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Pennsylvania Governor Wolf Proposes Increases in Minimum Salary Levels for Salaried Exempt Employees

As Published in the February, 2018 Issue of the PELRAS Newsletter

Published on: Thu 8th Feb, 2018 By: David E Mitchell

Pennsylvania Governor Tom Wolf has proposed increasing the minimum salary levels for salaried exempt employees under the Pennsylvania Minimum Wage Act (“MWA”) as part of his “Jobs That Pay” initiative, but in a more gradual way than the increases previously proposed under the federal Fair Labor Standards Act.

Under the Governor’s proposal, the minimum salary amounts for salaried exempt employees would increase from the current $455 per week (or $23,660 per year), which matches the current amounts in the federal FLSA regulations, to $610 per week (or $31,720 per year) on January 1, 2020. The Pennsylvania minimum salary threshold would further increase to $766 per week ($39,832 per year) in 2021 and $921 per week ($47,892 per year) in 2022. The Governor’s proposals would effectively implement increases originally proposed at the federal level by the Obama administration under the FLSA. Final regulations issued by the Obama administration in 2016 would have increased the minimum salary amount for exempt employees to $913 per week ($47,476 per year) and were subsequently set aside following a federal court challenge. In the event this change is implemented, Pennsylvania employers covered by the MWA would have to comply with the higher state minimum salary levels even if the FLSA thresholds are not increased.

Such an increase in the minimum salary amounts for exempt employees under the MWA could, however, have little direct impact on public employers. Few courts have considered the issue of whether the MWA applies to public employers, but there are numerous court decisions holding that the analogous Pennsylvania Wage Payment and Collection Law (“WPCL”) does not apply to public employers due to its statutory definition of the term “employer.”

The WPCL defines the term “employer” to include, in part, “every person, firm, partnership, association, corporation, receiver or other officer of a court of this Commonwealth[.]” 43 P.S. § 260.2a. Courts have consistently held that this WPCL definition does not encompass public employers, and as a result the law does not apply to them. The MWA similarly defines the term “employer” to include “any individual, partnership, association, corporation, business trust, or any person or group of persons acting, directly or indirectly, in the interest of an employer in relation to any employe.” 43 P.S. § 333.103.

In Morrow v. County of Montgomery, No. 13-1032, 2014 WL 348625 (E.D. Pa. Jan. 31, 2014), a federal court noted the similarities between the MWA and WPCL and held that public employers are not covered by the MWA. This result is consistent with a 1976 Pennsylvania Attorney General Opinion concluding that the MWA does not apply to public employers. To date, there has been little reason to litigate this issue because the Pennsylvania and federal minimum wage levels for salaried exempt employees were the same, but if Pennsylvania proceeds to implement the higher salary levels for exempt employees it is likely that the issue of whether the Pennsylvania Minimum Wage Act applies to public employers will be raised again in the courts. Stay tuned to future issues of the PELRAS newsletter for updates.