Pennsylvania’s overtime laws have historically aligned with those established by the federal Fair Labor Standards Act (FLSA). Most hourly and day-rate employees are entitled to overtime while many salaried employees are exempt from overtime pay.
However, employees with a fluctuating workweek schedule or who rely on tips may find it difficult to make ends meet. For example, in the restaurant industry, it is common for workers to be paid on both an hourly and salaried basis while irregular schedules are common.
In 2022, the Pennsylvania Department of Labor introduced new rules for tipped workers and salaried employees with fluctuating workweeks under its Minimum Wage Act. These rules diverge from the prior standards it followed under the FLSA. Employers who do not comply with these provisions may be liable in civil actions for overtime, backpay, and other financial damages.
Understanding the New Regulations for Tipped Workers
The state of Pennsylvania’s updates to the Minimum Wage Act came into effect on August 5, 2022. The first set of changes has to do with tipped workers to ensure they receive fair compensation.
Under these rules, a worker is classified as a tipped employee if they engage in work that results in more than $135 paid out in tips per month. This is a significant change from the prior standard imposed by federal law, which considers a worker to be a tipped employee if they make at least $30 a month in tips.
The updated laws prohibit managers or supervisors from partaking in tip pools and bar employers from deducting payment processing fees or credit card transaction fees from employee tips. When an employer charges service or administrative fees, they must inform patrons that the fee does not include tips for employees and provide them a place to add a tip.
All tipped employees must be paid minimum wage, and tips shared with non-tipped employees must compensate all employees in the tip pool with at least the minimum wage. Tipped employees are also not permitted to spend more than 20 percent of their time conducting tasks that will not lead to tips, meaning that 80 percent of their working time must consist of tipped activities.
New Fluctuating Week Rules for Salaried Employees
Under the updated rules, non-exempt, salaried employees who work a fluctuating workweek fall under a different method of calculating overtime pay than the federal standard. The federal standard says that employees should be paid 1.5 times their regular rate anytime they exceed 40 hours of work in a week.
For a salaried, non-exempt employee, this federal standard involves dividing the worker’s weekly salary by the number of hours worked in that given week, then multiplying the regular hourly rate by 0.5 to determine the overtime hourly rate.
The changes to Pennsylvania law help increase the overtime pay rate for workers. Now, for salaried workers with a fluctuating workweek, employers must divide the worker’s weekly salary by 40, no matter how many hours that employee worked that week.
Start Your Free, Confidential Review Now
Pennsylvania’s changes to its Minimum Wage Act provide enhanced protections for members of the service industry who rely on tips and non-exempt salaried workers with fluctuating schedules. If a court finds that an employer failed to adhere to these standards, they may be ordered to pay the employee the difference on top of additional damages and attorneys’ fees resulting from these unfair, illegal activities.
These laws can be exceptionally complicated to navigate without skilled legal assistance. If you are a tipped employee or a salaried employee with a fluctuating workweek and you believe your employer has violated your rights, our attorneys can evaluate your case. Contact our firm today by using our online chat or submitting a form for a free, confidential review.
