PA Department of Labor and Industry Expected to Announce Next Steps in Proposed Overtime Eligibility Changes This Fall

From PA Chamber of Business & Industry

Following feedback from the state’s Independent Regulatory Review Commission and stakeholders, the Pennsylvania Department of Labor and Industry is expected to indicate sometime this fall how they intend to proceed with potential proposed changes to the state’s overtime eligibility rules.

In 2018, the PA Department of Labor and Industry proposed new rules related to employee eligibility for overtime pay, including doubling the minimum salary threshold for exemption and requiring regular increases. The PA Chamber, along with hundreds of other employers and advocates, submitted comments to IRRC expressing concerns, and ultimately IRRC issued its own comments with a significant number of questions and suggestions to which the Department must respond in a subsequent filing. Among IRRC’s directives to the Department was more robust stakeholder outreach and in May and June of this year, the Department conducted a series of employer roundtable meetings throughout Pennsylvania. 

When President Obama proposed similar changes to the federal rule in 2015, the response from employers was swift and deeply negative, particularly among small businesses, nonprofit organizations, higher education institutions and the health service industry, among others. Employers not only described significant increases to the cost of providing services or doing businesses, but also the reality that this dramatic change would damage workplace culture and morale, as employees would have to be shifted from earning a salary to being paid by the hour. This transition typically requires employees to start clocking in and out, along with more burdensome record-keeping, less flexibility, a rigid work schedule and fewer training opportunities and benefits.

In February 2019, the U.S. Department of Labor released a new proposal to update overtime eligibility standards, which includes raising the salary threshold for exempt status but to a level considered less disruptive.