Salaried restaurant employees earning less than $45,500 annually in Pennsylvania would be entitled to overtime pay by 2022 under new rules issued yesterday by the state’s Department of Labor & Industry.
The new exemption threshold is nearly double the current state level and 28% higher than the new federal trigger that was proposed by the U.S. Department of Labor (DOL) in September.
Pennsylvania authorities said the rule change would make an additional 143,000 residents eligible for time-and-a-half pay when they work more than 40 hours per week, and dash any doubts about the eligibility of 251,000 additional individuals.
Restaurants have often been sued by salaried employees who claim they qualified for overtime pay because they performed the same duties as hourly workers who received time-and-a-half wages. The plaintiffs argued that their work was not managerial or administrative in nature, and hence not subject to an exemption under the so-called duties test.
Officials said the new Pennsylvania regulations clarify those criteria and bring them in line with federal guidelines, which rely more heavily on salary levels to determine eligibility.
An additional 61,000 Pennsylvanians would be entitled to overtime pay under the new federal rules, which are set to take effect Jan. 1. “The Wolf administration does not believe the new U.S. DOL rule truly reflects what Pennsylvanians are being paid,” the state labor department said in announcing the new rules, referring to the administration of Gov. Tom Wolf.
It noted that state overtime regulations had not been updated for four decades.
The new Pennsylvania regulations would be phased in over a three-year period, starting with a threshold of $35,568 on Jan. 1. The trigger level rises to $40,560 a year later, and to $45,500 in 2022.
The increases are still subject to approval by the Independent Regulatory Review Commission, a state watchdog agency.
Pennsylvania joins New York and California in setting an overtime exemption threshold that’s higher than the federal trigger. Colorado is considering a similar change in its regulations.