Updated Minimum Wage Act Regulations Protecting Tipped Workers Approved

The Pennsylvania Department of Labor & Industry announced regulatory changes to a decades-old law governing Pennsylvania’s minimum wage rules. The change is updating how employers pay tipped workers and ensuring that salaried employees with fluctuating schedules are appropriately compensated for overtime.

The final-form regulation covers five primary areas for tipped workers, including:

• An update to the definition of “tipped employee,” adjusted for inflation since 1977, that increases the amount in tips an employee must receive monthly from $30 to $135 before an employer can reduce an employee’s hourly wage from $7.25 per hour to as low as $2.83 per hour.
  
  
• Alignment with new federal regulations codifying long-standing policies that govern employer tip credits to allow employers to take a tip credit under certain conditions, including that the employee spends at least 80 percent of their time on duties that directly generate tips, commonly known as the 80/20 rule.
  
  
• Alignment with updated federal regulations that allow for tip pooling among employees but in most cases excluding managers, supervisors, and business owners.
  
  
• A prohibition on employers deducting credit card and other non-cash payment processing transaction fees from an employee’s tip included with a credit card payment or other non-cash method of payment.
  
  
• A requirement for employers to clarify that automatic service charges are not gratuities for tipped employees. 

The regulations also update the definition of “regular rate” for salaried employees whose hours vary from week-to-week to note that overtime is to be calculated based on a 40-hour workweek.

The Department of Labor and Industry will host webinars to educate business owners and affiliated parties on the new regulations and allow them to ask questions. These webinars are scheduled to take place at 10 am on Tuesday, July 12, and at 10 am on Tuesday, July 19. Information on these webinars and how to register will be posted on the Department of Labor and Industry’s website:

You can click here to find out more information on how to register for one of the webinars.