For several years we have been providing updates on the Obama-era National Labor Relations Board’s rather employer-unfriendly joint employer standard.  We have yet another. We believe the final episode in this saga should be good news for employers.  We’re just not sure whether the good news will come from the Courts, from the regulatory process, or both.

This may be hard to follow, but stay with us…

To recap, in 2015, the Obama Board issued a decision in Browning-Ferris Industries of California, and vastly expanded the situations in which a franchisor or a source employer could be deemed a joint employer with its franchisee or with a supplier of a contingent workforce.  All that needed to be shown under this new standard was some reserved ability by the franchisor or source employer to potentially control the terms and conditions of the other entity’s employees. To the relief of employers, Browning-Ferris quickly appealed this decision to the United States Court of Appeals for the D.C. Circuit.

As we reported in the Spring of 2017, the Board’s new standard appeared to receive a cool reception from the Court of Appeals during oral argument. We waited and waited, but no opinion came from the Court.

Then, in December 2017, the Trump Board decided Hy-Brand Industrial Contractors, and announced that it would return to the prior standard that required proof of a joint employer’s actual exercise of control over essential employment terms, rather than merely having reserved the right to exercise control. After Hy-Brand was issued, Browning-Ferris was no longer relevant, so the Court of Appeals remanded that appeal back to the Board.  All appeared to be right in the world.

Alas, this return to normalcy was short-lived.  In late February 2018, the Board issued an Order vacating Hy-Brand based on a determination by the Board’s Ethics Official that one of the three Members who participated in the matter should have been disqualified. With that disqualification no Board quorum existed.  So, what next?  The Board asks the Court of Appeals for a “do-over”: please recall Browning-Ferris and issue a decision. Please?!

On April 6, a divided Court of Appeals granted the Board’s request and recalled Browning-Ferris, and just like 2017, we again await that appellate decision.

But hold on.  There’s more.  Yesterday the Board announced that it is considering rulemaking to address the standard for determining joint-employer status. That would be actual regulations, folks. New Board Chair John Ring’s comments accompanying the announcement are telling: “Whether one business is the joint employer of another business’s employees is one of the most critical issues in labor law today. The current uncertainty over the standard to be applied…undermines employers’ willingness to create jobs and expand business opportunities. In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be.”

So, stay tuned for more news.  We know it’s coming.  Just not sure which channel will air it first.

Today, the United States Supreme Court has finally put to rest the issue of whether service advisors are exempt from the overtime compensation requirements of the Fair Labor Standards Act (FLSA).  You may recall an earlier post, discussing the law’s ambiguity in how auto dealers should classify service advisors under the Fair Labor Standards Act (FLSA).  It is an issue that has been before the Supreme Court twice now and a decision to clarify the standard has been much anticipated by auto dealerships across the country.

As a recap, the plaintiffs in Encino Motor Cars were current and former service advisors of a Mercedes-Benz dealership in California.  The service advisors sued the dealership for backpay, alleging that the dealership failed to pay them overtime compensation under the FLSA.  The dealership moved to dismiss the complaint, arguing that the service advisors were exempt from overtime under an FLSA exemption that applies to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements.”

In a 5-4 decision, the Court found that auto service advisors are exempt under the FLSA’s overtime provisions because they are salesmen primarily engaged in servicing automobiles.  Specifically, the Court found that while the term salesman is not defined under the FLSA, it could be defined as “someone who sells goods or services.”  Because service advisors sell customers services for their vehicles, Justice Thomas, authoring the opinion, found that “a service advisor is obviously a ‘salesman.’”

The Court also found that service advisors are primarily engaged in servicing automobiles.  In particular, the court found that they “meet customers; listen to their concerns about their cars; suggest repair and maintenance services; sell new accessories or replacement parts; record service orders; follow up with customers as the services are performed (for instance, if new problems are discovered); and explain the repair and maintenance work when customers return for their vehicles.”  Notably, the Court found that “if you ask the average customer who services his car, the primary, and perhaps only, person he is likely to identify is his service advisor.”  For these reasons, the Court concluded that the service advisors are exempt from overtime compensation.

Please feel free to contact any member of the McNees Wallace & Nurick Labor and Employment Practice Group for assistance with labor and employment law issues and/or if you have any questions regarding this article.

Winter is coming…still.  Some parts of the state are expected to receive possible snow squalls as well as a potential rain/snow storm in the weeks to come.  Weather conditions such as these often create challenges with business closures and employee absences.  With that in mind, employers should consider the following issues that may arise due to inclement weather:

Are employers required to pay employees when the business is closed because of inclement weather?

If weather conditions cause an employer to shut down operations and close, non-exempt employees need not be paid for time they did not work because of the closing. On the other hand, exempt employees must be paid their salary for the week regardless of the business closure.  An employer may require that exempt employees use accrued paid time off (PTO).

Must employees be paid if they do not report to work due to inclement weather when the business is open?

Non-exempt employees need not be paid for the time they are absent from work.  An employer may, however, at its discretion, allow non-exempt employees to use PTO for the absence. Additionally, exempt employees need not be paid for a whole day’s absence due to inclement weather. An exempt employee absent for part of a day may be required to use accrued paid time off.  If the exempt employee has no accrued paid time off, however, his or her salary may not be docked for a partial day absence.

May an employee be disciplined or discharged for failing to report to work due to weather conditions when the business is open?

Generally, an employer may apply its normal attendance policy to weather related absences. However, there is one major exception. Under Pennsylvania law, an employer may not discipline or discharge an employee who fails to report to work due to the closure of the roads in the county of the employer’s place of business or the county of the employee’s residence, if the road closure is the result of a state of emergency. The law does not apply to the following jobs: drivers of emergency vehicles, essential corrections personnel, police, emergency service personnel, hospital and nursing home staffs, pharmacists, essential health care professionals, public utility personnel, employees of radio or television stations engaged in the gathering and dissemination of news, road crews and oil and milk delivery personnel.

Ultimately, to avoid confusion about how weather-related closures and absences will be handled, employers should have a written inclement weather policy in their employee handbooks.  The policy should be clear that employee safety is the main concern.  The policy should also be clear as to the employees’ responsibility to give notice if they cannot make it to work due to bad weather.

Please feel free to contact any member of the McNees Wallace & Nurick Labor and Employment Practice Group for assistance with labor and employment law issues and/or if you have any questions regarding this article.

The Sixth Circuit Court of Appeals has held that discrimination against transgender/LBGTQ employees is discrimination on the basis of sex that violates Title VII of the Civil Rights Act of 1964.  Equal Employment Opportunity Commission v. R.G. & G.R. Harris Funeral Homes, Inc.  Moreover, the court held that the employer could not use the Religious Freedom Restoration Act (RFRA) as a defense to justify such discrimination.

The Plaintiff began work as a funeral director and presented as a male (birth sex).  Eventually, Plaintiff informed the funeral home that she had a gender identity disorder and would transition to female.  Plaintiff was fired when she informed the funeral home she was no longer going to present as a male and would transition and dress as a female.  The funeral home contended that continued employment would harm its business clients and violated the funeral home’s owner’s Christian beliefs.

The federal Equal Employment Opportunity Commission (EEOC) filed suit under Title VII alleging unlawful discrimination on the basis of sex.  The funeral home owner defended the termination under the RFRA.  The RFRA prohibits enforcement of a religiously neutral law that substantially burdens religious exercise, unless the law is the least restrictive way to further a compelling government interest.

The district court held that Plaintiff was discriminated against based upon sex stereotypes, but held the EEOC could not enforce a Title VII claim because it would burden the employer’s exercise of religion in violation of the RFRA.  The court granted summary judgment to the funeral home.

The Sixth Circuit reversed and held that Title VII prohibits discrimination on the basis of LGBTQ status.  Perhaps more importantly, the court held that the funeral home was not entitled to a RFRA defense on the ground that continuing Stephens’ employment would not, as a matter of law, burden the employer’s exercise of religion and, even if it did, the EEOC had established that enforcing Title VII is the least restrictive means of furthering the EEOC’s compelling interest in combating and eradicating sex discrimination.

The first cases addressing the impact of Pennsylvania’s Construction Workplace Misclassification Act (“CWMA”) in the context of the Pennsylvania’s Workers’ Compensation Act, have finally reached the Appellate Courts. The CWMA, which became effective on February 10, 2011, imposes criminal and administrative penalties for the misclassification of employees as “independent contractors” at commercial and residential construction sites in Pennsylvania. “Construction” is broadly defined to include “erection, reconstruction, demolition, alteration, modification, custom fabrication, building assembly, site prep and repair work,” at both residential and commercial sites.

The CWMA details a multi-prong test for determining whether a worker is an “employee” or “independent contractor” for purposes of the Act:

  1. The individual must have written contract to perform such services;
  2. The individual must be free from control or direction over the performance of such services, both by contract and in fact;
  3. The individual must be customarily engaged in an independently established trade, occupation, profession or business, with a business location separate from the location of the person for whom services are being performed; and
  4. The individual must maintain liability insurance during the term of the contract of at least $50,000.

What had been unclear for some time, was whether the formal requirements of the CWMA would supplant the common law definition of “employee” under the Pennsylvania Workers’ Compensation Act, which had focused primarily on a traditional “direction and control test” for distinguishing between independent contractors and employees. This issue was recently addressed in D & R Construction v WCAB. The Commonwealth Court in D & R Construction ruled that, for injuries occurring at construction sites on or after February 10, 2011, the injured worker will be deemed an employee, unless all of the mandatory criteria are in place for a finding of independent contractor status, pursuant to the CWMA. Additionally, all criteria should be given equal weight by the WC Judge, and if any one is absent, the injured worker will be deemed to be an “employee” of the business entity requesting the services.

In light of this ruling and pending clarification by the Pennsylvania Supreme Court, it is critically important that employers utilizing subcontractors at Pennsylvania residential and commercial project sites, make sure that such subcontractors and their employees meet the definition of “independent contractors” under the CWMA and are properly insured for both liability and workers’ compensation. Contractual indemnification language may also be advantageous, in the event of an unexpected construction site injury or claim.

For further information on construction site injuries or guidance, please contact Micah Saul, Denise Elliott, or Paul Clouser in the Lancaster office.

What should a Pennsylvania employer do when an employee seeks workers’ compensation benefits after injuring himself by engaging in risky behavior at work?  Companies may be tempted to take the position that workers’ compensation isn’t available to workers who hurt themselves by intentionally doing dangerous things on the job.  Recently, however, the Commonwealth Court found that Pennsylvania’s Workers’ Compensation Act requires a more nuanced analysis.

In Wilgro Services, Inc. v. WCAB, the claimant was employed as an HVAC technician.  He was assigned to work on air conditioning equipment located on a customer’s roof.  Several co-workers were performing other jobs on the customer’s roof at the same time.  Unfortunately for the claimant, they finished their work before he finished his.  Not realizing that claimant was still working, the other employees removed the ladder that was used to access the roof and left the job site.

The claimant was left stranded on the roof, with no apparent way down.  Eventually, he decided that his best option was to jump to the ground 20 feet below.  His flight of fancy did not end well.  The claimant sustained severe injuries to his feet and back.

The employer denied the claimant’s application for workers’ compensation benefits.  It reasoned that by jumping from the roof, he abandoned his employment.  The employer argued that such conduct was not among the claimant’s job duties and his leap from the roof did nothing to further the company’s interests.  The case eventually made its way to the Commonwealth Court on appeal.

The Commonwealth Court ultimately disagreed with the company’s arguments.  Instead, it determined that leaving the work site was a necessary element of any job, including the claimant’s.  Since a ladder was not readily available and because claimant jumped from the roof in a legitimate (but perhaps foolish) attempt to leave work, the Court found that his actions were not so far removed from his usual employment as to constitute departure from his job duties.  Thus, he was entitled to workers’ compensation benefits.

In reaching its decision, the Commonwealth Court analyzed a similar case that resulted in a different outcome.  In Penn State University v. WCAB, an employee was on his lunch break when he decided to jump down a flight of stairs on a whim for his own amusement.  He too was injured.  Unlike the Wilgro claimant, however, this employee was not entitled to workers’ compensation benefits.

The Commonwealth Court determined that although work injuries that occur during an employee’s on-premises lunch break are generally compensable unless they’re engaged in activity wholly foreign to the employer’s business.  Jumping down a flight of stairs on a lark, the Court held, was an extreme, high-risk action that sufficiently removed the employee from the course and scope of his employment.

So, if an employee is injured when intentionally engaging in high-risk conduct that is not overtly work-related, employers should assess all the facts and circumstances at hand before deciding whether to accept the claim.  In cases where an employee had some work-related reason to perform the dangerous act, they could be entitled to workers’ compensation benefits.

Keeping up with compliance requirements under Pennsylvania and federal laws can be challenging enough; however, for Pennsylvania employers that do business in multiple states, the compliance burden can grow exponentially.  It is expected that we will see little new federal employment legislation over the next few years.  However, the lack of legislative activity in Washington may prompt some state legislatures to place a greater emphasis on employment issues than usual.  It already appears that 2018 will yield a bumper crop of new state employment laws across the nation.  California, as usual, leads the league in new employment laws with a dozen new state employment laws taking effect on January 1, 2018.  Pennsylvania has no new notable employment laws scheduled to take effect; however, as we previously reported, Governor Wolf is aiming to revise overtime regulations under the Pennsylvania Minimum Wage Act.  Several of our neighboring states (New Jersey and West Virginia) have no new employment laws taking effect in 2018 – while New York has a number of new laws on the books.  Here is a very quick look at new state employment laws taking effect in 2018 among the states that border Pennsylvania.

New York

Paid Family Leave – This law is perhaps the most likely to trip up unwary Pennsylvania employers.  Any employer that employs at least one employee in New York for at least 30 days during the calendar year is covered; however, employees are not eligible for benefits until they have worked 26 consecutive weeks (or 175 days of employment for employees who average fewer than 20 hours per week).  Eligible employees will be eligible for 8 weeks of paid family leave in 2018 and this entitlement gradually increases to 12 weeks by 2021.  Pay during leave is based on a fraction of the state’s average weekly wage.  Employers may purchase coverage or self-insure.  Employees may be charged to cover all or part of the premium via payroll deduction.

Workplace Safety (Smoking) – Effective November 22, 2017, employees are now prohibited from vaping in workplaces (and other public places).

Salary History (New York City Ordinance) – Following suit with the City of Philadelphia, the Big Apple now prohibits covered employers from asking applicants about their salary history and from relying on that history unless the information is offered by the applicant voluntarily.  Note: Philadelphia’s Ordinance is currently being challenged in federal court and enforcement of the Ordinance has been stayed pending outcome of this litigation.

Delaware

Salary History – On December 14, 2017, Delaware’s law prohibiting employers from seeking an applicant’s pay history from current or former employers took effect.  Delaware is the third state to pass such legislation, joining California and Massachusetts.  As noted above, several cities (including Philadelphia) have passed ordinances with similar requirements.

Data Breach Notifications – Delaware was one of several states to update its laws governing notifications in the event of data breaches (i.e. identity theft prevention).  The new requirements take effect April 4, 2018.

Maryland

Data Breach Notifications – Like Delaware, Maryland has updated its law governing notifications in the event of data breaches.  The amendments took effect January 1, 2018.

Paid Sick Leave – Maryland’s “Healthy Working Families Act” is scheduled to take effect February 11, 2018; however, recent legislative efforts have been made to delay the effective date until July 2018.  Under the law, employees who have completed 106 days of employment and who work at least 12 hours per week are entitled to accrue sick leave at a rate of 1 hour per 30 hours worked – subject to a 40 hour annual cap.  For employers with 15 or more employees, the sick leave must be paid.  Smaller employers may provide the leave on an unpaid basis.  Covered employers are required to maintain records of accrual and usage for at least three years.

Ohio

Unemployment Insurance – Ohio’s law governing unemployment insurance has been amended effective January 1, 2018 to require employers to submit quarterly wage and contribution reports electronically.

We hope that this quick summary is helpful.  If you have questions, please contact any member of our Labor and Employment Law Practice Group.

In the months since the Harvey Weinstein scandal, there have been countless efforts to raise awareness of workplace sexual harassment.  Actresses donned black dresses at the Golden Globe Awards earlier this month to promote #MeToo and the related Time’s Up initiative.  Last weekend, the music industry’s elite carried white roses at the Grammy Awards to show solidarity for the movement.  These efforts, however, are not limited to celebrities.  Many other initiatives have sprung up in response to workplace sexual harassment issues – including those in our federal and state legislatures.

The most notable legislative development to date was tucked into the federal Tax Cuts and Jobs Act, which President Trump signed into law at the end of December.  The Act adds a provision to the Internal Revenue Code prohibiting tax deductions for payments or settlements “related to sexual harassment or sexual abuse”, and for attorneys’ fees related to such payments or settlements, if the payment is subject to a non-disclosure agreement.  Essentially, it is intended to discourage the use of non-disclosure provisions in settlements of sexual harassment or abuse claims by forcing employers to choose between the tax deduction and confidentiality.  It applies to amounts paid or incurred after December 22, 2017.

The good news is that the provision appears to be limited to settlements involving actual allegations of sexual harassment or abuse, rather than to every settlement involving a general release of claims.  The bad news is that the provision leaves many questions unanswered, including the key question: What constitutes a payment “related to sexual harassment or abuse”?  We anticipate that regulations implementing the Act will address this and other ambiguities in the provision.  Until then, however, employers are well-advised to consult with their financial and legal advisors regarding the applicability of this provision to their individual circumstances.

Employers also should be aware of other legislative initiatives targeting the use of non-disclosure agreements.  An increasing number of states have introduced legislation to prohibit the use of non-disclosure agreements in sexual harassment claims entirely.  In November 2017, Pennsylvania Senator Judy Schwank (D) introduced Senate Bill 999 that would ban non-disclosure provisions in any contract or settlement relating to “sexual misconduct”.  Among other things, the bill would prohibit an agreement not to disclose the name of a person suspected of sexual harassment.  It remains to be seen whether, or in what form, Senate Bill 999 may be passed into law.

In the meantime, beyond staying abreast of the latest legal developments, you might be asking yourself, What can my company do to raise awareness of – and effectively address – issues of sexual harassment (and other types of discriminatory harassment) in the workplace?  Click here to learn more about how you can educate your workforce, update and strengthen your policies and procedures, and effectively investigate reported concerns of harassment in your workplace.  We also will cover lingering questions about sexual harassment issues in the workplace and conducting workplace investigations at McNees’ 28th Annual Labor & Employment Law Seminar on May 11, 2018.  Stay tuned to our blog for details, or contact any member of McNees’ Labor & Employment practice group for more information.

Under the Fair Labor Standards Act (“FLSA”), employers are permitted to pay non-exempt employees a fixed salary to cover straight-time earnings for all hours worked in a week, provided several conditions are met: a) the employee’s hours must fluctuate week to week; b) the employee must be paid the fixed salary in weeks where employee works less than 40 hours; c) there must be a clear understanding that the salary is intended as straight-time compensation for all hours worked; d) the employee’s “regular rate” of pay (calculated by dividing the salary amount by the total weekly hours worked) must be at least the federal minimum wage; and e) for each hour worked in excess of 40 in a week, the employee must be paid an overtime premium of at least ½ the employee’s regular rate for that week.  This pay plan, commonly referred to as the “fluctuating work week” method (“FWW”), was long thought to be lawful in Pennsylvania.  However, in two federal court decisions issued in 2012 and 2014, FWW pay plans were found to violate the Pennsylvania Minimum Wage Act (“PMWA”).  Put another way, a pay practice that is permitted under federal FLSA regulations was found to violate Pennsylvania’s state law governing wages and overtime.

The earlier court decisions striking down FWW pay plans were both authored by federal judges who were interpreting state law.  Some employers have held out hope that the Supreme Court of Pennsylvania might disagree with their interpretation of the PMWA and resurrect FWW pay plans in Pennsylvania.  This issue has not yet reached Pennsylvania’s highest state court.  However, in Chevalier v. General Nutrition Centers, Inc. the Superior Court of Pennsylvania (an intermediate appellate court) considered the status of FWW plans under the PMWA.

In Chevalier, GNC’s store managers and assistant managers were treated as “salaried non-exempt” employees.  That is, they were paid a fixed salary regardless of how many hours they worked.  GNC also paid its managers an overtime premium consistent with the FWW method; i.e., a “regular rate” was calculated for each week (salary divided by total hours worked) and managers were paid ½ of the regular rate as a premium for each overtime hour worked.

Citing the prior federal court decisions referenced above, the plaintiffs argued that GNC’s FWW plan violated the PMWA.  From the plaintiff’s perspective, GNC was required to calculate each manager’s regular rate by dividing his or her weekly salary by 40 hours – and then pay 1 ½ times this rate for each hour worked in excess of 40.

Interestingly, the Superior Court did not side entirely with either party.  The Court found that GNC properly calculated each manager’s regular rate by dividing his or her weekly salary by the total number of hours worked by the manager in the week (and not by 40, as argued by the plaintiffs).  This holding results in a lower regular rate in weeks during which overtime is worked.

However, upon reviewing Section 231.43(b) of PMWA regulations, the Court agreed with the plaintiffs that overtime hours must be paid at a rate of 1 ½ times the regular rate for all hours worked in excess of 40 – or three times more than the ½ time premium that was being paid by GNC to its salaried non-exempt managers.  By way of example, if a non-exempt manager is paid a fixed salary of $1,000 each week, regardless of hours worked – then his or her “regular rate” is $20/hour in a week during which the manager works 50 hours.  Applying the Superior Court’s reasoning, this manager must then be paid $30/hour (1 ½ X $20) for each of the 10 overtime hours worked that week.

Notably, while the Chevalier case was pending, the Superior Court invited the Pennsylvania Department of Labor and Industry (“L&I”) to state its position as to whether the FWW method of calculating overtime pay is permitted under PMWA.  L&I declined to do so, explaining that, by taking a formal position on the issue, the Department would arguably be taking regulatory action without following the required regulatory review process.

In sum, the Chevalier decision makes it clear that employers may realize some wage savings by treating certain employees as “salaried non-exempt.”  However, the PMWA applies a stricter standard for calculating overtime pay than is permitted under FLSA regulations for FWW pay programs.   While Pennsylvania employers may calculate a salaried non-exempt employee’s “regular rate” in the same manner as they would under an FWW, the PMWA requires payment of 1 ½ times that rate for each overtime hour – and not merely payment of a ½ time premium.

Until the Supreme Court of Pennsylvania says otherwise (or the PMWA is amended), employers who employ salaried non-exempt employees in Pennsylvania should be careful to ensure that their overtime pay practices are consistent with the Chevalier decision.  If you have any questions regarding the Chevalier case or any other wage and hour compliance issue, please contact any member of our Labor and Employment Practice Group.

As many will recall, the U.S. Department of Labor issued regulations in May 2016 that would have increased dramatically the minimum salary requirements for the Fair Labor Standards Act’s “white-collar” overtime exemptions.  The 2016 FLSA regulations would have more than doubled the minimum weekly salary requirement for most white-collar overtime exemptions from $455 to $913 and contained a number of additional provisions, the vast majority of which were not viewed favorably by employers.

In November 2016, mere days before those FLSA regulations were set to become law, a federal judge issued an injunction blocking those regulations from taking effect.  Since then, the possibility of those regulations ever taking effect has diminished substantially.

Now, it appears that the changes the 2016 FLSA regulations promised may become a reality for Pennsylvania employers.  Yesterday, Governor Wolf announced that the Pennsylvania Department of Labor and Industry will propose new regulations under the Pennsylvania Minimum Wage Act that will increase the minimum salary requirement for the white-collar overtime exemptions under this state law.

The PMWA is the state-law equivalent of the FLSA.  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.  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, employers must comply with the more pro-employee requirements to avoid liability for unpaid minimum wages or overtime pay.

Governor Wolf announced that the proposed PMWA regulations will raise the salary level to determine overtime eligibility for most white-collar workers from the current FLSA minimum of $23,660 (i.e., $455 per week) to $31,720 (i.e., $610 per week) on January 1, 2020.  If the proposed regulations ultimately take effect, the annual salary threshold will increase to $39,832 (i.e., $766 per week) on January 1, 2021, followed by $47,892 (i.e., $921 per week) in 2022.  Starting in 2022, the salary threshold will update automatically every three years.  (The terms of such automatic increases have not yet been released.)

In addition, unlike the 2016 FLSA regulations, Governor Wolf announced that the new PMWA regulations will “clarify” the duties tests for the white-collar exemptions.  We can only assume that such “clarifications” when issued will not be favorable for employers and will make even more currently exempt employees now eligible for overtime.

The Department of Labor and Industry anticipates releasing the proposed regulations for public comment in March 2018.

For Pennsylvania employers, all of this will feel very familiar.  Should the proposed regulations become final and take effect, employers in Pennsylvania will need to take the following steps:

  • Identify those employees currently treated as exempt from overtime pay and determine whether their salaries will meet the new minimum salary thresholds.
  • For those employees currently treated as exempt who earn less than the new minimum salary thresholds, consider whether to increase their salaries to meet the new salary requirements or convert the employees to non-exempt status and pay them for overtime worked.

Of course, Governor Wolf announced only that proposed regulations containing these changes will be coming in March.  There is no guarantee that the proposed regulations will become final in the same or similar form, and, even if they do, legal challenges may await.  The PA Chamber of Business and Industry already has announced its strong opposition to the proposed changes.  There is also a gubernatorial election in November 2018 that may play a large role in the ultimate fate of these proposed regulations.

Whether and to what extent these changes will become law in 2020 remains to be seen.  We will provide updates on the proposed regulations as the situation warrants.  In the meantime, to quote the late great Yogi Berra, it’s déjà vu all over again.