Overtime Rule for Pennsylvania Exempt Status Minimum Weekly Salary
On Saturday, October 3, 2020, the Pennsylvania Department of Labor (DOL) published their guidance on how to implement the state DOL’s final rule that increases the minimum weekly salary to be exempt under the white-collar exemptions of the Pennsylvania Minimum Wage Law.
Effective October 3, 2020, the Pennsylvania Minimum Wage Law (PMWL) increased the minimum weekly salary to be exempt under the white collar exemptions to $684.00 per week (same as current minimum under the Fair Labor Standards Act). This amount will increase every year (see below) until 2023. At that time, and every third year, the PMWL will increase with only 90 days’ advance notice to employers.
As a result, PMWL will be higher than the minimum weekly salary of $684 under the Fair Labor Standards Act (FLSA).
Under the final rule as published by the Pennsylvania DOL, the increased minimum salary to be exempt under the PMWL white-collar exemptions will increase as follows:
- $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 federal regulations)
- $780 per week, $40,560 annually on October 3, 2021; and
- $875 per week, $45,500 annually on October 3, 2022
Effective October 3, 2023, and each third year thereafter, the minimum salary will go up with only 90 days’ advance notice to employers.
Additionally, following the FLSA, under Pennsylvania law as revised, up to 10 percent of the minimum salary may be satisfied by the payment of certain non-discretionary bonuses, incentives, and commissions.
The Pennsylvania DOL modified the duties tests under Pennsylvania law to align them more closely with the duties tests under the FLSA. However, the duties tests are not identical. Further, there are exemptions under the FLSA that still are not available in Pennsylvania.
For employers, this means you need to consider the increasing minimum salary in your budgeting for 2021 and beyond. You may also want to revisit whether an employee’s primary duty is exempt under the FLSA and PMWL. It could happen that an employee may be exempt under the FLSA but not the PMWL.
Also, keep in mind that other states have minimum salary requirements higher than the FLSA such as Alaska, California, Colorado, New York, Vermont and Washington. There are other states also considering increases to their minimum salary requirements (i.e., as New Jersey, Michigan, and Oregon).
PA Department of Labor link: https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/Pages/Overtime-Rules.aspx
PA Duties Tests: https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/minimum-wage/Pages/Minimum-Wage-Act-Exemption.aspx
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