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Legislative Winter 2019 Newsletter
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Roslyn H. Schaffer, SHRM-SCP, SPHR

 

Vice President, Legislative Update

 

 

 
PA Legislation

After returning from the summer recess, the PA General Assembly only saw a handful of bills related to employment introduced.

 

Bills Related to Leave:

HB 1739, introduced by Rep. Thomas, R-Bucks, on August 16 and referred to the Committee on Labor and Industry would establish the Pennsylvania Family and Medical Leave Program. The program would be funded through a payroll tax and administered by the Commonwealth in a manner similar to programs in New Jersey, Massachusetts, New York, Rhode Island, California, Washington and Washington, DC., providing paid leave for: the birth, adoption or placement through foster care for a child during the first year after birth; care of a family member with a serious health condition; serious health condition of the employee, including pregnancy; or care of a covered service member due to a qualifying exigency in accordance with FMLA.

 

SB 860, introduced by Sen. Leach, D-Montgomery and Delaware, on September 19 and was referred to the Committee on Labor and Industry. It would provide for up to 12 weeks of paid family leave to employees for the birth, adoption or placement through foster care of a child. This would apply to all employers who employ 4 or more employees.


 

Federal and Pennsylvania Regulations on Exemption from Overtime


In September, the US DOL released the final regulations amending the overtime exemptions under the FLSA. The regulations go into effect January 1, 2020 and will increase the salary requirement from $455 per week to $684 per week, or $35,568. Up to 10% of the minimum salary level may be satisfied with non-discretionary bonuses, commissions and other incentive pay that are paid annually or more frequently.

Additionally, the rule will increase the minimum total annual compensation required to qualify for the highly compensated exemption from $100,000 to $107,432, including at least $684 per week paid on a salary basis. Pennsylvania does not recognize the highly compensated exemption. The rule does not include any change to the duties tests.

 

The regulations do not call for automatic increases, and the required updates every four years through notice and comment rulemaking that were in the in proposed rules did not make it to the final regulations.

 

As you are aware from the alert sent out in July, the PA DOL also proposed regulations to the overtime rule. On October 17, 2019, the PA Department of Labor and Industry (DLI) sent final regulations to the state’s Regulatory Review Commission and will hold a public hearing on November 21. If approved, the regulations will eclipse the federal regulations to by changing the salary threshold to:

 

·       $684/week ($35,568 annually) effective January 1, 2020

·       $780/week ($40,560 annually) effective January 1, 2021

·       $875/week ($45,500 annually) effective January 1, 2022

 

Additionally, effective January 1, 2023 and every 3rd year thereafter, the salary threshold will automatically reset. The final regulations permit employers to satisfy up to 10% of the salary by paying non-discretionary bonuses, incentives or commissions.

 

The regulations do not provide for any exception for small businesses or non-profits.

 

Minor changes to the duties tests were made to make the regulations more closely aligned with the FLSA:

  • The requirement that executive exempt employees “customarily and regularly” exercise discretionary powers was eliminated; and
  • The requirement that administrative exempt employees “customarily and regularly” exercise discretion and independent judgment was eliminated and replaced with the requirement that their primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

 

However, there are several areas in which the Pennsylvania regulations will continue to differ from the FLSA in that they do not (this list is not all inclusive):

 

  • Allow for “concurrent performance” of exempt and non-exempt work while remaining exempt under the executive exemption;
  • Include the FLSA’s regulation extending the administrative exemption to employees whose primary duty is performing administrative functions related to academic instruction or training in an educational institution;
  • Include the FLSA’s regulation extending the professional exemption to employees with a primary duty of teaching in an educational institution;
  • Include the FLSA’s exemption of teachers, physicians and lawyers or computer professionals who are paid on an hourly basis; and
  • Include the FLSA’s highly compensated exemption.

 

This is a good time to review job descriptions and compensation practices in classifying employees as exempt or non-exempt under Pennsylvania law. Stay tuned for updates.

Update as of November 20, 2019

SB 79 which was introduced in January, 2019 by Senator Tartaglione, D-Philadelphia was passed by the Senate and sent to the House of Representatives where it was referred to the Committee on Labor & Industry. This bill is a compromise bill amends the PA Minimum Wage Act (PMWA) and will increase the minimum wage in Pennsylvania and, in exchange, repeal the PA DOL regulations that would increase the threshold for exemption from minimum wage and adopt the provisions of the FLSA. It is expected to pass the House and be signed by the Governor.

 

Specifically, the bill would increase the minimum wage in PA from $7.25/hour as follows:

 

·       July 1, 2020: $8.00/hour

·       January 1, 2021: $8.50/hour

·       July 1, 2021: $9.00/hour

·       January 1, 2022: $9.50/hour

 

The bill also requires employers who permit customers to pay gratuities by credit card to pay the tipped employees the full amount of the gratuity indicated on the charge slip by the customer no later than the next scheduled payday without any deductions for credit card processing fees or costs.

 

In exchange for agreeing to increase the minimum wage, the bill amends the PMWA to state that its minimum wage and overtime requirements must be applied in the same manner as the FLSA, except when a higher standard is specified under the PMWA or its regulations. This change would be significant for employers, as it would eliminate much ambiguity and the differences between the PMWA and FLSA on issues like overtime exemption requirements.  In other words, Pennsylvania employers would have one set of requirements to follow in this area, rather than two often vague and conflicting sets of rules.  This amendment would make all overtime exemptions currently available under the FLSA now also apply to the PMWA, including the highly compensated and computer professionals.  Additionally, it would provide clear guidance that, in areas where the PMWA and its regulations are silent, federal law would apply and provide the necessary guidance for compliance.  This change would be particularly timely, as the Pennsylvania Supreme Court issued a decision on November 20 holding that the fluctuating work week method of paying salaried non-exempt employees, which is expressly permitted by the FLSA’s regulations, violates the PMWA, because the PMWA’s regulation do not mention or address the fluctuating work week method.  Conflicts and uncertainty like this due to silence in the PMWA and its regulations would go away if the Senate bill becomes law.

 

Like the FLSA regulations, the bill allows up to 10% of the salary of an exempt employee to be comprised of non-discretionary bonuses, incentives and commissions.

 

However, the PA legislation does allow the DOL to update the salary basis from time to time beginning January 1, 2023 if the FLSA is not updated to reflect any increases.


Getting Talent Back to Work

 With the First Step Act having been signed into law, SHRM has joined a coalition of groups working to improve rehabilitation and re-entry opportunities for incarcerated men and women. In recognition of the barriers that currently exist, the goal is to give opportunities to qualified people with a criminal background who deserve a second chance. The official website to learn more about this is www.GettingTalentBackToWork.org.

There are many incentives to employers including the Work Opportunity Tax Credit, Federal Bonding Program, local Workforce Development programs and local community and faith-based organizations that offer re-entry programs. 

At the SHRM Employment Law and Legislative Conference we heard from Joe Phelps of Johns Hopkins Health Systems who has developed a process for hiring hundreds of people with records and auditing accidents and other major negative events and found that not one has been caused by an employee with a record. To date he has achieved a 64% placement of those with a criminal background. We also heard from several other employer representatives who have modeled this practice, finding that formerly incarcerated employees aren’t just “nonproblems”; they are role models in terms of performance, attendance and teamwork. They have seen the alternative and, in the overwhelming majority of cases, they deliver and are highly motivated.

SHRM is encouraging employers to take the Getting Talent Back to Work Pledge: https://www.gettingtalentbacktowork.org/#pledge

 Check out the SHRM toolkit: https://www.gettingtalentbacktowork.org/resources/


SHRM Advocacy at Work Conference: March 15-17, 2020

The Employment Law and Legislative Conference has been replaced with the Advocacy at Work Conference. This event will focus on a few key issues relevant to employers such as workplace equity, healthcare, paid family leave and immigration as well as provide for Hill visits on March 17. Training and preparation for the Hill visits are built into the schedule. For more information, please use this link: https://events.shrm.org/ehome/488163.


 

Join the Legislative Affairs Committee

Help our Chapter members stay informed about key pending legislation and hot issues. Become part of the Legislative Affairs Committee! Much of the work is self-paced as we analyze bills and draft alerts for our members. It’s a chance to learn more about the legislative process and directly apply your activities for the committee to your workplace. For more information, please contact: sepa-legislative@sepashrm.org

 

Join the A-Team

As HR professionals we are the experts when it comes to understanding the impact of policy and legislation on the workplace and lives of our employees. Consider applying that knowledge as an influencer of key decisions by joining the SHRM A-Team: http://www.advocacy.shrm.org/app/register?7&m=21248.

For more information, contact your Advocacy Captain at sepa-legislative@sepashrm.org.

 

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