If you’re a salaried employee in Pennsylvania, you may be entitled to some overtime pay you didn’t even realize you were owed.
Recent testimony by senior members of the Department of Labor and Industry (DLI) before the Pennsylvania House Labor and Industry Committee indicates that many employers either do not know the law regarding salaried employees earning overtime or that they do know the law but are not following it.
Many people erroneously believe that salaried employees, unlike hourly employees, are not “allowed” to earn overtime because salaried employees are expected to work the hours necessary to get the job done–even if that means working well beyond their “typical” hours. This supposition is simply not the case.
Federal Law vs. State Law in Pennsylvania
The issue of who is exempt from overtime is detailed in both federal law and state law in Pennsylvania, but those two laws are not in sync. The federal law, as it is outlined in the Fair Labor Standards Act (FLSA), and the state law, as it is set out in the Pennsylvania Minimum Wage Act (PMWA), do not say the same thing. As these laws read currently, the “FLSA threshold below which salaried employees must be paid overtime is $455 per week ($23,660 annualized). Because this amount is greater than that currently required by the PMWA, employers must comply with the FLSA’s salary threshold requirements.”
However, federal law does not override state law when the PMWA is more generous than the FLSA. When the PMWA allowed amount is higher, Pennsylvania employers must comply with the state guidelines. As with any other legal issue, ignorance of the law is no excuse for failure to pay your salaried employees what they have earned. Pennsylvania employers are expected to know which law applies to each situation and to make sure that their employees are compensated accordingly.
Governor Wolf’s Task Force
In 2017, Pennsylvania Governor Tom Wolf created the Middle Class Task Force to examine the Department of Labor and Industry (DLI) regulations created in 1977, which were now outdated. Surely, times have changed significantly enough in the last 40 years to warrant an investigation of what needs to be updated to accurately capture what’s happening in the modern workforce. The task force decided on two goals for the regulations:
- Modernize the dollar amounts for the PMWA threshold because the amount of $250 per week maximum (or $13,000 a year) is outdated. The proposal is to increase the PMWA threshold to $610 per week (or $31,720 annually) the first year; increase to $766 per week (or $39,832 a year) one year after publication; and to $921 per week (or $47,892 per year) two years after publication. Starting the third year after publication on January 1, and every third year thereafter, the salary threshold would automatically reset, using a formula derived from figures published by the U.S. Department of Labor Bureau of Labor Statistics.
- Streamline “duties tests,” under which employees earning more than the threshold salary may still qualify for overtime if they do not qualify for executive, administrative, or professional exemptions. This goal would bring the duties tests closer to federal guidelines in the FLSA.
The DLI Secretary and Deputy Secretary said the DLI would have the authority to recover from an employer the amount that the employee had been underpaid, but it would not have the authority to fine the employer.
Several small business owners and nonprofit employers are concerned about the new regulations. Six private sector witnesses were at the hearing and expressed concern with regular threshold increases. Small businesses, for example, may not be able to afford to pay higher wages when the increases are due. They said they might have to reduce salaried workers to minimum wage, lay people off, or close their small businesses.
Concern was raised that the new regulations were complex and confusing and could result in a compliance problem. Others suggested that salaried workers who had to be converted to an hourly wage might see that as a demotion.
The DIL has two years to issue revised regulation. In that two-year period, the Pennsylvania Independent Regulatory Review Commission will examine the recent proposals.