By Peter Calcara, vice president – government relations
The PICPA is working at both the federal and state levels to soften the blow of the U.S. Department of Labor’s (DOL) overtime rule that will take effect later this year. (See my April 4 blog post.)
In short, the final rulemaking, announced by DOL in May, includes a significant salary threshold increase for white-collar salaried employees. The increase will double the current threshold of $23,660 to $47,476 on Dec. 1, giving employers little time to determine how best to comply with the mandate.
As I noted in my April 4 post, the magnitude of an increase to the salary threshold and almost any changes to the duties test will hurt small businesses, schools, municipalities, nonprofits, and other employers, as well as workers and the economy as a whole. Many employees could lose the flexibility they currently enjoy, and employers could face potentially significant increases in labor and administrative costs.
The PICPA has been actively engaged in exploring ways to make the rule less disruptive to Pennsylvania businesses here and throughout the nation. One option is the Overtime Reform and Enhancement Act (OREA), H.R. 5813, sponsored by U.S. Rep. Kurt Schrader (D-Ore.).
H.R. 5813 would absorb some of the compliance burden placed on employers and their employees by implementing a framework for gradual increases. The measure would build up to the full threshold envisioned by DOL in December 2019, providing three full years for firms and companies to better plan how to absorb the increase. Additionally, H.R. 5813 would eliminate the automatic update provision of the overtime rule, preventing DOL from setting a new salary threshold without public input.
OREA has the backing of nearly 100 organizations, including the American Institute of CPAs and the American Society of Association Executives (ASAE).
The PICPA has sent letters of support on H.R. 5813 and asked Congressional delegation members to cosponsor the bill as it will provide needed regulatory relief to firms and their employees in Pennsylvania.
On the state level, Sen. Lisa Baker (R-Wayne) plans to formally introduce legislation in the near future to modernize and simplify the Pennsylvania Minimum Wage Act of 1968 (PMWA) by eliminating confusing and unnecessary differences between state and federal law.
These modifications should eliminate unnecessary litigation that results when Pennsylvania employers are alleged to fail to comply with the PMWA, even though they have complied with federal rules they assumed applied. The modifications are also expected to free resources within the state government, allowing for concentrated enforcement efforts in other areas.
Pennsylvania would be joining several other states making similar revisions, including the surrounding states of Maryland, New Jersey and Ohio, as well as Alaska, Massachusetts, Missouri, Montana, North Carolina, Rhode Island, and the District of Columbia.
With only a handful of legislative days remaining in the 2015-2016 session, Baker’s bill will have to be reintroduced in 2017 if there’s no legislative action this year.