Overtime Rules in Pennsylvania
For informational purposes only.
New overtime rules in the federal Fair Labor Standards Act take effect nationwide Wednesday, January 1, 2020.
- Pennsylvania employers will need to follow both the new federal overtime rules and the overtime requirements of Pennsylvania's Minimum Wage Act.
- Pennsylvania employers must follow the rule that provides the greater benefit to the employee where there are differences between the two laws.
An employee is entitled to at least minimum wage and overtime pay at time and a half for all hours worked over 40 hours per week. However, the federal Fair Labor Standards Act (FLSA) and Pennsylvania's Minimum Wage Act do not require overtime pay for "any employee engaged in a bona-fide executive, administrative, or professional capacity" who is paid on a salaried basis instead of an hourly wage and meets the minimum salary threshold defined in federal and state regulations. (29 U.S.C. § 213a(1), 43 P.S. § 333.105a(5)).
The United States Department of Labor (USDOL) published its revised final regulations concerning its overtime requirements under the FLSA on September 24, 2019. (29 CFR 541).
The new federal regulations took effect on January 1, 2020.
The update to federal regulation includes:
- raising the "standard salary level" from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker); and
- allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level.
Impact on Pennsylvania Employers
Pennsylvania employers must still comply with the overtime requirements of Pennsylvania's Minimum Wage Act (35 P.S. § 333.101 et seq.) and regulations. (34 Pa. Code § 231.1 et seq.). Pennsylvania's existing state requirements are still in effect.
Pennsylvania's current requirements are similar to the federal standards. However, where there are differences, Employers must follow Pennsylvania's regulations even if these rules are more stringent for employers than the revised federal requirement. Federal law (29 USCS § 218) and the new federal rules (29 C.F.R. § 541.4) specifically state that federal law does not affect enforcement of state overtime requirements, such as Pennsylvania's requirements.
The USDOL enforces Federal rules contained in the FLSA and related regulations. The Pennsylvania Department of Labor and Industry (L&I) enforces Pennsylvania's minimum wage requirements contained in the Minimum Wage Act and related regulations.
Differences Between Overtime Requirements
There are three major differences between Pennsylvania and federal requirements for overtime. First, Pennsylvania does not recognize the highly compensated employee exemption which allows employer to avoid paying overtime if an employee earns a certain salary. The revised federal regulations set a threshold for this exemption at $107,432 annually. However, this federal exclusion does not apply to Pennsylvania employees because Pennsylvania law does not recognize this exemption. Therefore, employees earning this salary or above must be paid overtime unless they qualify for an exemption recognized by Pennsylvania law.
Second, the Federal rules do not require overtime for certain computer employees. However, Pennsylvania law does not contain an exemption to overtime for these employees. Accordingly, overtime must be paid to computer employees, if they are unable to qualify for an exemption recognized by Pennsylvania law.
Lastly, Pennsylvania's rule has increased the salary threshold executive, administrative, or professional need to make in order to be exempt from overtime. Pennsylvania's updated overtime salary threshold will be phased in over three steps:
- $684 per week, $35,568 annually, on January 1, 2021 (note: this is the current level required by federal law; it has been in effect since January 1, 2020 per federal regulations);
- $780 per week, $40,560 annually on October 3, 2021; and
- $875 per week, $45,500 annually on October 3, 2022.
Starting in 2023, the salary threshold will adjust automatically based on the average wages of occupations in Pennsylvania that are exempt every three years.
Overtime Posters
Overtime FAQs
Pennsylvania's Overtime Rules were published in the Pennsylvania Bulletin on October 3, 2020 and ensures that the duties for executive, administrative and professional workers align more closely to the federal overtime regulation, which will make it easier for employers to know if a worker is exempt or not.
This FAQ is designed to help answer general questions about the new overtime rule and calculation of overtime.
Accordion
Expand AllClick here for a more accessible versionUnless they are employed in an occupation specifically exempted by the Pennsylvania Minimum Wage Act, employees covered by the Pennsylvania Minimum Wage Act must receive pay for hours worked in excess of 40 in a workweek at a rate not less than one and one-half (1½) times their regular rate of pay. This rate is referred to as "overtime" pay.
Who qualifies for overtime payments under Pennsylvania's overtime rule?
With few exceptions, hourly employees who work more than 40 hours a week must be paid time and a half for all hours over 40.
Most salaried employees who work more than 40 hours per week and earn less than the salary threshold included in this regulation are eligible for overtime regardless of their job duties.
Most salaried employees who do NOT perform executive, administrative, or professional duties are eligible for overtime regardless of how much they are paid.
Salaried employees who perform executive, administrative, or professional duties and make more than the salary threshold per year are NOT eligible for overtime.
Pennsylvania's updated overtime salary threshold will be phased in over three steps:
- $684 per week, $35,568 annually (per federal rule), on October 3, 2020 (note: this is the current level required by federal law; employers have been required to comply with this threshold since January 1, 2020 per federal regulations);
- $780 per week, $40,560 annually on October 3, 2021; and
- $875 per week, $45,500 annually on October 3, 2022.
Starting in 2023 and every three years thereafter, the salary threshold will adjust automatically based on the average wages of executive, administrative and professional occupations in Pennsylvania.
Learn more about PA's overtime rules at www.dli.pa.gov/overtime
What is the "regular rate" of pay?
Generally, an employee's regular rate is the amount that the employee is regularly paid for each hour of work. The regular rate of pay cannot be less than the Pennsylvania minimum wage, which currently is $7.25/hour. When an employee is paid on a non-hourly basis (e.g. piece work, salary), the regular hourly wage rate is found by dividing the total hours worked during the week into the employee's total earnings. For example, an employee who has piece rate earnings of $500 in a workweek for 40 hours work has a regular rate of $12.50 per hour. $500.00 total wages ÷ 40 Hours = $12.50 Per Hour Regular Rate.
May bonuses be used to satisfy part of the new standard salary level test?
Yes, up to 10 percent of the salary threshold can be satisfied by nondiscretionary bonuses, incentives, and commissions paid on an annual basis. The Department recognizes that some businesses pay significantly larger bonuses; where larger bonuses are paid, however, the amount attributable toward the EAP standard salary level is capped at 10 percent of the required salary amount.
The intent of the Department in allowing a certain percentage of salary to be payable by bonus or other incentive payment was meant to reflect the way that certain industries, business models, and/or occupations structure their compensation package to employees.
Can an employee be required to work overtime?
Yes, employers are able to dictate the time of day and hours employees work.
Can an employee be required to waive their right to receive overtime?
No. An announcement by an employer that no overtime work will be permitted, or that only overtime work authorized in advance will be paid, does not cancel the employer's obligation to pay overtime to workers for hours worked beyond 40 hours per week.
Can an employer refuse to pay an employee for overtime for hours that have they have worked?
No, unless if the employee qualifies for an exception from overtime under Pennsylvania’s Minimum Wage Act.
What can an employee do to ensure they receive the overtime pay they are owed?
Employees are encouraged to speak with their employer about their right to overtime under Pennsylvania's Minimum Wage Act.
If an employer refuses to pay the overtime, employees can either file a complaint with the Pennsylvania Bureau of Labor Law Compliance, or file a lawsuit in court against their employer to recover the lost wages.
When is a salaried employee considered exempt from the overtime pay requirements?
To be exempt from the overtime requirement, an employee generally must meet all of the following conditions:
- be salaried, meaning that they are paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the "salary basis test");
- primarily perform executive, administrative, or professional duties or perform the duties of one of the other exempted occupations as defined in the Minimum Wage Act regulations (the "duties test"). Learn more about the duties tests for exempt employees by visiting the Minimum Wage Act Exemption for Executive, Administrative and Professional Employees website.
- be paid at least a weekly salary specified by Minimum Wage Act regulations which as of January 1, 2020 is $684 per week, the equivalent of $35,568 annually for a full-year worker (the "salary level test"); and
Pennsylvania's overtime salary threshold will be updated on the following timeline:
- $684 per week, $35,568 annually, on October 3, 2020 (note: this is the current level required by federal law; employers have been required to comply with this threshold since January 1, 2020 per federal regulations);
- $780 per week, $40,560 annually on October 3, 2021; and
- $875 per week, $45,500 annually on October 3, 2022.
Starting in 2023 and every 3 years thereafter, the salary threshold will adjust automatically based on the average wages of executive, administration and professional occupations in Pennsylvania.
Information
The USDOL provides information on its overtime requirements. (www.dol.gov). However, L&I will provide additional notification and conduct other outreach efforts to assure that employers are complying with Pennsylvania's overtime requirements. L&I’s Bureau of Labor Law Compliance enforces Pennsylvania’ wage laws, including the Minimum Wage Act. Copies of the Minimum Wage Act and regulations, information on overtime and complaint forms may be obtained from the following:
Bureau of Labor Law Compliance
1301 Labor & Industry Building
651 Boas Street
Harrisburg, PA 17121
Tel. 717-787-4671 or 1-800-932-0665
Website: www.dli.pa.gov