PA Chamber Gives Overview of Overtime Eligibility Rule
Source: PA Chamber of Business and Industry
The U.S. Department of Labor issued a rule last week that could have significant implications for how employers in Pennsylvania comply with overtime requirements.
The rule, announced last Tuesday, increases the salary threshold required to exempt workers from overtime pay. The federal Fair Labor Standards Act requires employers to pay overtime, or time and half, to eligible workers for any hours worked beyond 40 in a week.
Specifically, the rule increases the required minimum salary level for an overtime-exempt employee from $35,600 to $43,900 effective July 1, 2024, and then to $58,700 by the beginning of 2025. The rule also provides for the automatic increase of this threshold every three years based on wage data.
According to the White House, this rule is expected to expand overtime eligibility to an additional four million people by January 1, 2025, although a legal challenge is likely forthcoming.
Previous attempts to expand overtime eligibility were defeated by legal challenges motivated by pushback from employers and some impacted employees. Many employers who cannot afford the costs associated with paying overtime are forced to convert salaried employees to hourly status, in which employees must clock in and out to track their time and ensure they do not exceed 40 hours in a week.
In 2016, the Obama administration proposed a similarly significant expansion which was struck down by an Obama-appointed federal judge following a lawsuit filed by the U.S. Chamber. Additionally, the PA Chamber led a successful effort in 2020 to repeal a Pennsylvania-specific overtime expansion proposed by then-Gov. Tom Wolf.
To access the final rule, please click here.
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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of BusinessTM.