Being a responsible employer is about providing jobs and fostering a positive work environment by protecting employee rights. Pennsylvania overtime law is one of the crucial regulations employers must incorporate in their compliance policies.
This article explores the state and federal regulations that Pennsylvania employers must know. Adherence to these regulations is essential not only to comply with the law but also to uphold ethical standards and maintain a positive work environment. This guide will help you better understand and implement Pennsylvania’s overtime laws.
Table of Contents
Tipped Worker Rules and Tip Pooling
Pennsylvania has many establishments in the service industry that employ many tipped workers—Pennsylvania’s regulations regarding tipped workers and tip pooling aim to protect the earnings of tipped employees.
Clarification on ownership of tips and gratuities paid via non-cash methods
As per law, in Pennsylvania, the tips and gratuities belong to the employees who receive them, regardless of whether they are paid through cash or non-cash, such as credit card payments. Therefore, tips given by customers are the property of the tipped employees, and employers are prohibited from withholding or retaining any portion of these tips for themselves.
Prohibition of employers deducting processing fees from employee tips
The Department of Labor clearly states that no employer can deduct any sort of processing fee from employee tips for credit cards or another mode of payment. Under no condition can an employer deduct any processing fee, ensuring that all employees receive total compensation and all tips.
Guidelines for forming tip pools
A tip pool can include all employees who receive the minimum wage of $7.25 per state and federal rules. However, tip pools can only have individuals who receive regular tips. It can include non-tipped employees if they also receive the state-determined minimum wage.
Managers, supervisors, or employers are strictly prohibited from receiving tips from the tip pools. However, these individuals can contribute to the tip tools. These employees can receive tips from the patrons if they provide the entire service without assistance.
Understanding Definitions and Requirements for Tipped Employees
Tipped employees are the ones who receive regular tips in addition to hourly wages. To be considered a tipped employee, an individual must earn at least $135 monthly tips.
As per the regulations, employers must ensure that tipped employees earn at least $7.25 per hour, including the base hourly wage and tips.
If a tip-credited employee earns less than $7.25 per hour, the employer must make the difference to comply with the Pennsylvania Minimum Wage Act.
Comprehending Federal Overtime Regulations: Ensuring Worker Protection and Compliance
Understanding federal overtime regulations is crucial for employers to ensure compliance and protect the rights of their workers. Act 70, effective July 9, 2021, is one of the most essential overtime regulations.
Insight into Federal Overtime Regulations
The Fair Labor Standards Act (FLSA) governs federal overtime regulations in all states in the United States. Pennsylvania doesn’t have any state law for overtime, so it implements FLSA as per the overtime rules for all employers.
Under overtime regulations as per the FLSA, all non-exempt employees are entitled to receive overtime pay at least 1.5 times their regular pay rate for all hours worked beyond 40 hours in a workweek. Irrespective of the industry, employers must provide all non-exempt employees overtime pay and accurate compensation.
There are guidelines for determining employee eligibility for overtime pay, including classifications as exempt or non-exempt and specific criteria for exemption status. Employers must familiarize themselves with the provisions of Act 70 to ensure compliance with the latest federal overtime regulations.
Guidance on Compliance in Case of Conflicts
If there is a conflict between the state and federal laws regarding overtime, employers are advised to follow the regulation that provides maximum protection to workers. For instance, if there is a conflict in deciding the appropriate overtime pay rates for your employees due to a conflict of the laws, choose the federal or state law depending on which provides higher overtime pay rates or broader eligibility criteria.
However, employers must seek legal counsel for clarification on the appropriate course of action. Employers can ensure maximum worker protection by prioritizing compliance with state and federal regulations.
Overview of Pennsylvania Overtime Laws
Pennsylvania’s overtime law aligns with federal law, allowing all non-exempt employees to earn overtime at 1.5 times the regular wage rate. Such employees are eligible for overtime beyond a 40-hour workweek.
For employers, it is essential to understand the eligibility, rate, and other criteria for overtime payment.
Eligibility Criteria
All employers in Pennsylvania are required to pay most hourly employees overtime. Salaried employees are primarily exempt, but a few categories of salaried employees can be eligible for overtime pay as per state and federal law.
Additionally, the eligibility for overtime pay is determined based on the number of hours worked in a workweek. Employees are entitled to overtime pay at one and a half times their regular pay rate for hours worked beyond 40.
Calculation for Overtime in Pennsylvania
- For hourly employees:
Hourly employees should be paid time and a half for hours over 40 work hours/week.
Hourly employees receiving bonus or commission:
Overtime calculation for such employees is made based on this formula=
{((Total hours x Hourly Rate) + Commission) / Total hours} / 2
- For salaried employees:
For eligible salaried employees, the overtime pay is made per regulation, i.e., 1.5 times the regular page for the overtime hours.
Exemptions:
Certain salaried employees are exempted from overtime requirements under Pennsylvania law. According to Pennsylvania’s overtime law, here is a complete list of those exempt from overtime requirements.
Some of the exempted employees include:
- Specially skilled employees like computer workers
- Agricultural workers
- Seasonal employees
- Executives
- Administrative
- Professional employees making at least $684 per week
- Highly compensated employees
However, these exemptions are narrowly construed; you must check the specific criteria outlined in state and federal regulations to qualify for exemption status.
The above rules and exemptions are a mixture of the overtime laws determined by the Pennsylvania Department of Labor and federal laws. Employers in the state can provide more benefits and rights contained in the Federal Fair Labor Standards Act (FLSA) of 1938, but not less.
Special Rules for Tipped Employees and Alternate Work Schedules
According to Pennsylvania overtime laws, a tipped employee has to earn tips of $135 per month to be exempted from overtime. They are eligible for the tip credit if they earn less than this. Therefore, if you employ tipped employees, you must check if they receive a significant portion of their income from gratuities. Then, you can make changes to the employment policies as necessary.
Also, the 80/20 rule applies to tipped employees. The rule stipulates that tipped employees must spend at least 80% of their time performing tipped duties directly related to customer service. They can pay 20% of the time on non-tipped duties, such as side work or cleaning. Non-customer tasks must be at most 20% of the employee’s total work time to be eligible for tipped employee benefits.
Alternate Work Schedules (AWS)
An alternate work schedule is also known as a flexible or compressed work schedule. It is entirely up to the employees’ discretion to provide AWS to employees. Eligibility for AWS typically depends on employer policies and agreements negotiated with employees or labor unions. Under a compressed work schedule, employees can complete the 80-hour work in less than ten work days. Flexible work schedules allow employees to deviate from a specified arrival and departure time but must be present for core work. AWS may allow for longer shifts without triggering overtime pay until a certain threshold of hours worked in a workweek is met.
Clarifications on Exemptions and Daily Overtime Limits
As mentioned, certain occupations are exempt from overtime pay requirements under state and federal law. It mainly includes certain types of salaried employees, professionals, and certain seasonal workers. For employers, it is mandatory to review exemption criteria carefully to ensure compliance with regulations.
Unlike some states, Pennsylvania does not impose daily overtime limits. Instead, overtime pay is typically calculated based on hours worked beyond the standard 40-hour workweek. This means that employers can independently decide the overtime hours for the employees. However, it is recommended that employers maintain a balanced schedule for employee overtime.
How can Truein help with Overtime Pay management?
Truein is a complete time and attendance management system that can streamline the process of managing overtime pay for employees. Automating the process of tracking employee work hours, including overtime, reduces the need for manual tracking, which can be time-consuming and prone to errors. GPS geofencing features allow managers to monitor real-time overtime hours at several remote sites. This will enable them to quickly identify when employees are approaching overtime thresholds and take appropriate action.
Truein allows organizations to set customizable overtime rules based on local labor laws and company policies. It has over 70 templates that you can customize according to your requirements. It integrates with existing payroll systems, making it easy to calculate and process overtime pay and regular payroll cycles. Learn how Truein can help ensure compliance with labor laws and regulations related to overtime pay.
Conclusion
The importance of understanding and adhering to Pennsylvania’s overtime laws for employers cannot be stated enough. It helps employers to uphold fair labor practices, protect workers’ rights, and avoid legal liabilities. By adhering to state and federal laws, businesses are committed to ethical employment standards. Truein can facilitate compliance and fair compensation practices by ensuring accurate and transparent overtime pay management.
