Pennsylvania DLI Issues Proposed Revisions to PMWA Overtime Exemption Regulations

June 28, 2018

The Pennsylvania Department of Labor and Industry has submitted proposed rulemaking announcing proposed revisions to the Pennsylvania Minimum Wage Act overtime exemptions. The proposed rulemaking seeks to significantly increase the salary level needed to qualify as exempt under the act’s white collar exemptions, and purports to update the duties tests to conform to federal law. Publication of the final regulations is expected to occur sometime in 2019.

The proposed revisions increase the minimum salary needed to qualify for the Pennsylvania Minimum Wage Act’s (PMWA’s) administrative, executive, and professional exemptions (the “white collar exemptions”) to annually increasing levels that far exceed the current salary thresholds under the PMWA.

The proposed revisions would increase the PMWA salary threshold to $31,720 annually ($610 per week) upon publication of the final rule, which is expected in 2019. The Pennsylvania Department of Labor and Industry (DLI) also proposes to increase the minimum salary level to $39,832 annually ($766 per week) one year after publication of the final rule, and to $47,892 annually ($921 per week) two years after publication. DLI then proposes to automatically reset the threshold three years after the final rule’s publication, and on January 1 every three years thereafter, to an amount equal to the 30th percentile of earnings for full-time, non-hourly employees for the Northeast Census region, as published by the US Department of Labor (DOL) (this threshold equaled $47,892 annually ($921 per week) in 2016). DLI’s proposed rule would permit up to 10% of the minimum salary levels to be satisfied by nondiscretionary bonuses, incentives, and commissions paid quarterly or more frequently.

Lastly, DLI’s proposed rulemaking updates the duties tests for the white collar exemptions and indicates that it intends to make them more consistent with the 2004 federal regulations interpreting the Fair Labor Standards Act (FLSA) white collar exemptions.

DLI is expected to publish the proposed rulemaking in the Pennsylvania Bulletin by the end of June 2018, after which the public will have 30 days to submit comments.