Recent News & Blog / Pennsylvania Repeals Salary Increase for Overtime Exemptions
July 21, 2021
During the recent 2021-2022 Pennsylvania budget negotiations, Governor Tom Wolf and the state legislature agreed to a compromise. This resulted in additional funding for Pennsylvania’s public schools in exchange for repealing an administrative rule that would have substantially increased the salary threshold needed to qualify as an exempt executive, administrative, and professional (EAP) employee under the Pennsylvania Minimum Wage Act (PMWA). The repeal became law on July 9, 2021.
In October 2020, Pennsylvania’s regulations (see our prior guidance) took effect that substantially increased the salary threshold to qualify as an exempt employee. As noted below, additional increases were to be implemented that would take the minimum salary threshold above the federal minimum salary level:
- $684 per week ($35,568 annually) effective Oct. 3, 2020
- $780 per week ($40,560 annually) effective Oct. 3, 2021
- $875 per week ($45,500 annually) effective Oct. 3, 2022
With the 2020 overtime rule repeal, employers in Pennsylvania are no longer required to review and adjust the salary level of employees who are correctly classified as exempt. The minimum salary threshold requirements will remain the same for the EAP exemptions for both the PMWA and the Fair Labor Standards Act (FLSA), $684 per week or $35,568 annually.
Employers should still regularly review the classification status of their employees. When determining the classification for an employee, the salary threshold is just one requirement of the overtime exemptions. An exempt employee must also perform the job duties outlined in the duties test for the exemption. Determining eligibility for an exemption requires a review of the job description. A job title and/or paying an employee a salary does not automatically make them exempt from overtime.
Please contact Laura Stover with any questions.