Effective January 1, 2020, after a failed attempt to raise the minimum weekly salary for exempt employees to $913 ($47,476 annually), the U.S. Department of Labor issued new regulations increasing the minimum weekly salary for exempt employees from $455 per week to $684 ($35,568 annually). In October 2019, the Pennsylvania Department of Labor (PA DOL) issued Regulations that also raised the minimum weekly salary for exempt employees under the Pennsylvania Minimum Wage Act to $684 per week, but unlike the federal Regulations, the PA DOL Regulations also provided for additional increases.
On October 3, 2021, the minimum weekly salary for exempt executive, administrative and professional employees in Pennsylvania will rise to $780 per week ($40,560 per year). On October 3, 2022, the minimum weekly salary for exempt employees in Pennsylvania will rise again to $875 per week ($45,500 per year). On October 3, 2023, the annual salary threshold will be set at a “rate equal to the weighted average 10th percentile wages for Pennsylvania workers who work in exempt executive, administrative or professional classifications as determined by the Department with advice and consultation by the Minimum Wage Advisory Board and based on an annual wage survey of all worker classifications conducted by the Department.” The salary threshold will then be increased every three years thereafter (October 2026, October 2029, etc.) based on the same formula used to determine the minimum weekly salary in October 2023.
Because the PA DOL Regulations require a higher salary than the federal regulations, employers will have to meet the PA minimum salary if they wish to treat their executive, administrative or professional employees as “Exempt.” Employees whose pay does not equal or exceed the increased minimum weekly salary must be treated as “Non-exempt,” and will have to track the number of hours they work each week and be paid time and a half for all hours they work over 40 in a workweek.
As the minimum weekly salary for exempt employees goes above the federal minimum week salary, it is expected that the PA DOL will increase its enforcement efforts. All employers need to review their compensation structure and job descriptions to determine whether or not the employees they are treating as exempt under the administrative, executive or professional exemptions will meet the new minimum salary threshold and other requirements for those exemptions, and either adjust employee salaries or prepare to treat employees whose salaries fall below the new threshold as non-exempt for overtime purposes.