Pennsylvania: New Overtime Rule Increases Exempt Salary Threshold

On January 31, 2020, Pennsylvania’s Independent Regulatory Review Commission approved a final regulation that increases the exempt salary threshold, extending overtime eligibility to more workers. The final regulation includes annual increases in 2021 and 2022, with adjustments following every three years thereafter. The regulation will formally go into effect once approved by the state Attorney General.

Following current federal regulations, workers employed in executive, administrative, and professional jobs must earn at least $35,568 per year ($684 per week) to be exempt from overtime pay requirements. Under the new statewide regulation, the minimum salary threshold will increase to $40,560 per year ($780 per week) in 2021 and $45,500 yearly ($875 weekly) in 2022. In 2023, the salary threshold will automatically be adjusted every three years. Up to 10% of the minimum salary threshold may be met by non-discretionary bonuses, incentives, and commissions paid on a quarterly or more frequent basis.

Employers should note that the salary test is only one component of determining whether or not an employee may be classified as exempt. Employers will still need to review each position’s duties to determine if the position qualifies for exemption.

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