Gov. Wolf moves to change overtime rules

At an event in Philadelphia Wednesday, Gov. Tom Wolf announced he is having his Department of Labor and Industry change regulations relative to overtime work to modernize a system that he called “outdated” as a means to help the middle class and provide fairness to families.

According to the Wolf administration, the current overtime rules have not been updated since the 1970s.

The changes sought by the governor would increase the salary thresholds over a four-year period – and then every three years after that – by which workers are exempted from overtime requirements that guarantee overtime pay for workers making less than the threshold amount.

“I am taking this action to ensure hundreds of thousands of Pennsylvanians who work more than 40 hours a week for the same job receive the overtime pay they have earned,” Wolf said Wednesday. “It’s simple: If you work overtime, then you should get paid fairly for it. This important step will put more money into the pockets of hardworking people and will help expand the middle class in Pennsylvania.”

The current threshold amount of $24,000 has not been updated since 1977. According to the plan outlined by the governor, the new regulations – expected to undergo the regulatory review process in March – would increase the threshold amount by which workers would be exempt from overtime requirements over a four-year period ending in 2022.

The first step will raise the salary level to determine overtime eligibility for most workers from the federal minimum of $455 per week/$23,660 annually, to $610 per week/$31,720 annually, on Jan. 1, 2020. The threshold will increase to $39,832 on Jan. 1, 2021, followed by $47,892 in 2022, extending overtime eligibility to 370,000 workers and up to 460,000 in four years.

Starting in 2022, the salary threshold will update automatically every three years. The administration also hopes to clarify duties relative to executive, administrative, and professional employees to make it easier to determine whether an employee is subject to overtime regulations.

The move drew wide praise from Democratic legislators, including Sen. Anthony Williams (D-Philadelphia) and Rep. Jordan Harris (D-Philadelphia), who joined Gov. Wolf in Philadelphia for the announcement.

“The governor’s proposal will give many working families in PA an increase in their income and will make sure they are paid for the hard work they are doing,” Harris said.

“That additional revenue will help pay utility bills, buy groceries, take vacations and just make life a little easier.”

The Republican reaction was less than enthusiastic about the governor’s announcement.

According to House Republican Caucus spokesperson Steve Miskin, the governor’s actions show why regulatory reform – and a legislative package unveiled a number of House GOP members Tuesday – is needed in Pennsylvania.

“One of the many reasons for regulatory reform is that burdensome red tape that employers, large and small, need to go through. One of the reasons GE is leaving Erie, and other manufacturers with good-paying jobs are leaving or deciding not to come to Pennsylvania, is we already have one of the highest costs of doing business,” he said. “In another unilateral decision, the governor is increasing the cost again.”
He added the Wolf administration could get more accomplished if they worked collaboratively toward joint goals instead of continued unilateral action.

“The dysfunction in Harrisburg begins with him and his refusal to try and work together. We don't live in a dictatorship but a representative democracy,” Miskin said.

“There's a reason for constitutional checks and balances, but he doesn't seem to care, and this is just the latest example of a unilateral action where he just did something without talking to anybody.”

Outside the Capitol, the reaction was equally mixed.

The left-leaning think tank Keystone Research Center applauded the governor’s action.

“The governor’s action, recommended last year by KRC, could benefit roughly half a million Pennsylvania workers. These workers are currently paid as little as $10 for each hour they work – including as supervisors in fast food, department managers in discount stores and office managers,” said the center’s executive, Stephen Herzenberg. “Good employers, such as Altoona-based Sheetz, recognize that salaried workers paid decently will repay their employers in loyalty, productivity and service.”

However, business groups like the Pennsylvania Chamber of Business and Industry stated that the governor’s proposal will likely hurt the job climate in Pennsylvania.

Specifically, they pointed to when a similar change was proposed at the federal level under the Obama administration, there was a large outcry from employers – particularly nonprofits and health service providers – who noted the new rule would have a negative impact on their ability to provide services.

“For a similar proposal to be put forth just in Pennsylvania would definitely make Pennsylvania less attractive to businesses,” said the chamber’s director of government affairs, Alex Halper. “The concern is that employers attempting to accommodate this requirement will be forced to convert salaried employees to hourly in order to help control what's expected to be pretty significant cost increases,” he added. “Being eligible for overtime does not necessarily mean you are going to get overtime and that’s a bit of a misconception. Converting individuals from salaried to hourly takes away workplace flexibility and, if you are prohibiting employees from working over 40 hours, that can kind of change the culture of the workplace and hurt morale.”

Jason Gottesman is the Harrisburg Bureau Chief of The PLS Reporter, a news website dedicated to covering Pennsylvania’s government.