Pennsylvania Overtime Rule Repealed in 2021–22 State Budget

As we reported in Monday’s Budget Overview Alert, the PA General Assembly and the Governor came to an agreement to repeal the Governor’s PA Overtime Rule. As you may recall, RCPA was part of a wide-ranging coalition headed up by the PA Chamber of Commerce and Industry. The Coalition sought to halt the enactment of this onerous rule. The PA Overtime Rule became effective on January 1, 2021, and implementation would have begun in October.

Prior to its repeal, health and human service providers for the past six-months and during the height of the COVID-19 pandemic had to plan to comply with both the Federal and PA Overtime Rules. Under the PA Overtime Rule, RCPA members had to plan for:

• Raising their employee’s salary threshold on October 3, 2021. In October 2021, salaried workers earning $40,560/yr, or about $780/week, would have needed to receive a salary increase to at least this amount or be classified as non-exempt;
• There would have been another increase on October 3, 2022. In October 2022, the employee salary threshold would have been raised to $45,500/yr, or about $875/week;
• Plan for another automatic increase in October 2023 and every three years thereafter (i.e. after 2023, the next increase will occur in 2026); and
• The employer would still have to show the employee still met both the salary test and the duties test to qualify as exempt.

If you recall, the Federal Department of Labor published its final rule on Friday, September 27, 2019. The Federal rule:

• Raised the salary threshold from the current $23,660 ($455/week) to $35,568 ($684/week);
• Became effective 1-1-2020;
• Did not automatically update or change the duties test; and
• Allowed nondiscretionary bonuses, incentive payments, and commissions to satisfy up to 10 percent of the salary requirement.

RCPA applauds the General Assembly and the Governor for repealing this duplicative and unnecessary rule.

If you have any questions, please contact Jack Phillips, Director of Government Affairs.