Pennsylvania Repeals Salary Increase for Overtime Exemptions

Posted August 27, 2021

On July 9, 2021, the Pennsylvania General Assembly repealed an overtime rule that would have increased the minimum salary threshold for exempt executive, administrative and professional (EAP) employees beginning in October 2021.

The Repealed Regulations

The Pennsylvania Minimum Wage Act (PMWA) provides an exemption from overtime pay for EAP employees. To qualify for these exemptions, EAP employees must meet salary level and job duty requirements.

On Oct. 2, 2020, the Pennsylvania Department of Labor and Industry (DLI) announced an overtime rule that would have increased the salary threshold for EAP employees to $780 per week ($40,560 annually) on Oct. 3, 2021, and $875 per week ($45,500 annually) on Oct. 3, 2022. In addition, starting in 2023, the salary level would have adjusted automatically every three years.

Impact on Employers

Now that the 2020 overtime rule has been repealed, employers in Pennsylvania are no longer required to review and adjust the salary level of employees who currently meet EAP exemption criteria. This means that minimum salary threshold requirements will remain the same for the EAP exemptions for both the PMWA and the federal Fair Labor Standards Act (FLSA)—$684 per week or $35,568 annually.

However, employers should still regularly review their employee classification status. Being paid a salary on its own does not automatically qualify employees for an EAP exemption. Employees must satisfy every term and condition of an exemption for the exemption to apply. Similarly, actual job responsibilities, rather than a job title, determine an employee’s exemption status.

Overtime Exemptions

Salary Test
To qualify for the EAP exemptions from overtime requirements, an employee must receive a salary that is at least equal to the state salary level.

Duties Test
An individual’s actual responsibilities (not job title) determine whether he or she meets the state’s definition of an EAP employee.

Minimum salary threshold requirements will remain the same for the EAP exemptions for both the PMWA and the FLSA.