Salaried Non-Exempt Workers in Pennsylvania to be Paid Time-and-a-Half for Overtime

On November 20, 2019, the Pennsylvania Supreme Court issued a decision requiring that employers provide salaried, non-exempt employees with overtime compensation that is 1.5 times their regular rate of pay for hours worked in excess of 40 during a work week.

This decision will improve the lives of many low-wage salaried workers in the Commonwealth. It means that Pennsylvania law will now stand in sharp contrast to the federal Fair Labor Standards Act’s (“FLSA”) requirement that this type of worker be paid half their regular rate of pay for any hours worked over 40 in a week.

In Chevalier v. General Nutrition Centers, Inc., No. 33-WAL-2018, the Pennsylvania Supreme Court interpreted the overtime requirements of the Pennsylvania Minimum Wage Act of 1968 (“PMWA”), as applied to salaried non-exempt workers for the first time. A salaried non-exempt employee is an employee who is:

1) not a farm laborer, executive, administrative, professional, or outside sales employee; and
2) makes less than $455 per week ($684 beginning January 1, 2020).

Most commonly these employees tend to be those with jobs such as retail team leaders/managers or paralegals. In this case, the lead plaintiff, Tammy Chevalier, worked as a store manager and senior store manager for General Nutrition Centers, Inc.

The court’s ruling requires that employers calculate the regular rate of pay of the employee by dividing the total weekly wages by the number of hours worked during the week. The employer is then required to pay employees 1.5 times the employee’s regular rate of pay for any hours worked in excess of 40. For example, an employee who is paid a weekly salary of $420 and works 46 hours during a work week has a rate of pay of $9.13/hour. That same employee will now be paid $13.70/hour for the six hours over 40 in that week, or $82.20. Under federal law, the same employee with an hourly pay rate of $9.13 would only be paid $4.57/hour for the six hours over 40 he/she worked, or $27.39.

The basis for the court’s decision was its finding that the intent of the Pennsylvania General Assembly in enacting the PWMA was to “use the Commonwealth’s police power to increase wages to combat the evils of unreasonable and unfair wages.” This is, the court noted, different from the purpose of the FLSA, which “was not only to increase pay for overtime work but also to prevent excessive work hours and to increase the distribution of available work.” Furthermore, the court held that the PWMA is an example of the Commonwealth’s inherent power to “enact more beneficial wage and hours than those provided in the FLSA.” Logically, therefore, the court determined that overtime requirements for non-exempt salaried workers should be more protective than those of the FLSA. As a result of this decision, salaried non-exempt workers will receive overtime at the same rate as hourly non-exempt workers.

If you have questions about whether the rate of pay you are receiving complies with the Pennsylvania Minimum Wage Act or the Fair Labor Standards Act please contact our Overtime and Unpaid Wages Group.

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