Pennsylvania Governor Repeals New Overtime Rules as Part of Budget Deal

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

On June 30, 2021, Pennsylvania Governor Tom Wolf signed an approximately $40 billion state budget package. In exchange for increased funding for public schools in the state budget, Governor Wolf agreed to repeal Pennsylvania’s new overtime regulations, which were set to increase the minimum salary that employers must pay to certain salaried employees to classify them as exempt from overtime requirements under the Pennsylvania Minimum Wage Act of 1968.

Specifically, the regulations would have required employers to pay executive, administrative, and professional (EAP) exemptions salaried workers at a rate of $780 per week (or $40,560 annually)  beginning on October 3, 2021, to retain their exempt status. Most employers are still required to follow the applicable regulations under the federal Fair Labor Standards Act (FLSA), which sets the salary threshold for EAP exempt workers at $684 per week (or $35,568 annually).

House Bill (HB) 336, which was passed as Act No. 70, repealed the regulations. In addition to repealing the increased salary thresholds to qualify for the EAP exemptions, Act No. 70 also repealed the regulations that define the terms “executive,” “administrative,” and “professional.” The Pennsylvania Minimum Wage Act (PMWA) exempts “bona fide executive, administrative, or professional [employees] … as such terms are defined and delimited from time to time by regulations of the secretary.” Section 2215.1 of Act 70 states: “THE REGULATIONS AT 34 PA. CODE §§ 231.82 (RELATING TO EXECUTIVE) 231.83 (RELATING TO ADMINISTRATIVE) AND 231.84 (RELATING TO PROFESSIONAL) ARE ABROGATED.” Those regulations define the terms “executive,” “administrative,” and “professional.” Although the repeal of those regulations makes it unclear which employees qualify for the EAP exemptions in Pennsylvania, the exemptions themselves are still in effect because they are codified in the PMWA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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