This repeal not only wipes out the scheduled increases, it also eliminates the entire regulatory framework for the white collar exemptions under the PMWA.

Pursuant to a final rule published by the Pennsylvania Department of Labor & Industry (DLI) in October 2020, the weekly minimum salary required to qualify for the white collar (executive, administrative and professional) exemptions under the Pennsylvania Minimum Wage Act (PMWA) was set to increase significantly in October 2021 and again in October 2022, with further annual adjustments thereafter. However, in an unexpected twist during negotiations on the 2021-2022 state budget, Governor Tom Wolf agreed to the Legislature’s repeal of this final rule, effective September 7, 2021. This repeal not only wipes out the scheduled increases, it also eliminates the entire regulatory framework for the white collar exemptions under the PMWA.

As we previously reported, the DLI’s final rule increasing the minimum weekly salary took effect October 3, 2020, setting the following schedule of increases: $684 per week ($35,568 annually, the same as the current minimum salary threshold under the Fair Labor Standards Act (FLSA)) on October 3, 2020; $780 per week ($40,560 annually) on October 3, 2021; and $875 per week ($45,500 annually) on October 3, 2022. These now-repealed regulations also prescribed automatic adjustments starting in October 2023.

The repeal of the scheduled increases is welcome news to employers as it eliminates the anticipated higher cost of maintaining white collar exempt status for some employees in Pennsylvania. Notwithstanding the repeal of the entire regulatory framework, however, Pennsylvania will still recognize these exemptions because the PMWA statute expressly provides that bona fide executive, administrative and professional employees are exempt from its overtime requirements. Going forward, Pennsylvania courts are likely to interpret the PMWA white collar exemptions in accordance with the standards applicable to the corresponding FLSA exemptions.

What This Means for Employers

Pennsylvania employers who had been planning for substantial increases to the minimum salary threshold in 2021 and 2022, and annual adjustments thereafter, can breathe a sigh of relief, as those changes will not take effect. For now, the minimum salary threshold for the executive, administrative and professional exemptions from overtime under both the PMWA and the FLSA will remain at $684 per week ($35,568 annually), and the duties test for each exemption under the PMWA likely will track interpretation of the corresponding exemption under the FLSA.

As with employers across the country, however, Pennsylvania employers will need to remain vigilant in light of an anticipated uptick in U.S. Department of Labor wage-and-hour investigations, as well as the possibility that the department will promulgate regulations further increasing the minimum salary threshold for the FLSA’s white collar exemptions.

For More Information

If you have any questions about this Alert, please contact Christopher D. Durham, Natalie F. (Hrubos) Bare, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.