PA Leads on Overtime Pay – Where the Governor Can Act Without the State Legislature

Stephen Herzenberg |

Turns out that Gov. Wolf believes in the 40-hour week. Because he does, about 460,000 lower-paid Pennsylvania salaried workers will soon be on track to receive overtime pay if they work more than 40 hours a week. If their employer doesn’t want to pay overtime, these hard-working members of Pennsylvania’s middle class will get back time with their family, instead of having to work for free.

We’re talking here about shift supervisors at a McDonald’s who mostly serve customers, department managers at a Walmart, accountants and para-legals overseen by high-paid executives and partners, team leaders in some factories. Their salary ranges from $24,000 to $48,000 and, if they work 45-50 hours per week, their pay per hour can be $10 or $11 – or less. They hold together many of our businesses, arriving early, staying late, going the extra mile – and too often their employers take advantage of them. (Thankfully, good employers such as Altoona-based Sheetz recognize that salaried workers paid decently will repay their employers in loyalty, productivity and service.)

The Governor stepped up to give lower-paid salaried workers basic fairness because a Texas court and the Trump Administration derailed the Obama Administration’s effort to do the same for 12.5 million workers nationally. The Trump Administration has appealed the court’s December 2016 claim that the Department of Labor does not have the authority to set an overtime threshold. But it has indicated that it will set a much lower threshold than $48,000, a little over $30,000 rather than the current $23,600. That will leave some salaried workers still working for as little as $12-$13 per hour.

Gov. Wolf’s leadership on the overtime rule provides an interest contrast with Pennsylvania’s inaction on the minimum wage. On the minimum wage, every one of our neighboring states has raised its minimum wage above the federal $7.25 per hour. But Pennsylvania is the regional laggard because increasing the state minimum wage requires state lawmakers to act. Since they have not done so, Pennsylvania’s lower-paid workers have not enjoyed a roughly $1,500 per year (if they work full time, full-year) increase in wages enjoyed by lower-paid workers in our neighbors. Our county map of pay trends in a typical lower-wage industry across the seven-state region drives home, which workers have seen little increase in their pay since 2012. Most of them are in Pennsylvania and there’s a big concentration in rural central Pennsylvania. Those counties’ lawmakers should be leading the parade for a higher minimum wage (cue to Mufasa’s voice from The Lion King), “but they’re not.”

In stark contrast to the situation on the minimum wage, Pennsylvania is now a regional – and national – leader on overtime pay for lower-paid salaried workers. It is because Gov. Wolf can raise the overtime threshold on his own, even while state lawmakers sit on their hands. The regulatory process will take some time and provides opportunities for public (get ready!) and legislative input. But unless both chambers of the General Assembly can muster a veto-proof, two-thirds vote to block an increase – which they can’t – and as long as the Governor puts forward a solid rationale for the increase and the overtime threshold chosen (which he will), the Governor’s position will prevail.

New York is also a regional leader on the overtime rule – it already has overtime thresholds that will increase above the Obama threshold (as does California). But Pennsylvania is the first state where a Governor or legislature has stepped up to give salaried workers a long-overdue raise since the Texas Court and President Trump failed to do so. We share the hope of our national partners at the Economic Policy Institute and the National Employment Law Project that Gov. Wolf’s leadership emboldens his peers – got that New Jersey Gov. Murphy? Washington Governor Inslee? And friendly legislatures beyond CA and New York?

As with the minimum wage, and increasingly paid family and medical leave, inaction in Washington D.C. means that states must take the lead on overtime pay to create an economy that works for all.

While the Trump Administration has refused to defend President Obama’s bold attempt to raise the overtime threshold nationally, here’s one thing to get ready for: President Trump increasing the rule from the current $23,600 to slightly over $30,000. He will then call his meager bump “huge” that benefits “many millions” of workers and claim that this shows he, and not President Obama, is the real champion of the middle class. Inoculate yourself and your friends against such nonsense.