The Pennsylvania minimum wage has undergone several transformations since it was first established in 1968, including various exemptions and special cases that apply to different categories of workers. As an employer, understanding and complying with these changes is essential to ensure fair compensation for employees and avoid potential legal repercussions.
In this comprehensive guide, we will explore everything you need to know about Pennsylvania’s minimum wage laws. We will also discuss additional wage laws in the state that employers need to be aware of. That way, you will understand your obligations as an employer and how to effectively navigate the complexities of Pennsylvania wage laws to ensure fair compensation and nurture a compliant work environment.
- How Minimum Wage Works in the US
- Pennsylvania Minimum Wage: Historical Timeline
- Pennsylvania Minimum Wage Rates
- Exemptions & Special Cases
- Who Enforces the Pennsylvania Minimum Wage?
- Additional Pennsylvania Wage Laws
- Best Practices to Ensure Wage Law Compliance
- How Factorial Can Help You Comply with Pennsylvania Wage Laws
- A Payroll Solution that Centralizes All Your Tasks🚀
How Minimum Wage Works in the US
The minimum wage is the lowest amount of money that employers are legally allowed to pay their employees per hour. However, there is no single minimum wage in the United States. Instead, there are three tiers of minimum wage laws: federal, state, and municipal.
Federal Minimum Wage
The federal minimum wage, set by the Fair Labor Standards Act (FLSA), is currently $7.25 per hour. This is the lowest wage that any employer in the United States can legally pay their employees. However, the federal minimum wage is not always the highest minimum wage that applies to employees.
State Minimum Wage
Many states have their own state minimum wage laws that are higher than the federal minimum wage. In these states, employees are entitled to the higher of the two minimum wages. As of October 2023, 29 states and the District of Columbia have minimum wages that are higher than the federal minimum wage. The highest state minimum wage is $15 per hour in Washington, D.C., and seven other states.
Municipal Minimum Wage
Some cities also have their own minimum wage laws that are higher than both the federal and state minimum wages. These municipal minimum wages are typically set by the city council or by ballot initiative. There are currently over 60 U.S. cities with minimum wages that are higher than the federal minimum wage. The highest municipal minimum wage is $17.25 per hour in Los Angeles, California.
Ultimately, while the federal minimum wage provides a nationwide standard, the tiered structure at the state and local levels acknowledges the diverse economic landscapes across the country and allows for more localized adjustments to account for varying economic conditions.
Pennsylvania Minimum Wage: Historical Timeline
The Pennsylvania minimum wage has a long and varied history, reflecting the evolving economic landscape and the State’s need to ensure a living wage for its workers.
Key highlights of the Pennsylvania minimum wage timeline include:
- 1937: Pennsylvania adopted the federal minimum wage of 25 cents per hour, marking the beginning of a journey of continuous adjustments and refinements.
- 1968: Pennsylvania established its first minimum wage of $1.15 per hour.
- 1989: The Pennsylvania minimum wage increased to $4.25 per hour, the highest minimum wage in the state’s history at that time.
- 1992: The Pennsylvania minimum wage increased to $5.15 per hour, the highest minimum wage in the state’s history until 2009.
- 2009: The Pennsylvania minimum wage increased to $7.25 per hour to comply with the federal minimum wage.
Pennsylvania Minimum Wage Rates
The minimum wage in Pennsylvania is currently $7.25 per hour for all employees, regardless of experience or tip status. This rate has been in effect since 2009 and is the same as the federal minimum wage.
However, there is a growing movement to increase the minimum wage in Pennsylvania. In 2023, there were several bills introduced in the Pennsylvania General Assembly. Although they are yet to be passed, these bills propose raising the PA minimum wage to $11.00 per hour in 2024, with further increases each year.
Watch this space…
Tipped Employees
In Pennsylvania, a tipped employee is defined as someone who routinely receives more than $30 per month in tips.
According to Pennsylvania minimum wage law, employers can pay tipped employees a lower cash wage than the standard minimum wage as they can take a tip credit of up to $4.42 per hour. This means that tipped employees must receive a cash wage of at least $2.83 per hour, with the rest of their wages coming from tips.
For example:
Paul is a dishwasher in Pennsylvania who earns the minimum wage of $7.25 per hour. During one of his shifts, he receives $5.00 in tips. As employers in Pennsylvania can credit a portion of the tips that an employee receives towards the minimum wage that they must pay their employees, Paul’s employer can credit $4.42 of the $5.00 in tips towards his hourly wage. In other words, Paul’s employer only has to pay him $2.83 in cash wages for that hour. This is because, including both the cash wage and the tips received, Paul’s total earnings for that hour are $7.83.
However, if Paul does not receive any tips in the next hour of his shift, his employer must pay him the full minimum wage of $7.25 in cash wages for that hour. That way, he is earning the Pennsylvania minimum wage of $7.25 per hour at all times, taking into account hourly rate and tips.
Exemptions & Special Cases
There are a few exemptions to the Pennsylvania minimum wage.
These exemptions include:
- Agricultural workers. Employees who are employed by an agricultural employer on a farm, in the cultivation of orchards or gardens, in handling or packing farm or garden products, or in connection with the operation or maintenance of farm machinery or equipment.
- Domestic workers. Employees who are employed in the home of an employer as a babysitter, housekeeper, cook, or companion.
- Newspaper carriers. Employees who are under the age of 18 and who are employed to deliver newspapers.
There are also a few special cases that apply to the Pennsylvania minimum wage.
These special cases include:
- Tipped employees. As we saw above, employers can pay tipped employees a lower wage than the minimum wage, but the wage must be at least $2.83 per hour.
- Learners. Learners are employees who are being trained on the job. Employers can pay learners a lower wage than the minimum wage, but the wage must be at least $4.25 per hour.
- Apprentices. Apprentices are employees who are enrolled in a formal apprenticeship program. Employers can pay apprentices a lower wage than the minimum wage, but the wage must be at least $12.00 per hour.
Hardship Waivers
Finally, employers who are unable to pay the minimum wage due to economic hardship can apply for a hardship waiver from the Pennsylvania Department of Labor and Industry (DLI). The DLI will grant a hardship waiver if the employer can demonstrate that they are experiencing financial difficulty and that paying the minimum wage would cause them to go out of business.
Who Enforces the Pennsylvania Minimum Wage?
The Pennsylvania Department of Labor and Industry’s Bureau of Labor Law Compliance (BLLC) is responsible for enforcing the Pennsylvania minimum wage. The BLLC enforces the minimum wage law by investigating complaints, conducting audits, and taking enforcement action against employers who are found to be violating the law. Enforcement action can include issuing fines, requiring employers to pay back wages to underpaid employees, and even criminal prosecution.
Employees can file a complaint with the BLLC online, by phone, or in person. The BLLC will investigate all complaints and take appropriate enforcement action.
The BLLC also provides resources and information to help employers comply with the minimum wage law. These resources, available on the BLLC’s website, include:
- Minimum wage posters
- Fact sheets about the minimum wage law
- FAQs about the minimum wage law
- Compliance assistance
Employers who are unsure about how to comply with the minimum wage law can contact the BLLC for assistance. The BLLC can help employers understand the law and answer any questions that they may have.
Additional Pennsylvania Wage Laws
In addition to the Pennsylvania minimum wage, the Keystone State has several additional wage laws that employers need to be aware of. These laws cover various aspects of employee compensation, working conditions, and employee rights, ensuring fair and equitable treatment for all workers in the state.
Overtime Pay
In the state of Pennsylvania, employers must compensate their non-exempt employees with overtime pay at a rate of 1.5 times their regular hourly wage for any hours worked beyond 40 in a workweek. This regulation applies to all non-exempt employees. In other words, those classified as eligible for overtime pay under the Fair Labor Standards Act (FLSA).
Meal and Rest Breaks
According to Pennsylvania law, employers must provide their employees with meal and rest breaks to ensure their well-being and productivity.
The specific requirements for meal and rest breaks vary depending on the length of the employee’s shift. For example, for employees who work more than five consecutive hours, employers must provide a 30-minute meal break. During this break, employees must be relieved of all work duties and allowed to leave their work area. Employers do not have to pay employees for meal breaks.
In addition to meal breaks, employees who work more than six consecutive hours must receive a 10-minute rest break. Rest breaks can be taken at shorter intervals throughout the shift, but they must be at least 10 minutes long each. Employers do not have to pay employees for rest breaks.
As a result, tracking employee hours worked and breaks is crucial to ensure compliance with Pennsylvania’s meal and rest break regulations. Accurate timekeeping records can help employers identify potential violations and make necessary adjustments to their scheduling practices. Additionally, maintaining detailed records can serve as evidence of compliance during audits or investigations conducted by the Pennsylvania Department of Labor and Industry (DLI).
Wage Payment and Collection Act
The Pennsylvania Wage Payment and Collection Act (WPCA) requires employers to pay their employees all wages due within 48 hours of the end of the pay period. The WPCA also prohibits employers from making deductions from employees’ wages without their consent.
Pennsylvania Prevailing Wage Act
The Pennsylvania Prevailing Wage Act (PWPA) requires employers to pay prevailing wages on certain public works projects. Prevailing wages are the rates of pay that are typically paid in the locality for a particular type of work.
Equal Pay Act
The Pennsylvania Equal Pay Act, which mirrors the federal Equal Pay Act of 1963, prohibits employers from discriminating against employees based on their gender. This means that employers must compensate men and women equally for jobs that require the same level of skill, effort, and responsibility, regardless of gender. This is known as pay parity.
The Equal Pay Act applies to all employers in the state of Pennsylvania, including private businesses, government agencies, and educational institutions. It covers both non-exempt and exempt employees, meaning that all employees are protected from gender-based pay discrimination.
Recordkeeping
Pennsylvania law requires employers to maintain certain employee records. This includes pay stubs, time records, and payroll summaries. Employers must maintain these records for a minimum of two years.
Best Practices to Ensure Wage Law Compliance
Ensuring wage law compliance is crucial to avoid costly legal consequences and maintain a positive reputation. This includes the Pennsylvania minimum wage as well as the additional state wage laws that we have just highlighted.
Here are some best practices to help you:
- Stay updated on wage laws. Firstly, regularly review and stay informed about the latest federal, state, and local wage laws applicable to your business. This includes understanding minimum wage requirements, overtime pay rules, recordkeeping obligations, and any applicable exemptions.
- Develop and communicate wage policies. Secondly, establish clear and comprehensive wage policies that outline the company’s compensation practices, including regular pay rates, overtime pay procedures, and any applicable differentials. Communicate these policies to all employees in writing to ensure pay transparency.
- Proper employee classification. Thirdly, accurately classify employees as either exempt or non-exempt. This is important because employers do not generally have to pay overtime to exempt employees. However, employers must compensate non-exempt employees for all hours worked beyond the standard workweek.
- Accurate recordkeeping and payroll processing. In addition, maintain accurate and complete records of employee hours worked, wages paid, and any deductions. Use reliable payroll software that automatically calculates wages, taxes, and deductions to minimize errors.
- Regular audits and reviews. Conduct regular audits and reviews of payroll records and wage practices to identify and rectify any potential compliance issues.
- Employee training. Provide training to managers and supervisors on Pennsylvania wage law compliance, including identifying potential violations, understanding overtime rules, and handling employee inquiries.
- Open communication and complaint resolution. Finally, establish open communication channels for employees to report wage concerns.
By following these best practices, employers can minimize the risk of wage law violations, protect their employees’ rights, and maintain a positive employer brand.
How Factorial Can Help You Comply with Pennsylvania Wage Laws
Due to its ever-changing nature, staying compliant with state and federal regulations can be a daunting task. Thankfully, with its automated calculations and robust security features, Factorial empowers businesses to manage payroll, streamline recordkeeping, and ensure wage law compliance with confidence and ease.
For example:
- Payroll management. Factorial’s automated payroll system takes care of all calculations, ensuring that you pay your employees correctly and on time. This includes calculating pay raises and tracking on-demand pay.
- Holiday pay. Factorial automatically calculates employee holiday pay, including setting paid or unpaid time off for Pennsylvania state holidays.
- Overtime. Factorial can help you to accurately calculate Pennsylvania minimum wage and overtime pay for all employees. You can also use the time tracking feature to track employee hours worked so that you compensate your workforce accurately for all overtime hours.
- Payroll security. Factorial employs robust payroll security measures to protect sensitive employee data. These measures include multi-factor authentication, data encryption, and regular security audits.
- Recordkeeping. Finally, Factorial automatically stores all of your payroll records, including pay stubs, time records, and payroll summaries. That way, you ensure compliance with Pennsylvania recordkeeping requirements.
What’s more, Factorial’s user-friendly interface is very easy to navigate. Even if you’re not a tech expert, you can quickly figure out how to manage your payroll systems and handle other important tasks. Plus, even if an issue does arise, Factorial’s team of experts is available to help you with any questions or concerns that you might have. That way, you can be sure that you and your team have all the support you need to ensure compliance with Pennsylvania minimum wage laws and build an engaged and productive workforce.
