Background
On October 2, 2020, the Pennsylvania Department of Labor and Industry (DLI) announced that a new overtime rule would take effect as of October 3, 2020. This new overtime rule increases the salary threshold that must be satisfied for executive, administrative, and professional (EAP) employees to qualify for an overtime wage payment exemption.
Summary
What are the EAP Exemptions?
The Pennsylvania Minimum Wage Act gives employers an exemption from overtime pay for EAP employees. To qualify for these exemptions, employees must meet certain tests regarding their job duties and salary level.
Effective October 3, 2020, the minimum salary required for the state Wage Act EAP Overtime Exemptions will match the level that is required for EAP overtime exemptions under the federal Fair Labor Standards Act: $684 per week ($35,568 annually). This means that the state salary levels will increase to:
- $780 per week ($40,560 annually) on October 3, 2021; and
- $875 per week ($45,500 annually) on October 3, 2022
In addition, starting in 2023, the salary level will adjust automatically every three years. This new overtime rule allows up to 10% of these thresholds to be satisfied by nondiscretionary bonuses, incentives, and commissions that are paid on a frequent basis, annually or quarterly.
Overtime Exemptions and Compliance
Being paid a salary alone doesn’t qualify employees for the EAP exemption. Employees must fulfill the terms and conditions of every exemption that applies. Similarly, job responsibilities, not job title, determine an employee’s exemption status.
Employees who do not qualify for these exemptions are:
- Bookkeepers
- Social workers
- Case managers
- Advocates for individuals with disabilities
- Secretaries
- Help desk support specialists
- Inspectors
- Medical coders
- Mortgage loan officers
- Nurses
Examples of Employees Who May Meet the Exemptions
Though job titles do not qualify an employee for the exemptions, below are some examples of jobs that may qualify an employee for the exemptions.
For the Executive exemption, the following jobs may meet the exemptions:
- CEOs
- CFOs
- Human Resources directors
- Bank branch managers
- Office managers
For the Administrative exemption, the following jobs may meet the exemptions:
- Academic advisors
- Consultants
- Insurance claim adjusters
- Purchasing agents
For the Professional exemption, the following jobs may meet the exemptions:
- CPAs
- Attorneys
- Doctors
- Architects
- Engineers
- Authors
- Cartoonists
- Musicians
Please note: Each exemption has its own qualifying criteria that must be met. It is important to review the criteria carefully before speaking with any employees. In addition, please be clear that job titles do not determine exemption status.
Employers Next Steps
- Employers should make sure each employee is classified properly and correct any misclassifications.
- If you are a Full-Service or Virtual HR client and would like our assistance with reviewing employee classification status or taking appropriate steps for misclassified employees, please email us.
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This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable laws in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this content, please contact HR Knowledge at 508.339.1300 or email us.
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