The Pennsylvania Department of Labor and Industry (“PDLI”) has submitted to the Pennsylvania Independent Regulatory Review Commission proposed revisions for salaried workers who are exempt from overtime pay. The proposal includes salary increases for the Executive, Administrative, and Professional exemption job categories. The proposed regulations are expected to be published on June 23 with a comment period until July 23, 2018.
If you recall, the Federal Department of Labor, under the Obama administration, proposed an increase to the salary levels of the white collar exemptions under the Fair Labor Standards Act (“FLSA”) to $47,476 per year. The FLSA’s revised salary level was supposed to go into effect on December 1, 2016. However, the changes were struck down by a court as invalid prior to implementation. Despite this ruling, the PDLI now proposes salary increases that would ultimately exceed those that were proposed under the FLSA.
Under the PDLI proposal, the salary increase for Executive, Administrative, and Professional job categories would be as follows:
- $610 per week ($31,720 per year) effective on the date of publication of the final rule in the PA Bulletin, anticipated to be in 2019.
- $766 per week ($39,832 per year) effective one year after the date of publication.
- $921 per week ($47,892 per year) effective two years after the date of publication.
- Three years after publication, and January 1 of each third year thereafter, the salary will be adjusted according to the Northeast Census region as published by the U.S. Department of Labor, Bureau of Labor Statistics.
To meet the salary requirements set forth above, 10% of the salary can be satisfied through non-discretionary bonuses, incentives and commissions that are paid to employees on at least a quarterly basis. Employers are permitted to make up the salary each quarter if these payments do not bring the employee up to the requisite salary level.
Pennsylvania’s current regulations have not been updated since 1977 and have not kept up with updates to the FLSA. The proposed regulations also seek to update the “standard duties test” for the white collar exemptions to eliminate two tests that were previously eliminated under the FLSA in 2004. However, the PDLI’s proposal still leaves inconsistencies between state and federal law and Pennsylvania employers are left trying to comply with both laws.