Pennsylvania new regs for tipped employees and O/T calculation for nonexempt salaried employees

Effective August 5, 2022, new regulations governing tipped employees and nonexempt salaried employees will become effective in Pennsylvania. The final rules were published in the May 7, 2022 edition of the Pennsylvania Bulletin.

These new regulations include:

  1. Raising the salary threshold for tipped employees from $30.00 per month to $135.00 per month;
  2. Rules for when an employer may use a tip credit for an employee’s non-tip producing work;
  3. Rules on tip-pooling and prohibitions on deductions from tips for fees that are charged to the employer such as credit card fees;
  4. Rule formally prohibiting the use of the Fluctuating Work Week method of calculation for a nonexempt salaried employee’s overtime pay under the FLSA. Instead, the final rule provides that “’the regular rate’ in all cases for salaried workers should be calculated based on a regular, 40-hour workweek and not the total hours worked including overtime, which may be irregular and inconsistent from week to week.”

In prohibiting the FWW methodology in favor of a calculation on a regular, 40-hour week, PDLI found that that this calculation was “in the public interest because it will assure that employees who are compensated under the fluctuating workweek method are not paid less because they work more hours . . . and is in accordance with the purpose of the act which is to protect workers from unreasonably low wages.”

The final regulations also include notice and recordkeeping requirements for tip-pool arrangements. Employers are required to provide notice to affected employees at or before the time the employer makes an employment offer or at least one pay period before tip pooling arrangement takes place.

Disclaimer: The information contained herein is not intended to be construed as legal advice, nor should it be relied on as such. Employers should closely monitor the rules and regulations specific to their jurisdiction(s) and should seek advice from counsel relative to their rights and responsibilities.

By Megan Butz
General Counsel, HR Compliance, Checkwriters
Megan joined Checkwriters in 2020 and is responsible for reviewing, revising, and implementing internal policies of the company, advising on human resource, employment, and labor matters, and monitoring and publishing state and federal legal updates to the Checkwriters News and Compliance Center for distribution to thousands of clients around the country. Before joining Checkwriters, Megan served as a judicial law clerk for the justices of the Massachusetts Probate and Family Court performing legal research and writing, followed by private practice in Cape Cod.

Go back