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Pennsylvania Increases Minimum Salary Threshold to Avoid Overtime Compensation For White Collar Workers


At the end of January, the Pennsylvania Independent Regulatory Review Commission adopted an amendment to increase the minimum salary threshold required to avoid overtime compensation for Executive, Administrative, and/or Professional workers ("EAP workers") in the state.

As some readers are likely aware, the Fair Labor Standards Act requires employees to be paid overtime for working more than 40 hours in a week.  However, there are several groups of employees that are exempt from this requirement, such as some white collar workers.  However, in order for this exemption to apply, for instance to EAP workers, employers must establish that the employees perform certain executive, administrative, or professional duties and that the employees receive a minimum weekly salary.  (Effective January 1st of this year, the minimum salary threshold went to $684/week or $35,658/annually.)

Under amendment approved earlier this year, the new minimum salary threshold is $684/week or $35,568/annually for employees in Pennsylvania.  Readers might recall that this mirrors the Labor Department's previously announced minimum salary threshold, stating that EAP workers are entitled to overtime pay unless they make $684/week or $35,568/annually.  However, there is a big difference between the Labor Department's version and the one that will take effect in Pennsylvania:  Beginning in 2021, the minimum salary threshold in Pennsylvania will rise to $780/week or $40,560/annually, and in 2022 to $875/week or $45,500/annually.  Subsequent increases could take place every three years thereafter, at a rate equal to the 10th percentile of Pennsylvania workers in the exempt EAP classification.  (The Labor Department's minimum salary threshold does not provide for future adjustments.)

Employers and employees alike in the state should take note of these changes.  After all, 2021 will be here before you know it.



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