On October 17, following a public comment period and extensive stakeholder outreach, the Department of Labor & Industry submitted the final regulation that will modernize Pennsylvania’s overtime rules to the Independent Regulatory Review Commission and legislative oversight committees.
The new regulation will expand eligibility for overtime to 143,000 people and strengthen overtime protections for 251,000 more. In total, 394,000 workers may benefit from the updated overtime rules.
Because the state’s overtime rules have not been updated in more than four decades, a salaried worker earning as little as $23,660 a year, which is below the poverty line for a family of four, can work over 40, 50, 60 or more hours a week and not be guaranteed overtime at time-and-a-half.
This final regulation ensures that employees who work overtime are fairly and fully compensated for their labor in accordance with the original intent of the Pennsylvania Minimum Wage Act.
L&I’s final regulation modernizes overtime rules, clarifies requirements, and updates the salary threshold to reflect current wages paid to Pennsylvanians working in executive, administrative, and professional occupations.
This new rule will raise the salary threshold to determine overtime eligibility for salaried executive, administrative, and professional workers from the federal overtime salary threshold of $455 per week, $23,660 annually, to $875 per week, $45,500 annually.
Additionally, this final overtime regulation ensures that the duties for executive, administrative and professional workers more closely align to the federal overtime regulation, making it easier for employers to know if a worker qualifies for overtime.
The U.S. Department of Labor issued a final rulemaking in September raising the federal overtime salary threshold to $35,568, which, on January 1, 2020, will make 61,000 Pennsylvanians newly eligible for overtime.
The Wolf Administration does not believe the new U.S. DOL rule truly reflects what Pennsylvanians are being paid. L&I set the minimum salary threshold at $45,500, to be phased in over two years beginning in 2021. By 2022, an additional 82,000 workers in Pennsylvania will be eligible for overtime.
This increase will be phased in over three steps: $684 per week, $35,568 annually (per federal rule), on January 1, 2020; $780 per week, $40,560 annually in 2021; and $875 per week, $45,500 annually in 2022, extending overtime eligibility to 143,000 workers in three years.
Based on public feedback received by L&I, these revised thresholds are lower than the amounts in the department’s original proposed overtime regulation updates from June 2018.
Starting in 2023, the salary threshold will adjust automatically every three years.
L&I held informational sessions around the state over the summer and will continue outreach to businesses and workers on the lawful application of overtime rules.
The final regulation must be approved by the Independent Regulatory Review Commission before it takes effect.