Kathy Speaker MacNett, Managing Partner, SkarlatosZonarich LLC
July 13, 2021
On October 3, 2020, Pennsylvania adopted a change in its White-Collar salary threshold for administrative, executive and professional employees to be considered exempt from overtime payments. Effective October 3, 2021 Pennsylvania’s salary threshold was to increase to $780 per week ($40,560 annually), while the same threshold under the federal Fair Labor Standards Act (“FLSA”) would have remained at $684 per week ($35,568 annually). That regulation was duly adopted by the Independent Regulatory Review Commission, known as IRRC, even after concerns were expressed by various legislative committees.
As we have counseled before, Pennsylvania employers are required to abide by the law, either the FLSA or the Pennsylvania Minimum Wage Act (“PMWA”), which is more favorable to the employee. Hence, Pennsylvania employers could have been FLSA compliant and PMWA non-compliant as of October of this year with regard to employees exempt from overtime. Many employers, even some who would have favored an increase in the minimum wage rate for hourly workers, had concerns about the increased salary threshold to be considered an exempt employee. We expected that this would be particularly difficult for start-up businesses, private or religious schools and non-profit corporations, among other private business entities.
And then came this year’s Pennsylvania budget consideration. The task of budget consideration was made much easier this year by the federal funding allotted to Pennsylvania as COVID-19 relief. As part of the budget process, HB 336, PN 1933 was adopted by both the Pennsylvania House and Senate and sent to the Governor. This bill amends the Administrative Code, which applies to a wide panoply of state agencies, boards and commissions. The bill became law without the Governor’s signature as Act 20 of 2021 on July 9, 2021. One of the sections of that bill amends Section 2215.1 of the Administrative Code to provide:
ABROGATION OF DEPARTMENT REGULATIONS.--THE REGULATIONS AT 34 PA. CODE §§ 231.82 (RELATING TO EXECUTIVE) 231.83 (RELATING TO ADMINISTRATIVE) AND 231.84 (RELATING TO PROFESSIONAL) ARE ABROGATED.
The above quoted language had previously mandated the increased salary threshold for overtime exempt employees. That troublesome section of the regulations has now been repealed meaning that employers will not have to comply with the contemplated salary increases in either 2021 or 2022 in order to comply with Pennsylvania law. The FLSA’s salary threshold remains at $684 per week ($35,568 annually), and employers must comply with that threshold.
BOTTOM LINE: This repeal is a pleasant development for many Pennsylvania employers, who are trying to recover from COVID.
If you have any questions, please contact Kathy Speaker MacNett for additional information.