It has been more than two years since the Pennsylvania Department of Labor and Industry (DLI) proposed new regulations under the Pennsylvania Minimum Wage Act (PMWA). The revision aims to increase the minimum salary requirement significantly for the white-collar overtime exemptions under this law.

And just last month, the regulations were published in their final form. Here are the basic things that you should know about the changes and the Act itself.

What is the Pennsylvania Minimum Wage Act (PMWA) and how does it differ from the Fair Labor Standards Act?

The PMWA is the state-law equivalent of the federal Fair Labor Standards Act (FLSA).  The PMWA’s requirements apply to essentially all employers in Pennsylvania.  The PMWA and FLSA both place minimum wage and overtime pay obligations on Pennsylvania employers.  While the laws’ requirements are similar, they are not identical.

Which between the PMWA and the FLSA should employers in Pennsylvania follow?

Employers in Pennsylvania must meet the requirements of both laws to ensure compliance.  In areas where one law is more favorable to employees than the other, Pennsylvania employers must comply with the more employee-friendly requirements to avoid liability for unpaid minimum wages or overtime pay.

MAIN POINT: The DLI’s new overtime exemption regulations increase the minimum salary requirement for the PMWA’s white-collar overtime exemptions as follows:

• $684 per week ($35,568 annually) on October 3, 2020 (note: this is the current level required by the FLSA and has been in effect since January 1, 2020);
• $780 per week ($40,560 annually) on October 3, 2021; and
• $875 per week ($45,500 annually) on October 3, 2022.

 The salary threshold will adjust automatically to an amount equal to the 10th percentile of all Pennsylvania workers who work in salaried exempt positions by year 2023.

What does this changes mean for Pennsylvania employers?

For the next year, the white-collar exemptions’ minimum salary requirements under the PMWA and FLSA are the same

However, starting on October 3, 2021, the minimum salary requirements for the PMWA’s white-collar exemptions will increase significantly to $780 per week ($40,560 annually). Meaning, any employee classified as exempt under a white-collar exemption that has a minimum salary requirement who earns less than that amount will need to receive a salary increase to at least meet this amount or be reclassified as non-exempt (and made eligible for overtime pay) going forward.

Important notes for Pennsylvania employers:

They must ensure compliance with federal and state legal requirements for minimum wage and overtime exemption classifications or face the risks of non-compliance in the form of costly class-based litigation and government agency investigations.

For starters, they should be posting the Pennsylvania and Federal Labor Law Poster to inform their employees of the new minimum wage and overtime exemption classifications

They should be aware of the new increased minimum salary requirements that will take effect in October 2021 and beyond and ensure they have a strategy to address these requirements for affected employees, especially that significant increases will also occur in 2022 and 2023.