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Budget Compromise Includes Abrogation of PMWA Exemption Increases

The recently negotiated state budget compromise between Governor Wolf and the legislature includes a pleasant surprise for employers.  Accompanying the Budget Bill through the legislature was an Administrative Code Bill containing a repeal of Pennsylvania’s Minimum Wage Act (“PMWA”) overtime exemption regulations.  Both Bills were presented to the Governor on June 28th, and he has indicated he will sign them. 

In October 2020 the Pennsylvania Department of Labor & Industry amended the PMWA regulations, increasing the minimum salary requirement that an employee must receive to fit within a “white collar” exemption to overtime pay (executive, administrative, or professional exemptions).  The 2020 increase moved the Pennsylvania exempt amount to $684 weekly salary (or $35,568 per year), which was the same exempt amount under Federal Law pursuant to the Fair Labor Standards Act.  However, the Pennsylvania regulations provided for increases to the exempt amount in October 2021 (to $780 weekly salary) and October 2022 (to $875 weekly salary), as well as automatic three-year minimum salary adjustments thereafter beginning in 2023.  So, under that regulatory scheme, each year the amount that employers would need to pay employees to avoid the requirement of paying time and a half for hours worked in excess of forty hours in a week was increasing quickly each year. 

Section 2215.1 of the Administrative Bill “abrogates” the regulations that increase the exemption amount for the executive, administrative, and professional exemptions.  It remains to be seen whether the repeal will be prospective, impacting only the planned changes from October 2021 forward, or if the repeal will retrospectively capture the increase of the PMWA exempt amount to $684 back in October 2020. 

We will monitor the Department of Labor & Industry for clarifying regulations and guidance.

If you have any questions about the changes to the exempt amount under the PMWA, please contact a MacDonald Illig attorney.