Exemption from overtime is dependent on two factors: an employee’s salary and an employee’s duties. Effective October 3, 2020, new regulations issued by Pennsylvania’s Department of Labor and Industry took effect. These regulations began expanding eligibility for overtime based on salary and updating the task-related tests for determining whether an employee is exempt from overtime.

Salary Threshold. The U.S. Department of Labor has already updated the salary threshold for exemption effective January 1, 2020, and the initial step of Pennsylvania’s three-step process matches that update. However, there will be increases in succeeding years as well, as shown below:

• $684 per week, $35,568 annually (per federal rule), on January 1, 2020;
• $780 per week, $40,560 annually on October 3, 2021; and
• $875 per week, $45,500 annually on October 3, 2022.

The salary threshold will adjust automatically “at a rate equal to the weighted average 10th percentile wages for Pennsylvania workers who work in exempt executive, administrative or professional classifications” starting in 2023. The Department will publish the newly adjusted rates at least 30 days prior to the effective date on its website and in the Pennsylvania Bulletin. Up to 10% of the salary threshold can comprise non-discretionary bonuses, incentives, and commissions paid annually, quarterly, or more frequently.

Employees earning less than these amounts as of the dates shown above will generally not be exempt from overtime.

Duties Test. The new regulations bring the duties tests more in line with the already-established federal tests for Executive, Administrative, and Professional exemptions from overtime. For example, the new rules remove the requirement that exempt employees “customarily and regularly” exercise certain executive or managerial duties. Instead, their positions must “include” the exercise of such duties, consistent with the federal regulations.

There are still variations between Pennsylvania and the federal duties tests. For example, Pennsylvania does not include specific exemptions for academic administrators or professionals, computer professionals, or “highly-compensated” employees, among others, and maintains a different definition of outside sales professionals.