Pennsylvania Department Of Labor And Industry Proposes Amendments To The State's White Collar Exemption Regulations

The Pennsylvania Department of Labor and Industry (DLI) responded to Governor Tom Wolf's call to modernize Pennsylvania's outdated overtime rules for "white collar" employees. On June 12, 2018, the DLI submitted to the Pennsylvania Independent Regulatory Review Commission (IRRC) a proposed rulemaking package that would update the Executive, Administrative and Professional (EAP) exemptions to the minimum wage and overtime requirements of the Pennsylvania Minimum Wage Act (PMWA).

The DLI identified two primary goals associated with its proposal:

To update the salary level at which salaried workers may become exempt "to more accurately match the duties they perform"; and To update the duties test for each EAP exemption to be more closely aligned and consistent with the federal regulations interpreting the corresponding exemptions under the Fair Labor Standards Act (FLSA). Despite these worthwhile goals, the DLI's initial rulemaking efforts fall well short of the stated aspirations. First, its efforts to update the salary level appear to go too far, ignoring the lessons learned by the U.S. Department of Labor (U.S. DOL) when it attempted to more than double the salary level applicable to the federal EAP exemptions. Second, despite the stated intent to "align" the duties tests with their federal counterparts and to make them "consistent" with federal law, the proposed amendments simply do not achieve that goal. Significant work remains to be done to achieve the DLI's goals and fulfill its mission to modernize Pennsylvania's outdated rules.

Updated Salary Level

According to the DLI, the EAP salary thresholds under federal and state law "failed to keep pace with economic growth and the rising nominal salaries of exempt salaried workers." Indeed, the EAP salary threshold under Pennsylvania law has not been updated since the 1970s. It currently stands at just $250 per week ($13,000 annually) under the so-called "short test" commonly applied under the PMWA.1 Since this salary threshold is well below the $455 per week ($23,660 annually) threshold imposed by the FLSA, it has little practical impact.

The DLI's proposed regulations would increase the EAP salary threshold under Pennsylvania law to:

$610 per week2 ($31,720 annually) effective on the date of publication of the final rule in the Pennsylvania Bulletin (which the DLI projects will occur in 2019); $766 per week ($39,832 annually) effective one year later; and $921 per week ($47,892 annually) effective one year later. Three...

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