Pennsylvania House Committee Holds Hearing on Proposal to Increase Number of Salaried Workers Eligible for Overtime

All salaried employees who are paid less than a certain
threshold amount must be paid overtime. Higher-salaried employees can qualify
for overtime if their job duties do not fit within the exemptions: the
executive exemption, the administrative exemption, or the professional

While the issue of who is exempt from payment of overtime is
present under both federal law (The Fair Labor Standards Act- FLSA) and state
law (The Pennsylvania Minimum Wage Act- PMWA), the two laws are not in sync.
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, the FLSA does not override the PMWA in
situations where the PMWA is more generous than the FLSA. Where it is so,
Pennsylvania employers are required to comply with the PMWA. Ignorance of the
law is no excuse; Pennsylvania employers are expected to know which law applies
to each situation and to make sure that their personnel are compensated

Overtime Law and the Proposed Regulations

This provided that the secretary of the Department of Labor
and Industry (DLI) has the power to issue regulations interpreting the
Pennsylvania Minimum Wage Act (PMWA). When the salary threshold in the 1977
regulations went into effect, about 60% of salaried Pennsylvania employees were
eligible for overtime. Now that number has dropped to just 7%.

An updated set of regulations was proposed by the public. Its
goals were

1.     To
Modernize the PMWA salary threshold- on January 1 of every third year, the
salary threshold will reset, using a formula from figures published by the U.S.
Department of Labor, Bureau of Labor Statistics.

2.     Streamline
the so-called “duties tests.”- workers earning more than the threshold salary
can still be eligible for overtime if their job duties do not qualify for the

The September

The hearing was scheduled to consider possible impact of the
regulation on employers. DLI employees explained the rationale for the
amendments, because it was extremely outdated. The DLI would have the authority
to recover the amount an employee had been underpaid, but cannot levy fines.
They can also prevent and/or punish retaliation by the employer against the
complainant. Witnesses expressed concerns of the private sector:

1.     Pennsylvania’s
overtime regulations should track those under the FLSA- adopting these
regulations will increase the chances of a “compliance trap” for employers that
will be faced with different sets of overtime rules.

2.     If the
salary threshold is increased, small businesses may not be able to afford to
pay more wages, therefore reducing salaried workers to minimum wage, lay- offs,
or closures.

3.     Charities
and nonprofit human services providers could not absorb increased wage costs
unless there was a commitment from government funders to increase their level
of support.

4.     The proposed
regulations create “unfunded mandates” that employers may not be able to cover
by raising costs.

5.     Salaried
workers may perceive their status as being higher than that of hourly workers
and might perceive being converted to hourly compensation as a demotion.

At Converge HR Solutions, we offer a complete HR Outsourcing
service that includes employee compensation and regulatory compliance, so that
your company follows all updated regulations and policies. To learn more about
the products and services Converge has to offer, visit our website at You
can also email us directly at
or give us a call at 610-296-8550.

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