Overtime Laws

by Jonathan Segal, Esq.

The following chart compares the white collar exemptions [from overtime] under the federal FLSA with the white collar exemptions [from overtime] under Pennsylvania state law. It does not address the other exemptions which exist under the federal FLSA and/or Pennsylvania state law.
In order for an employee in Pennsylvania to be exempt from overtime, he or she must be exempt under both the federal FLSA and Pennsylvania state law. If an employee is exempt under the federal FLSA but not Pennsylvania state law, then he or she is entitled to overtime under Pennsylvania state law (and vice versa). [Many other states, such as NewJersey, NewYork and California, to name just three (3), have state laws which are not identical to the federal FLSA and must be considered in order to determine if an employee in one of those states is exempt from overtime.
Under the old FLSA regulations, there were short tests and long tests for determining whether an employee is exempt. A higher minimum salary applied for the short test and a lower minimum salary applied for the long test. Under the new federal FLSA regulations, the short tests and long tests were abolished. There is now generally a uniform minimum salary of $455 per week.
- In contrast, Pennsylvania state law retains a short test and a long test. The short test applies if the employee is making $250 per week or more. The long test applies if the employee is making less than $250 per week but at least $155/170 per week, depending on the exemption. It is easier for an employee to meet the short test than the long test. In other words, there are additional requirements under the long test which do not apply under the short test.
- The practical effect of the FLSA's increase of the minimum salary to $455 per week is to eliminate the long test under state law in most circumstances. That is because all employees who meet the minimum threshold under federal law will qualify for the short test under state law (that is, they will earn at least $250 per week). Stated otherwise, if someone qualifies for the long test but not the short test under Pennsylvania state law, then (subject to the exception below), they won't be exempt under federal law so that the exemptions under Pennsylvania state law become irrelevant. Accordingly, the focus of the chart is solely the short test under Pennsylvania state law.
- Exception: there are a few positions under the federal FLSA with respect to which there is no minimum salary requirement, but with respect to which Pennsylvania state law does not provide an express exclusion from the minimum salary requirement, for example only, doctors, lawyers and teachers. For this category of positions only, the long test under Pennsylvania state law could apply. Depending on the exemption, the long test may include minimum percentage requirements on the amount of exempt work and/or maximum percentage requirements on the amount of non-exempt work. In the unlikely event that an employee not subject to a minimum salary under federal law is paid less than $250 per week but at least $155/170 per week (depending on the exemption), then the long test under Pennsylvania state law applies and the state regulations need to be consulted in terms of the specific terms and conditions for the applicable long test.
The chart focuses on general rules only and does not address exceptions. In addition, the chart focuses on salary only and not the fee basis, where applicable.
The changes to the federal regulations go into effect August23, 2004 (unless blocked). Until then, the old FLSA regulations remain in effect.
This summary, as well as accompanying chart, should not be construed as legal advice or as pertaining to specific factual situations. In particular, the chart was prepared based solely on the regulations themselves and not court opinions, wage and hour opinion letters or other authoritative pronouncements which could define or delimit in more detail the scope of the exemptions.

White Collar Exemptions: FLSA v. Pennsylvania Law

FLSA Regulations	Pennsylvania Regulations	Comment
1. Executive Exemption
Employee's primary duty is the management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision;	Same	In terms of duties, it is easier to meet the PA exemption than the federal exemption, because the federal exemption requires the authority to hire or fire etc. and the PA short test does not. If employee falls within the federal exemption, should fall within PA exemption too.
Employee customarily and regularly directs the work of two (2) or more employees; and	Same
Employee has authority to hire or fire other employees or whose suggestions and recommendations as to hiring, firing or other [material] change of status decisions are given particular weight	No comparable requirement (short test)
$455 per week	$250 per week
No minimum percentage of exempt work	Same (short test)
No maximum percentage of non-exempt work	Same (short test)

FLSA Regulations	Pennsylvania Regulations	Comment
2. Business Administrative Exemption
Employee's primary duty must be the performance of office or non-manual work which is directly related to the management or general business operations of the employer or the employer's customers; and	The same, except for two (2) differences, which may or may not be material: 1. "management policies" rather than just "management" 2. "general operation" rather than "general business operations."	In terms of duties, it is probably easier to meet the PA exemption than the federal exemption, because the federal exemption requires that the discretion be with regard to "matters of significance" and the PA exemption does not. If employee falls within the federal exemption, should fall within PA exemption too. However, it is possible that the PA regulations focus on "management policies" rather than "management" generally is more restrictive.
The primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.	Same, except for one material difference: no requirement that the discretion and independent judgment involve "matters of significance."
$455 per week	$250 per week
No minimum percentage of exempt work	Same (short test)
No maximum percentage of non-exempt work	Same (short test)

FLSA Regulations	Pennsylvania Regulations	Comment
3. Academic Administrative Exemption
Employee's primary duty must be performing administrative functions directly related to academic instruction or training in an educational establishment [Involves work related to academic operations or functions of a school as opposed to administration along the lines of general business operations].		No regulatory provisions in PA dealing with special academic administrative exemption. However, the PA statute's white collar exemption provision is essentially the same as the FLSA's white collar exemption provision. Both statutes reference generally "academic administrative personnel."
$455 per week or minimum starting salary for teachers in the establishment (even if less than $455 per week)		In the absence of PA regulations defining the scope of the academic administrative exemption under PA law, a good (although not ironclad) argument can be made that the regulations under federal law should be looked to for guidance in determining the scope of the exemption under PA state law.
No minimum percentage of exempt work
No maximum percentage of non-exempt work

FLSA Regulations	Pennsylvania Regulations	Comment
4. Learned Professional Exemption
Employee's primary duty must be the performance of work requiring advanced knowledge (involving consistent exercise of discretion and judgment)[Separate exemption for teachers, below;	Same.	Federal FLSA and PA state regulations essentially the same. If employee falls within the federal exemption, should fall within the PA exemption too.
In a field of science or learning; and	Same.
Customarily acquired by a prolonged course of specialized intellectual instruction.	Same, except no stated requirement that the instruction be "intellectual." However, required under federal law so omission under state law, whether intended or inadvertent, irrelevant.
$455 per week (subject to certain exceptions)	$250 per week
No minimum percentage of exempt work	Same (short test)
No maximum percentage of non-exempt work	Same (short test)

FLSA Regulations	Pennsylvania Regulations	Comment
5. Creative Professional Exemption
The employee's primary duty must be the performance of work requiring invention, imagination, originality or talent; and	Essentially the same: work which is original and creative in character, requiring invention, imagination or talent.	Federal FLSA and PA state regulations essentially the same. If employee falls within the federal exemption, should fall within the PA exemption too.
In a recognized field of artistic or creative endeavor.	Essentially the same: in a recognized field of artistic endeavor. Although no reference to "creative" in terms of the endeavor, "creative" referenced above in terms of the character of the work. Distinction probably not material, although an argument could be made that state law imposes additional burden by listing "creative" as part of the primary duty as opposed to the field.
$455 per week	$250 per week
No minimum percentage of exempt work	Same (short test)
No maximum percentage of non-exempt work	Same (short test)

FLSA Regulations	Pennsylvania Regulations	Comment
6. Teaching Professional Exemption
The employee's primary duty means teaching, tutoring, instructing or lecturing in the activity of imparting knowledge ; and		No specific regulatory exemption under PA state law for teachers. However, PA statute's white collar exemption provision is essentially the same as the FLSA's white collar exemption provision. Both reference "including..teacher in elementary or secondary schools." Because statutory language is same, good (although not ironclad) argument that regulations under federal FLSA with regard to exempt status of teachers, defined broadly, should apply under PA state law too (at least in terms of duties).
Who is employed and engaged in this activity as a teacher in an educational establishment.
No minimum salary
No minimum percentage of exempt work
No maximum percentage of non-exempt work

FLSA Regulations	Pennsylvania Regulations	Comment
7. Outside Sales Exemption
Employee's primary duty is (i) making sales as defined by the statute or (ii) obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer [Under statute, "sale" is defined to include any sale, exchange, contract to sell, consignment for sale, shipment for sale or other disposition]; and	Same, except: 1. PA law does not include "contracts for services." 2.Also, slightly different definition of "making sales," but which differences are not likely to be material.	Employee exempt under federal FLSA will not be exempt under PA state law, unless at least 80% of time spent on outside sales work (which may include promotional and other work incidental to the employee's own outside sales, but not the sales of others.) In addition, PA exemption does not appear to cover "contracts for services," even if PA percentage requirements are satisfied.
Employee is customarily and regularly engaged away from employer's place of business in performing such primary duty.	Same, except for percentage requirements and limitations discussed below
No minimum salary	Same-no minimum salary
No minimum percentage of exempt work	80% of work time must be away from employer's place of business
No maximum percentage of non-exempt work	No more than 20% of work can be non-exempt work

FLSA Regulations	Pennsylvania Regulations	Comment
8. Computer Exemption
Employee's primary duty is:		No comparable exemption under PA state law. Possible, however, that some computer programmers will fall under one of other exemptions recognized by PA state law .
The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications;
The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
The design, documentation, testing, creation or modification of a computer program related to machine operating systems; or
A combination of the aforementioned duties, the performance of which requires the same level of skills.
$455 per week or $27.63 per hour
No minimum percentage of exempt work
No maximum percentage of non-exempt work

FLSA Regulations	Pennsylvania Regulations	Comment
9. Highly compensated employees
Salary Requirements		Special exemption does not exist under PA state law so special exemption is irrelevant in PA. However, employee still may be exempt in PA if falls under any of the preceding exemptions.
$100,000 per year
$455 per week
Duties requirements
Employee must customarily and regularly perform one (not all) of either administrative, professional or executive exempt duties

Statutory Exemptions for Bona Fide
Executive, Administrative, and Professional Employees and Outside Salesmen

Fair Labor Standards Act, 29 U.S.C. § 213

Pennsylvania Minimum Wage Act, 43 P.S. § 333.105

Section 213. Exemptions (a) Minimum wage and maximum hour requirements: The provisions section 206 (except subsection (d) in the case of paragraph (1) of this subsection) and section 207 of this title shall not apply with respect to -

1) any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary, subject to the provisions of Subchapter II of Chapter 5 of Title 5 , except that an employee of a retail or service establishment shall not be excluded from the definition of employee employed in a bona fide executive or administrative capacity because of the number of hours in his workweek which he devotes to activities not directly or closely related to the performance of executive or administrative activities, if less than 40 per centum of his hours worked in the workweek are devoted to such activities);

Section 105. Exemptions. Employment in the following classifications shall be exempt from both the minimum wage and overtime provisions of the act: . . .

(5) In a bona fide executive, administrative, or professional capacity (including any employee employed the capacity of academic administrative personnel or teacher in elementary or secondary schools) or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the secretary, except than an employee of a retail or service establishment shall not be excluded from the definition of employee employed in a bona fide executive or administrative capacity because of the number of hours in his workweek which he devotes to activities not directly or closely related to the performance of executive administrative activities, if less than forty percent of his hours worked in the workweek are devoted to such activities);

Differences in the federal and Pennsylvania statutory provisions, while probably not material, are noted above in bold.