Compromise Overtime, Minimum Wage Bill Passes State Senate

From PA Chamber of Business & Industry

Legislation passed the Senate on Nov. 20 which would incrementally increase Pennsylvania’s minimum wage rate from $7.25 an hour to $9.50 by 2022, in exchange for Governor Wolf rescinding a plan to dramatically increase the threshold for overtime eligibility beyond the federal level. Senate Bill 79 was approved by a 42-7 vote. Senator Gordner voted in favor of the bill.

The PA Chamber has strenuously opposed the Administration’s proposal to greatly expand the population of employees eligible for overtime pay, or time-and-half for any hours worked over 40 in a week. Specifically, the proposed rule would nearly double the salary level over which employees may potentially qualify for a so-called “white collar” exemption. The PA Chamber has been a leading voice against this proposal, which has been strongly opposed by many sectors of the employer community – particularly nonprofits, educational institutions and small businesses that cannot afford such a dramatic expansion and would be forced to convert salaried employees into hourly positions so hours can be closely monitored and overtime avoided. The Board of the Columbia Montour Chamber also recently restated its opposition to the plan. The bill also includes important overtime regulatory reform long sought by the PA Chamber to better align federal and state overtime laws and help employers comply with the law.

While the PA Chamber remains concerned with the negative employment impacts of a mandatory increase to what are usually entry-level wages, the compromise bill’s gradual increase to $9.50 has been structured in a way to help mitigate the negative impacts and is certainly more reasonable than previous proposals.  Senate Bill 79 notably does not include an increase to or elimination of Pennsylvania’s tipped wage system or a requirement that the minimum wage automatically increase every year.

The PA Chamber’s position on S.B. 79 was mentioned in several news articles that covered legislative action on the compromise.  A Pittsburgh Post-Gazette article states that the PA Chamber views the bill as an acceptable tradeoff for Gov. Wolf dropping the overtime eligibility expansion; with Government Affairs Director Alex Halper saying, “Overall, it’s a compromise that we’re not opposing … It [the proposed overtime eligibility rule change] was a significant concern for many employers and stopping it has been a top priority for us.”  Another article in the Associated Press noted that while the PA Chamber has long opposed an increase in the minimum wage, the organization “has backed a compromise on raising minimum wage as the lesser of two evils.”

The bill now awaits consideration by the state House, where its fate is uncertain.