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By Kathy Speaker MacNett, Esq.

Recently, we alerted you to a change in the salary threshold under the federal Fair Labor Standards Act (“FLSA”) for so-called White-Collar exemptions for Executive, Administrative and Professional employees. Those white-collar exempt employees would not need payment for overtime if they were paid at least $684 a week effective January 1, 2020.

Then the action switched to the state level with a proposed Pennsylvania regulation for the same white-collar employees, which would have escalated the salary threshold far beyond the federal level. Now that proposed Pennsylvania regulation on the salary threshold has been withdrawn in favor of a legislative proposal, SB 79. This bill, in its current form, amends the Pennsylvania Minimum Wage Act (“PMWA”) to increase the minimum wage rate for non-exempt, usually hourly, employees.

Highlights include an increase in the minimum wage rate from its current level of $7.25 per hour to $9.50 by January 1, 2022 in steps:

July 1, 2020 – $8.00
January 1, 2021 – $8.50
July 1, 2021 – $9.00
January 1, 2022 – $9.50

The bill also presently includes language eliminating many differences in interpretation between the PMWA and the FLSA, which should be helpful to employers in eliminating the Compliance Gap between state and federal laws. The bill also would add an exemption for outside salesman, a highly compensated employee, a computer system analyst, computer programmer, software engineer or other similarly skilled work from both minimum wage and overtime. Up to 10% of the salary or fee amount for the salary threshold may result from payment of non-discretionary bonus, incentive or commission.

The bill also contains a provision stating that an employer may not deduct from tips on credit cards, the amount charged by a credit card company for processing the transaction. The employer must pay the employee the tip no later than the next regular payday following the date the customer authorized credit card payment.

SB 79 has already passed the state Senate and is awaiting committee consideration in the Pennsylvania House of Representatives. It is not yet law. If the bill passes the state House, it would take effect 90 days after signature by the Governor.

Bottom Line: This bill contains pro-employee increases in the basic minimum wage, but also includes many provisions favorable to employers, and streamlines the compliance process between federal and state wage and hour laws. Stay tuned to see what happens during consideration by the Pennsylvania House of Representatives.

Kathy Speaker MacNett, Esq.

Kathy Speaker MacNett, Esq.

Kathy Speaker MacNett, Esq. is a Managing Member of SkarlatosZonarich, LLC, concentrating her practice in management-side labor and employment matters. She has advised a large array of public and private sector clients. She can be reached at ksm@skarlatoszonarich.com or (717) 233-1000.

Featured in Harrisburg Commercial Real Estate Report – December 2019