UPDATE: Aug. 11, 2021: Pennsylvania will not increase its salary threshold as planned. The state's legislature voided the relevant regulations in a budget package adopted July 9.

Dive Brief:

• Pennsylvania will increase its salary threshold in stages, eventually hitting $875 a week ($45,500 annually) according to an Oct. 3 announcement.
• The state also changed its duties tests for executive, administrative and professional workers to more closely align with those found in the Fair Labor Standards Act (FLSA), the state's Department of Labor & Industry said in a statement. The changes are expected to expand eligibility for overtime pay to 143,000 people.
• Pennsylvania's threshold first increased to $684 a week ($35,568 a year) in line with the new federal rules that went into effect on Jan. 1, 2020. It will increase to $780 per week ($40,560 annually) on October 3, 2021, and again to $875 per week ($45,500 a year) on Oct. 3, 2022. Starting in 2023, the threshold will adjust automatically every three years. Up to 10% of the salary threshold may be satisfied by nondiscretionary bonuses, incentives, and commissions that are paid annually, quarterly or "more frequently," the statement said.

Dive Insight:

The FLSA requires that covered workers be paid time and one-half their regular rate for all hours worked over 40 in a workweek unless an exemption applies. The federal law provides several exemptions for white collar workers. If certain criteria are met, employers may not have to pay overtime to executive, administrative, professional, computer and outside sales employees, according to a fact sheet from the U.S. Department of Labor (DOL).  

Employers must consider both salary and job duties in determining whether workers are exempt, sources previously told HR Dive. All of the exemptions except the outside sales exemption require employees to make more than $684 per week, according to changes in the FLSA salary threshold requirements that went into effect earlier this year. Once the salary threshold is met, the employee's job duties are considered.

Exemptions are based on objective standards and are not dependent on employer-determined job titles, DOL has reminded employers. In a lawsuit filed earlier this year, a Florida air conditioning tech alleged that his former employer violated the FLSA by misclassifying him as a salaried air conditioning service technician despite performing non-exempt work and and working 50- to 60-hour workweeks.

Misclassification of employees under the FLSA especially where overtime pay is concerned is a common problem and can lead to pricey settlements for employers. Steak 'n Shake was ordered to pay more than $7.7 million after a court ruled that it denied overtime pay to employees misclassified as managers.

Employers do have a little leeway in job duties requirements because of the pandemic, however. This summer, DOL released guidance indicating that employers may continue to treat salaried executive, administrative and professional employees who are exempt under the FLSA as exempt, even if they perform nonexempt duties during the pandemic.

In addition to the increase in the salary threshold that went into effect earlier this year, DOL issued a new "regular rate" rule clarifying when employers can exclude certain benefits from overtime calculations late last year.

Experts have have suggested that employers audit their overtime practices in light of these changes.