Overtime Eligibility Part of State Minimum Wage Negotiations

Governor Tom Wolf is expected to pull his plan to increase the threshold for overtime eligibility if the legislature passes an increase in Pennsylvania’s minimum wage. On Monday, Nov. 18, the Senate Labor & Industry unanimously advanced a bill that would gradually increase the minimum wage to $9.50 an hour by Jan. 1, 2022. This would be a compromise from the $12 rate Wolf has been calling for since he took office.

Senate Bill 79 would increase Pennsylvania’s minimum wage from the current federal level of $7.25 to $8.00 an hour beginning July 1, 2020, then to $8.50 beginning Jan. 1, 2021, $9.00 beginning July 1, 2021, and $9.50 beginning Jan. 1, 2022, with no escalator beyond that. The legislation does not change the application of the tipped wage.

In exchange for the increase, the Governor is expected to drop his plan to increase the overtime eligibility threshold from the current level of $23,660 to $45,500 in three years. A new federal threshold of $35,568 is already scheduled to take effect Jan. 1. The Chamber’s Board of Directors voted to oppose the Governor’s proposal, as additional increases as the state level would create an excessive burden on businesses and inconsistency for employers that operate in multiple states.

While the Senate is expected to approve the minimum wage proposal, House leadership has not indicated support. The PA Chamber of Business and Industry is not supporting the legislation, but president Gene Barr feels that a modest increase in the minimum wage is an appropriate trade to avoid a dramatic increase in the overtime threshold which is expected to have significantly more negative impacts on employers and employees.