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Alerts and Updates

Minimum Weekly Salary to Be Exempt Under Pennsylvania Law to Soar Based on State Department of Labor New Overtime Rule

October 5, 2020

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Effective October 3, 2023, and each third year thereafter, the minimum salary will go up with only 90 days’ advance notice to employers.

The cost of being exempt in Pennsylvania is about to soar as the Pennsylvania Department of Labor (DOL) published guidance on October 3, 2020, to implement the state DOL’s final rule increasing the minimum weekly salary to be exempt under the white-collar exemptions of the Pennsylvania Minimum Wage Act (PMWA). As a result, the minimum weekly salary under the PMWL will be higher than the minimum weekly salary of $684 under the Fair Labor Standards Act (FLSA).

Under the final rule as published by the Pennsylvania DOL, the increased minimum salary to be exempt under the PMWA white-collar exemptions will increase as follows:

October 3, 2020: $684 per week (same as FLSA)

October 3, 2021: $780 per week

October 3, 2022: $875 per week

Effective October 3, 2023, and each third year thereafter, the minimum salary will go up with only 90 days’ advance notice to employers.

This means that, staring with the increase on January 1, 2020, under the FLSA, Pennsylvania employers will be subject to four minimum salary increases in four years.

Following the FLSA, under Pennsylvania law as revised, up to 10 percent of the minimum salary may be satisfied by the payment of certain nondiscretionary bonuses, incentives and commissions.

In addition, and a welcome surprise, the Pennsylvania DOL modified the duties tests under Pennsylvania law to align them more closely with the duties tests under the FLSA. However, the duties tests are not identical. Further, there are exemptions under the FLSA that still are not available in Pennsylvania.  

What This Means for Employers

Legal challenges are possible. For now, however, Pennsylvania employers need to consider the escalating minimum salary in their budgeting for 2021 and thereafter.

As part of their analysis, employers may wish to revisit whether an employee’s primary duty is exempt under the FLSA and the Pennsylvania law, the PMWA. Because of the differences that remain between the FLSA and the PMWA, an employee may be exempt under the FLSA but not the PMWA. There are benefits to conducting the duties analysis under attorney-client privilege to limit the likelihood that the analysis would be subject to discovery.

Also, keep in mind that many other states already have minimum salary requirements higher than the FLSA, such as Alaska, California, Colorado, New York, Vermont and Washington. Other states, such as New Jersey, Michigan and Oregon, may consider increases to their minimum salary requirements, too.

About Duane Morris

The Duane Morris Institute will hold a webinar on the new overtime rules under the Pennsylvania law later this month. Please check our website for updates and schedule.

For More Information

If you have any questions about this Alert, please contact Jonathan A. Segal, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.