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Pennsylvania State Senate
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Senate of Pennsylvania
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted: July 14, 2016 04:17 PM
From: Senator Lisa Baker
To: All Senate members
Subject: Standardizing Overtime Rules and the Exemption Status of Pennsylvania Employees
 

Please join me in co-sponsoring legislation to update, modernize and simplify the Pennsylvania Minimum Wage Act of 1968 (PMWA), by eliminating confusing and unnecessary differences between state and federal law.

This action is prompted by two factors. First is the enactment of new rules under the Fair Labor Standards Act (FLSA) regarding overtime and an increase in the amount of wages that an employee must make to be “exempt” from the payment of overtime, which take effect December 1, 2016.

Second, there are many inconsistencies between state and federal wage and hour laws. As an example, in 1968, the federal Department of Labor (DOL) published a comprehensive guide with respect to the application of certain overtime pay requirements under the FLSA. Among other provisions, the guide specifically approved a concept called the fluctuating work week. However, because Pennsylvania did not expressly adopt the regulations contained in that bulletin, a Pennsylvania court recently determined that a Pennsylvania employer was not permitted to use this method to determine the amount of overtime owed to an employee. This decision was reached despite the fact that even the Pennsylvania Department of Labor and Industry (PA L&I) offered guidance that the method was permissible.

Importantly, my bill does not seek to change the provisions of the new FLSA rules. It simply aligns the provisions of the PMWA with the FLSA. More specifically, it proposes that state law related to overtime would be interpreted in accordance with federal law and the regulations and interpretations contained in the DOL’s Field Operations Handbook. However, the state legislature would retain the right to determine that a different approach should apply.

To streamline these changes, the effective date of my bill will coincide with the effective date of the new federal FLSA rules. This will allow employers to update their policies and trainings, and payroll and human relations computer systems to comply with the new provisions of both federal and state law at the same time.

These modifications should eliminate unnecessary litigation that results when employers are alleged to fail to comply with the PMWA, even though they have complied with federal rules they assumed applied. The modifications are also expected to free resources within the (PA L&I), allowing for concentrated enforcement efforts in other areas.

Pennsylvania would be joining several other states making similar revisions including the surrounding states of Maryland, New Jersey and Ohio, as well as Alaska, Massachusetts, Missouri, Montana, North Carolina, Rhode Island, and the District of Columbia. Additionally, this approach was advocated by numerous testifiers during a recent joint hearing of the Senate Appropriations and Labor and Industry committees.


Introduced as SB1360