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State Lawmakers Hear Cheers, Jeers on Overtime Proposal

September 5, 2018
4:25 PM

Proposed overtime eligibility changes and their possible impact on employers was up for discussion this week at the state House of Representatives Labor & Industry Committee.

We were on hand when the committee heard testimony on the Department of Labor & Industry’s proposed regulation, which would more than double the current salary threshold for employee “exempt status” and provide for automatic adjustments to the salary threshold thereafter. Additionally, it would revise the “duties tests,” which are also used to determine eligibility.

During its hearing, the committee heard from the Pennsylvania Labor and Industry Secretary. In addition, the Deputy Secretary for Safety and Labor-Management Relations spoke in support of the Department of Labor and Industry’s proposed rule, noting that Pennsylvania’s salary threshold has not been updated since 1977.

The committee also heard from a panel of employers, representing both the non-profit and small business community who expressed concerns about the impact of the proposal on their businesses and employees. While no vote was taken during this hearing, lawmakers did have the opportunity to ask questions of those providing testimony.

Many IA&B member agencies are small businesses that will be significantly impacted by these proposed changes. During the open comment period, we sent a letter to the Department of Labor & Industry focused on:

  • Seeking more consistency between the federal FLSA and the state requirements (avoiding two differing sets of rules for employers to comply with);
  • Keeping the dollar threshold for exemption reasonable; and
  • Adding or amending two exemptions that are not applicable in Pennsylvania even though they are available under the federal statute. Both affect insurance agencies:
    • The Outside Sales Exemption currently requires spending 80% or more of the producer’s time on outside sales calls. IA&B is seeking a less stringent requirement.
    • The Highly Compensated Employee (HCE) is not available in Pennsylvania and could apply to some producers.

The regulation is still in the proposed rulemaking stage with comments from the Independent Regulatory Review Commission due by Friday, Sept. 21. After that, the Department of Labor & Industry will issue a final rule. Although the timing of the final rule is uncertain, the deadline is Aug. 24, 2020.

EDITOR’S NOTE: Due to the sensitive nature of compliance issues, a link to this article was included exclusively in the Agent Headlines emails sent to those members marked as “primary” in our database. If you are not the agency owner or do not handle HR in your agency, please forward this article to the appropriate person(s).