Employers with Pennsylvania employees should be aware of changes to the minimum wage law that will become effective this summer. Particularly hospitality and other employers with tipped employees will want to familiarize themselves with these new rules.
On May 7, 2022, Pennsylvania’s Department of Labor and Industry issued amendments to the regulations governing the state’s minimum wage law. The final regulations modify the rules about how employers pay tipped workers and ensure that salaried employees with fluctuating schedules are appropriately compensated for overtime. The regulations become effective on August 5, 2022. Please find a summary of the rules below.
Tipped Employees
In Pennsylvania, the new definition of a “tipped employee” will be “an employee engaged in an operation in which the employee customarily and regularly receives more than $135/month in tips.” This amount was increased from $30/month in tips.
In addition, consistent with the federal rules, employers may have tip pools comprising both employees who traditionally perform tipped work with employees who do not typically perform tipped work. However, again consistent with federal law, managers and supervisors may not receive tips from tip pools but may receive tips that are provided directly to them for services directly provided to patrons.
Also aligned with federal regulations, employers are permitted to take a tip credit when an employee performs work that directly generates tips or performs work that directly supports tip producing work, provided that the directly supporting work does not exceed, in aggregate, 20 percent of the employee’s hours worked during the workweek. Unlike federal law, however, there is no requirement that the directly supporting work not exceed 30 continuous minutes.
The rules also require employers to pay employees the full amount of the tip authorized by patrons on credit card or other non-cash payments and may not deduct any credit card payment or processing fees.
Finally, there are updates to the notice an employer is required to give to its tipped employees and records employers are required to keep, such as the names and positions of those in a tip pool and the amounts distributed to each. With respect to service charges, employers are also required to give specific notice to patrons via their contracts and menus.
Regular Rate of Pay
The regulations also codify that the regular rate for overtime purposes for non-exempt, salaried employees is calculated by adding the amount of remuneration received by an employee during the week and dividing it by 40. Employers should note this rule as it deviates from hourly employees, where the regular rate is calculated by dividing the total covered compensation earned in a week by the total number of hours worked in a week. In addition, in Pennsylvania, salaried employees are entitled to a 1.5 multiplier, rather than a .5 multiplier, applied to their regular rate for all overtime hours worked to calculate the total overtime compensation owed in a workweek.
Generally, these rules bring Pennsylvania wage payment into line with federal rules, with a few deviations. Plus, employers have some time to familiarize themselves with the rules and become compliant. If you have any questions regarding these changes to Pennsylvania’s minimum wage regulations, please contact Katharine Thomas Batista at kbatista@offitkurman.com or (267) 338-1319.
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