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By Sam Cook, Staff Writer
The Fair Labor Standards Act (FLSA) is the federal labor law that sets the $7.25/hour minimum wage and requires employers to pay certain non-exempt employees time-and-a-half for time worked exceeding 40 hours per week. [1] Pennsylvania has its own fair labor law entitled the Pennsylvania Minimum Wage Act (PMWA). [2]
Generally, overtime pay is not required for executive, administrative, or professional positions that are paid on a salaried basis and meet a minimum income salary threshold. [3] Title alone does not dictate which positions are exempt, but rather job duties. Executives generally must be managers who direct full-time employees, have authority to hire or fire employees, or may be compensated by incentive bonuses or commissions. [4]
Administrative positions generally refer to “office or nonmanual work” related to general business operations, like consultants or claims adjusters. [5]
Finally, professional roles generally mean work that requires specialized instruction or advanced knowledge, or imagination or artistic talent. Examples include lawyers, doctors, and engineers. [6]
The provisions of PWMA are similar to the FLSA, but there are three significant differences where Pennsylvania’s law is more stringent:
- The Highly Compensated Employee Exception
Under the federal law, after an employee makes more than $107,432 per year, they are considered “highly compensated” and no longer qualify for overtime pay. Pennsylvania does not recognize this exception, and as such, employers must still pay 1.5x overtime for otherwise eligible employees. [7]
- The Computer Employee Exception
This archaic-sounding exception under the FLSA exempts from minimum wage and overtime pay requirements computer systems analysts, programmers, software engineers, and other such IT workers, as long as they are paid at least $27.63 per hour. [8] Pennsylvania again does not recognize this exception, which means employers must treat these employees as they do all others similarly situated employees. [9]
- Salary Thresholds
Finally, Pennsylvania recently hiked the salary threshold that employees must earn to be considered “exempt’ under the PMWA. [10] The Department of Labor and Industry amended its regulations in early October to increase these minimums. [11] The practical effect of this amendment is to expand eligibility for non-exempt status, or those who are entitled to overtime. The stated purpose of the amended rule is to “protect employees from unreasonably low wages not fairly commensurate with the value of the services rendered.” [12]
The new Pennsylvania salary thresholds will increase each year for the next two years according to the following schedule:
| October 3, 2020 | $684 per week (or $35,568 annually) |
| October 3, 2021 | $780 per week (or $40,560 annually) |
| October 3, 2022 | $875 per week (or $45,500 annually) |
The DLI acknowledged that its salary thresholds were lower than that of the FLSA, which rendered it useless because the higher of the two will effectively control employers’ practices. The Commonwealth considered both the FLSA and PMWA’s thresholds too low, which ended up improperly classifying otherwise-eligible workers as exempt simply because they earned more than the inappropriately low threshold.
[1] https://www.dol.gov/agencies/whd/flsa
[2] https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/minimum-wage/Pages/default.aspx
[3] https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/minimum-wage/Pages/Minimum-Wage-Act-Exemption.aspx
[4] https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/minimum-wage/Pages/Minimum-Wage-Act-Exemption.aspx
[5] Id.
[6] Id.
[7] https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/Pages/Overtime-Rules.aspx
[8] https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fs17e_computer.pdf
[9] https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/Pages/Overtime-Rules.aspx
[11] https://www.pacodeandbulletin.gov/secure/pabulletin/data/vol50/50-40/50-40.pdf
[12] https://www.pacodeandbulletin.gov/secure/pabulletin/data/vol50/50-40/50-40.pdf
[13] Id.
