania General Assembly, the planned increases in salary requirements for white-collar workers to qualify as exempt are repealed. This avoids a considerable increase in salary or a transfer to an hourly pay structure in order for Pennsylvania employers to steer clear of overtime requirements.

Prior to this new state budget plan, the Pennsylvania Department of Labor & Industry (DLI) was set to increase the minimum weekly salary needed to qualify under the overtime exemptions for salaried “white-collar workers.” These exemptions, specifically for executive, professional, and administrative workers provided for in the Pennsylvania Minimum Wage Act, were set to increase in October 2021, again in October of the following year, and then annually following this rule.

However, things took an unexpected turn when Pennsylvania Governor Wolf took part in budget negotiations for the 2021-2022 budget. The Governor accepted a proposal to repeal the DLI’s rule effective September 7th, 2021, in return for increased education funding. This will repeal not only the planned increase in required salary to qualify for exempt status but also the surrounding framework to regulate white-collar exemptions for the PMWA.

Under the DLI’s final rule, these plans officially began on October 3rd, 2020, setting $684 every week as the state’s minimum salary requirement, equating to $35,568 annually, which is the same as under the current Fair Labor Standards Act (FLSA) standards. Following this, the next year, the first effective increase would occur. This would have increased the weekly salary requirement starting October 3rd, 2021, to $780 per week, which would equate to $40,560 per year. Then on October 3rd, 2022, this would have raised all the way to $875 every week or $45,500 yearly. After this, the legislation would have provided for annual automatic adjustments.

Employers are likely to welcome the abolishment of the planned increases and the resulting cost of maintaining an exempt white-collar workforce. In addition, despite repealing all frameworks to regulate these exemptions, the PMWA will still provide overtime exemptions for professional, executive, and administrative employees. Due to the lack of surrounding definitions for these, though, courts will likely interpret these exemptions in accordance with the applicable FLSA rules for exemptions.

Pennsylvania employers, for now, can plan for the immediate future with the assumption that the salary threshold will hold at its current level of $684 weekly and $35,568 annually, with applicable rules likely following the FLSA.