The Secretary of the Pennsylvania Department of Labor and Industry, in announcing the Department’s new overtime rule, projected that up to 251,000 or more people employed in Pennsylvania could soon see overtime compensation in their paychecks where there was none before.
Both the Federal and Pennsylvania regulations have always required that hourly employees who work more than 40 hours per week be paid 1.5 times their hourly rate for the overtime hours worked beyond 40 hours. Employers have not had to pay their salaried employees overtime for hours worked beyond the 40 hour threshold if they fit within specified exemptions. That is, if the salaried employee’s duties included the performance of executive, administrative or professional duties employers could exempt those salaried employees from overtime requirements. However, since January 2020 the federal government will not recognize these exceptions unless the salaried employee makes at least $35,568. While Pennsylvania’s threshold salary for exemption from overtime is also currently $35,568, effective October 3, 2020, Pennsylvania is going a step further by raising the threshold each year moving forward. For example, on October 3, 2021, the threshold for exemption will be $40,560. Effective October 3, 2022, the threshold for exemption from overtime will be $45,500 in salary. Starting in 2023, the salary threshold will be adjusted automatically based on the average wages of occupations in Pennsylvania that are exempt every three years.
Pennsylvania employers should be mindful of these changes to the overtime exemption rules to avoid employee complaints and investigation, and potential prosecution by the Department Pennsylvania Department of Labor and Industry.