Both the federal Fair Labor Standards Act (“FLSA”) and the Pennsylvania Minimum Wage Act (“PMWA”) exempt “executives,” “administrators,” and “professionals” from the statutes’ overtime pay mandates. These are generally referred to as the “white collar exemptions.”
Employees falling under the white-collar exemptions generally are paid on a “salary basis.” Both FLSA and PMWA have historically set the minimum salary at especially low levels. As discussed below, however, progress is being made:
The FLSA’s Increase to $35,308
With respect to the FLSA, the federal Department of Labor has published a regulation that became effective on January 1, 2020 and increases the annual salary requirement from $23,660 to $35,308. See 84 FR 51230. This increase by the Trump Administration is disappointing because it undercuts the Obama Administration’s proposed regulation raising the salary requirement to $47,476. Unfortunately, Obama’s $47,476 proposal was enjoined by a Texas district court judge. Instead of fighting for the $47,476 at the Fifth Circuit Court of Appeals, Trump settled for a more modest increase.
The PMWA’s Eventual Increase to $45,500
But, here in Pennsylvania, the Trump Administration’s modest increase is not the end of the story. That’s because, on January 31, 2020, the Pennsylvania Independent Regulatory Review Commission (“IRRC”) approved the Wolf Administration’s proposed regulation increasing the annual salary requirement to $35,568 when the regulation becomes effective later this year, to $40,560 one year later, and to $45,500 two years later. Click HERE for access to the regulation.
We currently expect the new Pennsylvania regulation to become effective this Spring. If this happens, the PMWA’s minimum salary requirement will exceed the FLSA’s requirement in Spring 2021 and substantially exceed the FLSA’s requirement in Spring 2022. (Of course, this assumes the FLSA’s salary requirement will not be increased in the first 18 months of a post-Trump presidency).
Although our law firm has advocated for an even larger increase to the PMWA’s salary threshold, we are delighted that the Wolf Administration is fighting for Pennsylvania’s salaried workers. Hopefully, the excellent results achieved at the IRRC will encourage the Governor and his Department of Labor & Industry to continue to update Pennsylvania’s overtime regulations and to extend overtime rights beyond the federal floor.
One final note: Workers and employers must always remember that, under both the FLSA and the PMWA, satisfaction of the minimum salary is only one of several independent requirements that must be satisfied in order for workers to fall within one of the white-collar exemptions. All three exemptions also require that the employee actually perform “executive,” “administrative,” or “professional” job duties. – PW