Major developments in the area of wage and hour law are happening right now in Harrisburg and happening quickly. These developments may have a significant impact on Pennsylvania employers in 2020 and beyond.
On November 20, the Pennsylvania Senate passed Senate Bill 79 by a vote of 42-7. This bill would make substantial amendments to the Pennsylvania Minimum Wage Act (PMWA).
Currently, the minimum wage rate under both the federal Fair Labor Standards Act (FLSA) and the PMWA is $7.25 per hour. Under the Senate bill, the hourly minimum wage rate under the PMWA would increase as follows:
- $8.00 effective July 1, 2020
- $8.50 effective January 1, 2021
- $9.00 effective July 1, 2021
- $9.50 effective January 1, 2022
In exchange for these increases to the minimum wage rate, Pennsylvania employers and their allies in the Senate were able to secure some welcome compliance simplification and relief. Specifically, the Senate bill would:
- Amend the PMWA to state that its minimum wage and overtime requirements must be applied in the same manner as the FLSA, except when a higher standard is specified under the PMWA or its regulations. This change would be significant for employers, as it would eliminate much ambiguity and the differences between the PMWA and FLSA on issues like overtime exemption requirements. In other words, Pennsylvania employers would have one set of requirements to follow in this area, rather than two often vague and conflicting sets of rules. This amendment would make all overtime exemptions currently available under the FLSA now also apply to the PMWA. Additionally, it would provide clear guidance that, in areas where the PMWA and its regulations are silent, federal law would apply and provide the necessary guidance for compliance. This change would be particularly timely, as the Pennsylvania Supreme Court issued a decision (coincidentally) on November 20 holding that the fluctuating work week method of paying salaried non-exempt employees, which is expressly permitted by the FLSA’s regulations, violates the PMWA, because the PMWA’s regulation do not mention or address the fluctuating work week method. Conflicts and uncertainty like this due to silence in the PMWA and its regulations would go away if the Senate bill becomes law.
- Preclude the Pennsylvania Department of Labor and Industry (DLI) from making any changes to the minimum salary requirements for the PMWA’s white-collar overtime exemptions until January 1, 2023. As noted previously in this blog, DLI submitted final regulations on October 17, 2019, that would have dramatically increased the minimum salary requirements for the PMWA’s white-collar exemptions well in excess of the minimum salary requirements for the same exemptions under the FLSA.
As for those new PMWA regulations, Pennsylvania’s Independent Regulatory Review Commission (IRRC) was set to consider and rule upon them at a public meeting on November 21. On the morning of November 21, the Wolf Administration formally withdrew the new regulations as part of the negotiations that led to bipartisan support for and passage of the Senate bill. With its withdrawal, the Wolf Administration made clear that, if the Senate bill is not passed by the Pennsylvania House of Representatives, it intended to resubmit the regulations for final approval.
That is a lot of legislative and regulatory action in a mere 24 hours!
The Senate bill is a compromise measure, with Governor Wolf able to secure a long-sought minimum wage increase and the Republican-controlled Senate able to block the PMWA minimum salary regulations from taking effect and obtain a long-desired alignment of the requirements of the FLSA and PMWA.
The bill now moves to the Pennsylvania House for consideration. Like the Senate, the House is Republican-controlled. Whether the bill will be passed by the House in the same or similar form remains to be seen. However, remarkable progress has been made in a very short time.