Pennsylvania Employers Take Note: Department of Labor Expanding Non-exempt Employees

You may recall that the Department of Labor (“DOL”), during the Obama Administration, created great angst among Employers by attempting to expand the universe of non-exempt employees under the Fair Labor Standards Act (“the Act”). The DOL did so by, among other things, increasing the salary level below which an employee would be non-exempt from the Act’s minimum wage and overtime rules. Last year, a federal judge in Texas blocked that effort and the Trump Administration has shown no inclination to revive those regulations.

Pennsylvania Governor Tom Wolf, however, has taken on the challenge. He recently announced that he will direct the Pennsylvania Department of Labor & Industry to adopt new rules that, in large part, mimic the blocked federal rules. Under the Governor’s edict, effective January 1, 2020, the salary level below which Pennsylvania employees would have to be paid the state minimum wage and overtime will be increased from $455 per week (or $23,660 per year) to $610 per week (or $31,720 per year). That number would be raised to $39,832 effective January 1, 2021, and then raised again to $47,892 effective January 1, 2022. Thereafter, the salary level would automatically adjust every three years. 

This is expected to increase the pool of non-exempt workers in Pennsylvania by 460,000 within the next four years. The directive will also “clarify” the duties of “Executive,” “Administration,” and “Professional” employees for purposes of those exempt classifications. In all likelihood such “clarification” will limit the employees who would be exempt by virtue of holding such positions, further expanding the class of workers who would have to be paid the minimum wage and overtime.

When faced with the federal analog, many Employers adjusted their workplace to avoid their application, such as reducing work weeks from 40 hours to 30 hours. (As a note, overtime only needs to be paid if an employee works more than 40 hours in a work week.) In short, the actual benefit to workers was in doubt.  It is likely that Pennsylvania employers will dust off those tactics in the face of Pennsylvania regulations.  In the meantime, Pennsylvania employers might want to contact their local representatives and register their objections.