Overtime Rules Comment Period to Close Aug. 22

The public will have until Aug. 22 to submit comments to a state regulatory review panel about Gov. Tom Wolf’s proposal to update Pennsylvania’s Minimum Wage Act regarding overtime rules to ensure that almost a half-million salaried workers are compensated fairly for the extra time they dedicate to their jobs.

American labor unions fought for and won a federally mandated 40-hour work week 80 years ago with the passage Fair Labor Standards Act. But hundreds of thousands of Pennsylvania’s low and mid-level salaried workers can no longer rely on that hard-earned protection.

Under current federal law, salaried employees who make more than $23,660 a year are generally ineligible for mandatory overtime pay. That threshold applies to most Pennsylvanians because it supersedes the state’s outdated level, which is as low as $8,600 for some job categories.

So, for an estimated 465,000 Pennsylvanians, an employer may choose not to compensate them for the time they work beyond the 40-hour standard.

Gov. Tom Wolf recently introduced a new set of regulations to modernize the state’s overtime rules. The proposal would more than double the salary threshold for mandatory overtime pay over the next four years to $47,892 and would clarify how existing law defines management-level jobs so that employers wouldn’t be able to use dubious exemptions to skirt overtime pay requirements.

Wolf’s issued this Jan. 17 statement that describes the changes. The proposed rules are subject to review by the state’s Independent Regulatory Review Commission, which is accepting public comments through Aug. 22. Visitors to the IRRC website can read the public comments submitted so far.

A recent statewide poll shows that an overwhelming majority, 84 percent, of Pennsylvanians support updating overtime rules so that salaried employees are compensated fairly for working extra time. Yet, many in the business community have opposed modernizing the state’s overtime rules and have launched their own write-in campaigns against the proposal.

Visit this website to submit comments via a simple online form created by The Action Network.

PA Supreme Court Upholds Philly Beverage Tax

The Pennsylvania Supreme Court upheld Philadelphia’s controversial sugary beverage tax by a 4-2 majority on July 18, finding that the city did not violate state law prohibiting double taxation because the beverage tax is levied against distributors, not consumers.

Opponents of the tax, including the beverage industry, store and restaurant owners and consumer groups, filed suit against the city arguing that the policy amounts to a consumer tax because distributors and retailers recover their additional costs by raising prices. Under the policy, distributors must pay 1.5 cents per ounce for the sweetened non-alcoholic beverages, syrups and concentrates they supply to retailers. The tax applies to products that list a caloric sugar-based sweetener among their ingredients. These products are generally subject to the state’s sales tax, as well.

City officials imposed the beverage tax to raise funding for pre-kindergarten programs, community schools and improvements to parks, recreation centers and libraries. After the Supreme Court ruling, Mayor Jim Kenney said the city will “fully ramp up” its implementation of the programs and improvement projects. The Inquirer reported the city will begin spending an estimated $56 million in beverage tax revenue that it had held in reserve pending the outcome of the litigation, although the tax has raised about 15 percent less than previously projected by the administration.

Chief Justice Thomas G. Saylor wrote the majority opinion. Justices Max Baer, Debra Todd and Christine Donohue concurred. Justices David N. Wecht and Sallie Updyke Mundy wrote dissenting opinions here and here. Justice Kevin Dougherty of Philadelphia recused himself in the case.

GNC Employees’ Overtime Pay Dispute Reaches High Court

In a separate overtime rules issue, the PA Supreme Court has agreed to consider a case in which salaried GNC store workers claim their employer violated the Minimum Wage Act law by paying them only half of their usual pay rate for overtime hours they worked, rather than the time-and-a-half mandated by state law.

In Chevalier v. General Nutrition Centers the plaintiffs sued on behalf of a class of GNC employees to recover overtime wages they say they were unfairly denied by the company. They complained that the employer paid them only 50 percent of their hourly rate rather than the 150 percent required by law. In its defense, GNC argued that the employees’ standard salary covered the first 100 percent of the 150 percent overtime pay (that is, salaried employees are not hourly workers and should not be entitled to additional base pay for overtime).

Allegheny County Court of Common Please ruled in favor of the plaintiffs in September 2016 and ordered GNC to pay almost $1.4 million in back overtime pay, plus interest, legal fees and court costs. A Superior Court panel later affirmed the decision, prompting GNC to appeal.

However, the lower courts ruled for the defendants on a separate component of the suit. The plaintiffs further claimed that GNC calculated each employee’s hourly pay rate unfairly using “fluctuating” hours. That is, their weekly base salary remained the same regardless of overtime hours worked, so in weeks when employees worked more than 40 hours, their prorated hourly rate was less and the hourly time-and-a-half pay amounted to less.

GNC did not appeal the favorable lower court ruling on that part of the case, so the Supreme Court will not consider the issue. The Legal Intelligencer reported on the case here.

Fed Chairman Warns that Workers’ Shrinking Share of Profits Hurts U.S. Economy

Federal Reserve Chairman Jerome Powell called the decline in workers’ share of the nation’s business profits as “very troubling” during his testimony before the U.S. Senate Banking Committee on July 17 and characterized it as a “worrysome sign in an otherwise bright American economy,” according to a Los Angeles Times report.

Powell said that the share of profits going to the nation’s labor force has fallen precipitously over the last decade.

“In 2000, wages and salaries for American workers accounted for about 66% of the overall economy. That rate has fallen to about 62%, although the decline has leveled off since the end of the Great Recession, according to statistics compiled by the Brookings institution and cited at Tuesday's hearing by Sen. Jack Reed (D-R.I.),” the Times reported.

Powell, who was appointed last fall to oversee the nation’s central bank, told the Senate panel: "We want an economy that works for everyone. In the last five years or so, labor share of profits has been sideways. This is very much akin to the flattening out of median incomes over the last few decades."

Click here for the text of Powell’s prepared remarks to the committee.

June 2018 PA Jobs Update

Pennsylvania’s seasonally adjusted unemployment rate fell to 4.3% in June 2018, down 0.2% from the previous month, marking the lowest its rate has been since June 2007. Over the month, unemployment rolls decreased by almost 8,000 individuals, with total unemployment falling to 275,000. State unemployment statistics for the month are as follows:

• Total Unemployment – 275,244
• Change Over Month –   DOWN   7,958
• Change Over Year –   DOWN   33,742
• Change Over Gov. Wolf Term –   DOWN   70,397
• Rate Change Over Month –   DOWN   0.2%
• Rate Change Over Year –   DOWN   0.5%
• Rate Change Over Gov. Wolf Term –   DOWN   1.1%

With the decrease in unemployment rolls, its rounded percentage of the labor force, or unemployment rate, fell over the prior month (rate = unemployment / labor force). The labor force is the number of employed individuals combined with the number of unemployed individuals actively searching for work. Labor force growth is a sign of a strengthening economy from more people working and/or more individuals searching for jobs. PA’s labor force remained relatively flat from May to June 2018, falling by only 439, a combination of total employment* rising by 7,519 and unemployment down by 7,958 as noted above. However, total labor force growth under Gov. Wolf has declined from a peak of +52,798 in March 2016 (unemployment -312 & total employment +53,110) to being down -43,443 as of June 2018 (unemployment -70,397 & total employment +26,954). State labor force statistics for the month are as follows: 

• Total Labor Force – 6,363,119
• Change Over Month –   DOWN   439
• Change Over Year –   DOWN   60,685
• Change Over Gov. Wolf Term –   DOWN   43,443

Non-farm* job rolls rose by 4,000 from May and June 2018, marking a 15th consecutive month of growth and pushing total non-farm employment to a new record high of 6.016 million. Year-over-year for June 2018, the commonwealth added 77,500 new non-farm jobs. Since Gov. Wolf took office, 201,000 new non-farm jobs have been added, or almost 50,000 more than were added over Gov. Corbett’s four-year term. The addition of 201,000 non-farm jobs ranks the commonwealth 35th out of 50 states for new percentage job growth, an improvement from it’s ranking of 48th in the same survey over Gov. Corbett’s term. State non-farm employment statistics for the month are as follows:

• Total Employment – 6,016,900
• Change Over Month –   UP    4,000
• Change Over Year –   UP   77,500
• Change Over Gov. Wolf Term –   UP   201,000

*Total employment for labor force provided by U.S. Census Household survey. The separate BLS Establishment survey measures non-farm jobs only.