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Wage and Hour Issues

Posted on February 19th, 2019 at 3:45 PM

If you need to consult with an attorney or would like more information on wage and hour issues, please contact the Erie County Bar Association's Lawyer Referral & Information Service.

The "Fair Labor Standards Act" guarantees most employees minimum wage and overtime pay benefits. Currently, the minimum wage is $7.25 per hour. Employees may be paid an hourly rate, a fixed weekly salary, or a fixed monthly or semi-monthly salary so long as the employee is paid at least $7.25 for each hour worked. Employees may also be paid a piece rate, earning a set fee for each product produced. Under a piece rate payment schedule, the employee's average earnings must be equal to or greater than the minimum wage. The value of non-cash payments such as meals or lodging may be credited towards the employer's minimum wage obligation. States may set a higher hourly minimum wage if they so choose. Although Pennsylvania has not done so generally, the Governor signed an Executive Order effective July 1, 2018 raising the minimum wage for Commonwealth employees, as well as the employees of certain Commonwealth-affiliated agencies, lessors, and contractors, to $12.00 per hour. That minimum wage will increase $0.50 per year, each year, until it reaches $15.00 per hour on July 1, 2024.

Tipped employees may be paid a minimum wage of $2.13 per hour, so long as they earn enough in tips to exceed the current minimum wage. If a tipped employees earnings (with tips) fall below the current minimum wage, the employer must make up the difference. Tips may be split between “front of house” employees (i.e., servers) and “back of house” (i.e., cooks) employees only if the employer does not take a “tip credit” by paying servers the reduced minimum wage.

Under the Fair Labor Standards Act, employees must be paid overtime for all hours worked over forty (40) hours in one work week. There is no federal overtime requirement for daily hours worked in excess of 8 hours. The overtime rate is one and one-half of an employee's regular rate.

Under federal law there is a "white collar exemption" to the minimum wage and overtime requirements. Employees in the white collar categories are not entitled to guarantees of minimum wage and they are not statutorily entitled to overtime for hours worked over forty (40) hours in a week. To fit within the exemption, the employee must be an executive, an administrative or professional employee. Typically, to meet the exemption, a white collar employee must be paid a minimum salary of at least $455.00 per week.

An executive employee spends more than 50% of his or her time managing the business and directing the work of two or more full-time employees. An executive has the authority to hire, fire and promote employees, and exercises discretionary power on a regular basis. An example of an executive is branch manager, credit manager, foreman, office manager, or plant manager.

An administrative employee spends more than 50% of his or her time performing office or non-manual work directly related to management operations. An administrative employee regularly exercises discretion and independent judgment, regularly and directly assists an executive, and performs specialized or technical work. An example of an administrative employee is a chief financial officer, human resources manager or executive assistant.

A professional employee spends more than 50% of his or her time performing work that requires advance training in a field of learning or artistic creativity. A professional must perform work requiring advanced knowledge in a field or science which knowledge is acquired by a prolonged course of specialized intellectual instruction. An example of a professional employee is an artist, pharmacist, lawyer, or doctor.

In addition to the white collar exemption, outside sales persons who are regularly away from an employer's place of business making sales, and whose hours of non-selling work are not more than 20% of the regular work week of a non-exempt employee are exempt from the minimum wage and overtime requirements.

The Wage and Hour Division of the Department of Labor handles the investigation and enforcement of the provisions of the Fair Labor Standards Act. If you feel that you have not received minimum wage or appropriate overtime, you can contact the Wage and Hour Division at 814-835-7283. It is located at 3939 West Ridge Road, Erie, Pennsylvania 16506.

Information is current as of 2/2019.