Christine Tartaglione's Labor Report

Under Senate Bill 79, the state’s minimum wage would increase from $7.25 an hour to $9.50 in four increments over the next 25 months. It would rise to $8 on July 1, 2020; to $8.50 on January 1, 2021; to $9 on July 1, 2021; and to $9.50 on January 1, 2022. The full Senate adopted the bill by a 42-7 vote on November 20. The measure is now in the House of Representatives for consideration.

During floor debate, Senator Tartaglione and other supporters of the bill said that the $2.25 rate increase will help hundreds of thousands of low-wage Pennsylvania workers to pay for necessities like food, shelter, and healthcare. Yet, it falls short of the rates proposed by Senator Tartaglione in SB 12, which would raise the wage floor to $12 this year and $15 by 2025.

“The General Assembly hasn’t raised Pennsylvania’s minimum wage in over 13 years, so any increase is a step in the right direction,” Senator Tartaglione said. “By adopting SB 79, we have made a statement that we are capable of working together to advance legislation that provides Pennsylvania’s low-wage workers with much-needed and long-awaited relief.”

Tartaglione vowed to continue fighting for SB 12, which also proposes to tie future minimum wage increases to inflation, eliminate the sub-minimum wage for tip earners, and repeal preemption which prevents municipalities and counties from setting their own minimum wages higher than the state rate.

If enacted, SB 79 would also prohibit employers from taking a portion of gratuities paid to employees via credit card and would require employers to pay the full amount of the gratuities as indicated on the credit card slip to employees. A Republican-driven amendment to the bill would require the state’s overtime pay regulations and eligibility standards to match federal standards at least until January 1, 2023.

PA Court: Base Pay Does Not Cover Overtime Hours for Non-Exempt Salaried Employees

Non-exempt salaried Pennsylvania workers earned a legal victory on November 20 as the Pennsylvania Supreme Court affirmed that an employee’s weekly salary cannot be used as part of the worker’s overtime compensation. So employers must pay an additional 150% of an eligible employee’s regularly pay for each overtime hour worked.

In Chevalier v. General Nutrition Centers, two GNC employees sued on behalf of their co-workers claiming that the employer violated state law by paying only 50% of the regular hourly rate for each overtime hour. As a result, the employer underpaid salaried workers by $1.4 million.

According to Law.com, GNC argued that for a salaried employee, the regular weekly rate is the same regardless of how many hours are worked. Therefore, the base rate for any overtime hours (the first 100% of overtime pay) should be covered by the regular salary, and the employer should be required to pay only the extra 50 percent. The company cited provisions of the federal Fair Labor Standards Act to make its case.

Previously, the Allegheny County Common Pleas Court ruled in favor of GNC before a Pennsylvania Superior Court panel reversed that decision, prompting GNC’s appeal.

In affirming the Superior Court’s opinion, the Supreme Court found that under federal precedent, states have the authority “to enact more beneficial wage and hour laws than those provided in the FLSA.” Further, the high court determined that the intent of Pennsylvania’s Minimum Wage Act and Pennsylvania Department of Labor & Industry regulations is to require an additional 150% for each overtime hour.

On a separate point, GNC successfully argued in the lower courts that Pennsylvania overtime regulations do not preempt federal regulations that allow employers to use a fluctuating workweek to calculate an employee’s hourly rate for the purpose of calculating the overtime rate. That is, a salaried employee’s hourly rate is subject to change depending on how many hours the employee actually works. Therefore, the hourly overtime rate can be calculated based on the fluctuating regular hourly rate.

New Joint-Employer, Union Election Rules Coming in December

The Trump administration said it plans to issue new joint-employer and union election rules by the end of 2019 as part of its latest “regulatory roadmap” released on November 20.

According to Politico.com, the new joint employer rules would “make it harder for companies to be held liable under the Fair Labor Standards Act for violations committed by their franchises and contractors.” The Department of Labor rulemaking coincides with a similar pending rule issued by the National Labor Relations Board. Meanwhile, the Equal Employment Opportunity Commission “will issue a proposal next month clarifying when a company should be classified a joint employer under federal employment discrimination law.”

The administration may run into procedural problems as it attempts to repeal Obama-era regulations that removed legal obstacles and mandatory waiting periods from the union certification election process. Prior to 2014, union organizers were required to wait until after eligibility-related litigation was resolved before conducting a certification election. There was also a mandatory 25-day waiting period between when an election was ordered and when it could be held.

In 2017, the NLRB issued a request for information about repealing the 2014 rules that sped up the election process. The NLRB is now planning to issue a final rule this month. An official from the Washington-based consumer rights thinktank Public Citizen told Politico that NLRB would violate the Administrative Procedures Act by moving directly from a request for information to a final rule.

NLRB Underspends Again While Reducing Staff and Leaving Regional Posts Vacant

Is the National Labor Relations Board underspending in an effort to undermine workers’ ability to unionize and file labor complaints? The NLRB’s independent inspector general is investigating that question in light of the multi-million-dollar budget surpluses reported by the agency for the last two fiscal years.

According to Bloomberg Law, the NLRB ended Fiscal 2019 with a $5.7 million surplus and also ended 2018 without spending all of its appropriated budget. The agency’s annual budget has remained at $247 million for the previous six years.

“Agency leaders have said the surplus was caused by contracts that didn’t pan out, came in under budget, or are under protest,” the news agency reported.

Yet, “Career staffers have accused agency leadership of an intentional effort to slim down the NLRB,” which has offered buyouts to employees and left six of the agency’s 26 regional director positions vacant.

In a November 20 memo to NLRB CFO Isabel Luengo McConnell, Inspector General David Berry stated he will audit the agency’s Fiscal Year 2019 budget execution, specifically regarding the “lapse of $5.7 million from the (annual) appropriation.” Berry plans to complete the audit and issue a report by May 2020.

“Agency heads say they’re trying to make the NLRB more efficient and have previously pointed to the White House’s proposed budgets as a reason to cut staff and make other belt-tightening moves,” Bloomberg reported.

In 2018, the agency operated without a CFO for months. Meanwhile, the Government Accountability Office investigated its spending “following staff allegations that the Trump administration had instructed agency heads to stop spending budgeted money.”

October 2019 PA Jobs Update

Pennsylvania’s seasonally adjusted unemployment rate rose to 4.2% in October 2019, up 0.2% from September’s rate of 4.0%. Over the month, unemployment rolls increased by 10,801 individuals, with total unemployment rising above 270,000. State unemployment statistics for the month are as follows:

As indicated above, total unemployment’s rounded percentage of the labor force, or unemployment rate, rose over the 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 can be a sign of a strengthening economy from more people working and/or more individuals searching for jobs. In October 2019, PA’s labor force rose for a fourth consecutive month, increasing by 23,419 individuals, a combination of total employment* rising by 12,618 and unemployment up by 10,801 as noted above. The labor force in October 2019 stood at a new record of high of 6.516 million.
Over Governor Wolf’s first term, the state’s labor force grew by 58,755 (employment +137,320 – unemployment -78,565) and is up 114,176 (employment +187,751 – unemployment -73,575) over both terms thus far. State labor force statistics for the month are as follows:

PA non-farm* job rolls grew by 8,100 from September to October 2019, marking a third consecutive monthly increase as employment continues to rebound from negative growth seen in prior months. Year-over-year (October 2018 to October 2019), a total of 28,700 new non-farm jobs have been added. Over Governor Wolf’s first term (Jan. 2015 – Jan. 2019), a total of 223,000 new non-farm jobs were added, roughly 71,000 more than were added over the four-year term of the prior Corbett Administration. The addition of 223,000 non-farm jobs over Governor Wolf’s first term ranked the commonwealth 35th out of 50 states for new percentage growth, an improvement from it’s ranking of 49th in the same survey over Governor Corbett’s term. Though new non-farm growth is down in 2019, the commonwealth’s addition of 21,400 thus far through Governor Wolf’s second term rank it 33rd out of 50 states for new percentage growth over this period. State non-farm employment statistics for the month are as follows:

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

PA Job Growth Under Governor Wolf

Rankings relative to other U.S. states
(Non-farm, seasonally adjusted. Figures in thousands.)

Happy Thanksgiving from Senator Tartaglione!