by Katie Westenberger, on Aug 2, 2023 7:30:00 AM
Pennsylvania employers need to fully understand the requirements regarding Pennsylvania overtime laws and take action in order to avoid legal and financial penalties.
Pennsylvania Overtime Overview
Under Pennsylvania Labor Law, employers must adhere to regulations regarding overtime under the Fair Labor Standards Act (FLSA) and Pennsylvania Minimum Wage.
While some occupations are exempt from overtime requirements under the FLSA, Pennsylvania Minimum Wage legislation may require otherwise.
Businesses that are struggling with managing overtime and budgeting labor may want to learn more about what is employee scheduling, and the value of employee scheduling software.
Pennsylvania Overtime Compensation & Pay
According to Pennsylvania Overtime Law, employees in Pennsylvania who are covered under the state or federal overtime requirements are typically entitled to 1.5 times their regular rate of pay for all hours worked over 40 in a work week.
PA Overtime Calculation Example:
40 Regular Rate Hours
X $15 Per Hour Regular Rate
=$600
$15 Per Hour Regular rate
+ 1 ½ Overtime Premium
=$22.50 Per Hour Overtime Rate
10 Overtime hours
X $22.50
=$225
$600 Regular Rate Time or "Straight Time"
+ 225 Overtime
=$825 Total Pay
An employee’s regular rate of pay is their normal hourly wage. If an employee’s rate of pay differs at times, then use the average as the regular rate of pay.
Payments that are not part of an employee’s regular rate of pay include the following types of payments:
- Sums paid as gifts
- Payments made for occasional periods when no work is performed due to vacation, holiday, illness, etc.
- Reimbursement for travel or other expenses
- Discretionary bonuses
- Payments made to a bona fide profit-sharing, plan or trust, thrift, or savings plan
- Talent fees paid to performers
- Premium payments for overtime work
Pennsylvania legislation provides a full list of pay types that do not count as “regular rate” for employees here.
Pennsylvania Overtime Eligibility
Generally, all employees in Pennsylvania are eligible to receive overtime pay unless an employee meets specific criteria classifying them as exempt from overtime pay.
First, in order to receive overtime an employee must pass the salary level test. However, passing this test alone does not classify an employee as exempt. Only those employees who pass the salary level test and meet the criteria below of either an executive, administrative, or professional employee are exempt from overtime.
On November 15, 2024, the U.S. District Court for the Eastern District of Texas invalidated a U.S. Department of Labor (DOL) regulation that raised the salary threshold for the "white-collar" overtime exemption under the Fair Labor Standards Act (FLSA). This decision applies nationwide, rendering the rule ineffective.
As a result of the court ruling, the overtime-exempt salary threshold for 2024, 2025, and the foreseeable future is $684 per week ($35,568 annually). This threshold reflects the most recent update that is still in effect, made in 2019.
For highly compensated employees, the threshold remains at $107,432 / year (including at least $684 / week on salary or fee basis).
To learn more about the FLSA, click to access the FLSA Guide here. For more help on classifying employees under FLSA guidelines, click through to see this article.
Executive, Administrative, and Professional Employees Exemptions
Executive, administrative, and professional employees are exempt from overtime requirements. These are salaried employees who perform executive, administrative, or professional duties and make more than the salary threshold per year. In order to determine if an employee falls into one of these categories, they must meet a salary level test, as well as certain requirements.
Executive Exemption
In order to qualify for an executive exemption, an employee must pass the Salary Level Test as well as:
- Have a primary duty of either:
- Managing a business/company
- Managing a customarily recognized department or subdivision of a business/company
- Customarily and regularly direct the work of at least two or more other full-time employees
- Have the authority to hire and/or fire other employees, or their thoughts on similar decisions are given particular weight and consideration
If an employee meets the previous three requirements as well as the Salary Level Test, then they are considered an Executive Exempt Employee and are not subject to FLSA minimum wage and overtime law.
Administrative Exemption
In order to qualify for an administrative exemption, an employee must pass the Salary Level Test as well as:
- Have a primary duty of office or non-manual work that is directly related to the management or general business operations of either the employer or the employer’s customers
- The work involves the exercise of discretion and independent judgment in regard to important matters
If an employee meets the previous two requirements as well as the Salary Level Test, then they are considered an Administrative Exempt Employee and are not subject to FLSA minimum wage and overtime law.
Professional Exemption
In order to qualify for a professional exemption, an employee must pass the Salary Level Test as well as:
- Have a primary duty of work requiring advanced knowledge
- Defined as work that is predominantly intellectual and requires the consistent exercise of discretion and judgment
- The advanced knowledge must be in a field of science or learning and must be gained from a prolonged course of specialized intellectual instruction (such as college)
OR
- Have a primary duty of work requiring invention, imagination, originality, or talent in a recognized artistic field (Musicians, Composers, Engineers, etc.)
If an employee meets one of the previous two requirements as well as the Salary Level Test, then they are considered a Professional Exempt Employee and are not subject to FLSA minimum wage and overtime law.
Special Rules for Tipped Employees
Tipped employees have to earn at least $135 per month in tips to qualify for the exemption for the Pennsylvania overtime rates. Tipped employees who earn $135 per month in tips or more are also exempt from PA overtime.
Pennsylvania follows the 80/20 rule when it comes to tipped wages. Employees can qualify as tipped employees as long as that employee does not spend more than 20% of the 7-day previously established workweek performing duties that do not directly generate tips.
More information regarding Pennsylvania overtime wages for tipped employees can be found here.
Special Rules for Alternate Work Schedules (AWS)
In Pennsylvania, some employees have the option to work on Alternate Work Schedules (AWS). Overtime rules may vary depending on the specific situation.
An AWS is a type of work schedule that allows employees to work pre-established additional hours (beyond their regular 7.5 or 8.0 hours per day) on certain work days within a pre-established time period (i.e. week, pay period, month).
Simply put, an AWS is a compressed workweek schedule. For example, employees eligible for AWS can select a schedule that allows them to work 9 out of 10 workdays in a 2-week (14 days) period. When applied, employees can work:
- One 40-hour work week (5 days of 8 hours each day) and
- One 35-hour work week (4 days of 8 hours and 45 minutes each day), with one day as the AWS off day (AWSO)
Employees on AWS are eligible for overtime pay when they work more than half an hour after their daily shift or more than 40 hours in a work week. Overtime is compensated at 1.5 times their regular rate of pay. However, hours worked on an AWS off day (AWSO) will be considered as regular time and thus not eligible for overtime.
Additional Pennsylvania Overtime Exemptions
The following occupations are also exempt from the Pennsylvania overtime rates:
- Farm labor
- A seaman
- Domestic service worker
- Taxicab driver
- Bona fide outside salesman
- Any salesman, partsman or mechanic primarily engaged in selling and servicing vehicles
- Newspaper delivery worker
- Announcer, news editor, chief engineer of a radio or television station
- Any employee of a motor carrier
- Workers engaged in the processing of maple sap into sugar or syrup
- Non-employee workers for educational, charitable, religious, or nonprofit organizations where work is unpaid
- Golf caddy
- Seasonal worker who is under 18 years old
- Student worker who is under 24 years old that is either:
- Employed by a nonprofit health or welfare agency engaged in activities dealing with children with disabilities, or;
- Employed by a nonprofit day or resident seasonal recreational camp for campers under 18 years old (the camp must operate for a period of less than three months in any one year)
- Workers employed by a public amusement or recreational establishment, organized camp, or religious or nonprofit educational conference center under certain conditions
- Switchboard operator employed by an independently-owned public telephone company that has no more than 750 stations
- Employees not subject to civil service laws who hold elective office or are on the personal staff of such an officeholder, are immediate advisers to the officeholder, or are appointed by the officeholder to serve on a policy-making level
Please note that Pennsylvania does not have a daily overtime limit for employees who work more than a certain number of hours per day to receive overtime pay.
Get Help With Pennsylvania Overtime Requirements
It’s important for companies to learn more about Pennsylvania payroll processing and fully understand the compliance requirements. Employers struggling to maintain compliance with Pennsylvania Overtime requirements should contact a Pennsylvania Payroll company for help.
Companies that are struggling with managing overtime should consider modern time and attendance software, so that they may enhance their timekeeping processes.
