02 Mar Governor Wolf Announces Plans to Change Overtime Rules
Following the recent federal court injunction blocking of the Obama-era Department of Labor’s (“DOL”) proposed changes to the federal overtime rules, Pennsylvania Governor Tom Wolf has decided to take matters into his own hands. Governor Wolf recently announced plans to change the state’s overtime regulations in a manner similar to the DOL’s blocked overtime rule.
The Governor’s proposal to amend state overtime regulations would only require approval by a five-member board, of which three of the board members are selected by Democrats and two by Republicans. Changing the state overtime regulations allows the Governor to bypass the full state legislative process, making the proposed changes more likely to succeed considering both of Pennsylvania’s current legislative chambers are held by the Republican Party.
Pennsylvania’s current overtime regulations were last amended in 1977 and provide that the minimum salary for an employee to potentially qualify as exempt from overtime is $250 per week. However, because the current federal salary threshold is higher, at $455 per week, or $23,660 per year, the federal figure is the effective overtime salary threshold in Pennsylvania.
The Governor’s office stated that the proposed regulations, which are scheduled to be released for public comment in March, will initially phase in increases to the minimum salary threshold. The Wolf Administration announced that the overtime salary threshold would rise to $610 per week, or $31,720 per year, in January 2020, to $766 per week, or $39,832 per year, in January 2021, and $921 per week, or $47,892 per year, in 2022. Beginning in 2022, the overtime salary threshold would automatically adjust every three years, although the adjustment formula has not yet been announced. The proposed rule changes would also further clarify the duties test for the executive, administrative, and professional exemptions to the overtime requirement.
The proposed overtime rule changes are expected to affect an estimated 460,000 workers in Pennsylvania. As of 2018, over a dozen other states have overtime exemption salary thresholds which are higher than the federal minimum of $455 per week. Although the full details of the overtime rule change proposals have not yet been released, employers should keep an eye on any developments, including the proposed rule change anticipated to be release in March, and the gubernatorial election in November, which could expedite or derail these proposed changes, depending on the results of the election.