How do you calculate overtime pay in Pennsylvania?

October 2nd 2024

Calculating overtime pay in Pennsylvania follows both state and federal rules to make sure employees are fairly paid for any extra hours they work beyond the regular 40-hour workweek. While federal law sets the overtime requirements, Pennsylvania has specific regulations that employers must follow.

This guide provides the steps for calculating overtime pay in Pennsylvania, including the methods for hourly, salaried, commission-based, and tipped employees.

This Article Covers

Understanding Overtime in Pennsylvania
Overtime for Hourly and Salaried Employees in Pennsylvania
Overtime for Complex Pay Structures in Pennsylvania
Additional Considerations for Pennsylvania Overtime

Understanding Overtime in Pennsylvania

Which Overtime Laws Apply in Pennsylvania?

Overtime in Pennsylvania is governed by two primary laws:

  • Fair Labor Standards Act (FLSA): The FLSA is a federal law that sets the minimum wage, overtime, and recordkeeping standards. Under the FLSA, non-exempt employees must be compensated at one and a half (1.5) times their regular hourly rate for all hours worked over 40 in a workweek. The FLSA also provides the criteria for certain exemptions for specific employee categories like executives, administrative workers, and professionals.
  • Pennsylvania Minimum Wage Act (PMWA): The PMWA is a state law that complements the FLSA overtime regulations and provides more wage and overtime protections for Pennsylvania workers. The PMWA has its set of exemptions, which are similar but not identical to those under the FLSA.

Both laws ensure that employees in Pennsylvania receive fair compensation for overtime work, with the PMWA providing further protections at the state level.

How Much is Overtime Pay in Pennsylvania?

Overtime pay in Pennsylvania is calculated at a rate of one and a half (1.5) times the employee’s regular rate for any hours worked over 40 hours in a single workweek. This applies to employees classified as non-exempt under the FLSA.

To learn more, check out our guide on Pennsylvania Overtime Laws. 

Who is Eligible for Overtime Pay in Pennsylvania?

Eligibility for overtime pay in Pennsylvania is primarily determined by whether an employee is classified as exempt or non-exempt under the FLSA. Non-exempt employees, which include most hourly workers and some salaried employees, are entitled to overtime pay at 1.5 times their regular hourly rate for any hours worked over 40 in a workweek.

Common categories of non-exempt employees include those in roles in the retail, manufacturing, and service industries.

Check out our guide on Overtime Rights in Pennsylvania.

Who is Exempt from Overtime Pay in Pennsylvania?

Employees who are classified as exempt from overtime pay in Pennsylvania are generally those who meet specific criteria outlined by the FLSA and state regulations.

Under the FLSA, an exempt employee must meet the following criteria:

  • Salary Basis: Employees must be paid a fixed, predetermined amount per month, regardless of their hours worked or work completed.
  • Salary Test: The employee’s monthly salary must meet or exceed the minimum threshold set at $875 per week ($45,500 annually).
  • Duties Test: The employee’s primary job duties must fall within specific categories that qualify for exemption. The most common categories include:
    • Executive Employees: Those who manage a company or a department, direct two or more full-time employees, and have the authority to hire, fire, or make recommendations about hiring, firing, promotions, or other changes in an employee’s employment status.
    • Administrative Employees: Employees whose primary duties are office or non-manual work and directly related to the management or general business operations.
    • Professional Employees: Employees who perform work requiring advanced knowledge in a field of science or learning acquired through a specialized education course (e.g., doctors, lawyers, and licensed professionals).
    • Outside Sales Employees: Employees whose primary duty is making sales, obtaining orders or service contracts, or using facilities, and who regularly work away from the employer’s place of business.
    • Highly Compensated Employees: Employees earning a total annual compensation of $132,964 or more (as of July 2024) may also qualify for an exemption, provided they perform at least one of the duties of an exempt executive, administrative, or professional employee.

In addition to the common exempt categories, Pennsylvania considers the following occupations exempt from overtime:

  • Seaman
  • Taxicab driver
  • Motion theatre employee
  • Any employee of a motor carrier
  • Any salesman, partsman, or mechanic primarily engaged in selling and servicing automobiles, trucks, farm implements, or aircraft
  • Any employee engaged in the processing of maple sap into sugar or syrup
  • Announcer, news editor, chief engineer of a radio or television station, the major studio of which is located in:
    • A city or town with a population of 100,000 or less, not part of a larger metro area over 100,000 people.
    • A city or town with 25,000 or less, within a metro area but at least 40 miles from the main city.
  • Hours of an air carrier employee subject to the provisions of Title II of the Railway Labor Act

What is the Regular Rate of Pay in Pennsylvania?

In Pennsylvania, non-exempt employees’ overtime pay is calculated based on their usual rate of pay.

  • Hourly employees: The regular rate of pay of hourly workers is simply their hourly rate. If an employee is paid $15 per hour, then their regular hourly rate of pay is $15.
  • Non-exempt salaried employees: For employees paid on a salary basis, the regular rate is calculated by dividing the salary by the total number of hours worked during the week. For example, if an employee earns $800 and works 40 hours in a standard workweek, then the employee’s regular rate of pay is $20 per hour.
  • Commission and piece rate employees: If an employee earns based on commissions or piece rates, those amounts are added when calculating the regular rate of pay. The total compensation is then divided by the total hours worked to get the regular rate.

Overtime for Hourly and Salaried Employees in Pennsylvania

How do you Calculate Overtime for Hourly Employees in Pennsylvania?

For hourly employees in Pennsylvania, overtime is calculated based on the hours worked beyond 40 in a single workweek. To calculate the overtime pay of hourly employees in Pennsylvania:

  • Determine the regular hourly rate: An hourly employee’s regular rate of pay is simply their base wage. For example, if an employee is paid $18 per hour, that is the employee’s regular hourly rate.
  • Calculate overtime rate: The overtime rate is calculated by multiplying the employee’s hourly rate by 1.5 times. For example, employees who earn $18 per hour have an overtime rate of $27 ($18 x 1.5).
  • Determine the overtime hours: Overtime hours are any hours worked over 40 in a workweek. If an employee works 45 hours, five of those are counted as overtime hours (45 – 40).
  • Calculate overtime pay: Multiply the overtime rate by the number of overtime hours. If the employee worked an additional five hours, the employee is entitled to receive $135 ($27 x 5).

Read our guide on Your Rights as an Hourly Employee in Pennsylvania to learn more.

How is Overtime Calculated for Salaried Employees in Pennsylvania?

Salaried employees in Pennsylvania are compensated with a fixed weekly or annual salary rather than an hourly wage. However, to be eligible for overtime pay, salaried employees must be classified as non-exempt.

To calculate the overtime pay for salaried employees in Pennsylvania:

  • Determine the annual salary: For example, if an employee earns $42,120 per year, the employee’s annual salary will be used in the calculation.
  • Calculate the weekly salary: Divide the employee’s annual salary by 52 weeks. If the employee earns $42,120, their weekly salary is $810.
  • Calculate the regular rate of pay: Divide the weekly salary by the number of hours considered a standard workweek (typically 40 hours). If the employee’s weekly salary is $810, the employee’s regular hourly rate is $20.25 ($810 ÷ 40).
  • Calculate the overtime rate: Multiply the regular hourly rate by 1.5 to have the overtime rate. If the employee earns $20.25, their overtime rate is $30.38.
  • Determine the overtime hours: Any hours worked beyond the standard 40-hour workweek are counted as overtime. If the employee worked 50 hours in a week, the counted overtime hours is 10 (50 – 40).
  • Calculate overtime pay: Multiply the overtime rate by the number of overtime hours worked. From the example above, if the employee worked 50 hours, the employee is entitled to receive an overtime compensation of $303.80 ($30.38 x 10).

Check out our guide on Your Rights as a Salaried Employee in Pennsylvania.

Overtime for Complex Pay Structures in Pennsylvania

How do you Calculate Overtime for Tipped Employees in Pennsylvania?

Tipped employees in Pennsylvania, such as servers and bartenders, typically receive a lower base wage plus tips. The minimum base wage for tipped employees in Pennsylvania is set at $2.83 per hour. However, their total compensation, including tips, must equal at least the minimum wage of $7.25 per hour.

  • Determine the employee’s regular rate of pay: Tipped employees in Pennsylvania must receive at least $2.83 per hour in direct wages, which is often referred to as minimum cash wage. Employers can claim a tip credit, which is the difference between the minimum wage and the cash wage; the maximum tip credit is $4.42 per hour ($7.25 – $2.83). If a tipped employee works overtime, their regular rate of pay should be the full minimum wage, not just the $2.83 direct wage. The regular rate must include the sum of the cash wage and any tips received that bring the employee to the minimum wage or more.
  • Calculate the overtime rate: Overtime is paid at 1.5 times the regular rate for hours worked over 40 in a week. The regular rate for overtime is based on the minimum wage and not on the tipped wage. For example, if the tipped employee works 40 hours in a week, the overtime rate must be based on the $7.25 minimum wage, not the $2.83 cash wage. If the hourly rate is $7.25, then the overtime rate is $10.88 per hour ($7.25 x 1.5).
  • Determine the overtime hours: Overtime hours are counted as hours worked over 40 in a workweek. If the employee works 45 hours in a workweek, the overtime hours is five (45 – 40).
  • Calculate the overtime pay: Multiply the overtime rate by the number of overtime hours. In the example above, the employee worked an additional five hours, which means the employee is entitled to an overtime pay of $54.40 (5 x $10.88).

Employers must note that Pennsylvania follows the 80/20 rule that limits the time spent on non-tipped supporting work. The rule outlined that employees cannot spend more than 20% of their workweek on tasks directly related to tip-producing activities but do not generate tips.

Employers must ensure that any non-tipped tasks do not exceed these limits, or the employee may be entitled to full minimum wage (without a tip credit) for those hours.

How do you Calculate Overtime for Commission Employees in Pennsylvania?

Commission employees, often in sales roles, receive a portion of their earnings based on sales or completed work rather than a set hourly wage. In Pennsylvania, if these employees are classified as non-exempt, they are entitled to overtime pay for hours worked over 40 a week.

  • Determine the employee’s regular rate of pay: To calculate the regular rate of pay, you need to determine the total earnings of the week, including commissions. For example, let’s say a commission employee earned a total of $800 ($500 base pay, $300 in commissions) and worked 50 hours. The regular rate of pay would be $16 ($800 ÷ 50).
  • Calculate the overtime rate: Multiply the regular rate of pay by one and a half to get the overtime rate. In the example above, the overtime rate is $24 ($16 x 1.5).
  • Determine the overtime hours: Overtime applies for any hours worked over 40 per week. If the employee worked 50 hours, then the overtime hours would be ten (50 – 40).
  • Calculate the overtime pay: Multiply the overtime hours by the overtime rate to determine the total overtime pay. In the example above, the employee should be paid $240 ($24 x 10) for the ten overtime hours.

How do you Calculate Overtime for Piece Rates in Pennsylvania?

Piece rate employees are paid on the number of units they produce or tasks they complete rather than by the hour. In Pennsylvania, non-exempt piece rate workers are still entitled to overtime for hours worked over 40 in a week.

  • Determine the employee’s regular rate of pay: The regular rate of pay for piece rate workers is the average hourly rate for all hours worked in the workweek. This can be calculated as total weekly earnings ÷ total hours worked in the week. If an employee earned a total of $850 and worked 50 hours in a week, the employee’s regular hourly rate is $17.
  • Calculate the overtime rate: Once you have the regular rate of pay, the overtime rate is calculated by multiplying one and a half (1.5). From the example above, the employee’s overtime rate is $25.50 per hour.
  • Determine the overtime hours: Overtime hours are all hours worked over 40 in a workweek. To find the number of overtime hours = total hours worked – 40. From the example above, the employee’s overtime hours is ten.
  • Calculate the overtime pay: To calculate the overtime pay, multiply the number of overtime hours by the overtime rate. From the example above, the employee is entitled to $255 overtime pay for the ten hours of additional work.

Additional Considerations for Pennsylvania Overtime

What is the Statute of Limitations for Claiming Unpaid Overtime in Pennsylvania?

The statute of limitations for claiming unpaid overtime in Pennsylvania is two years from the date the work was performed.

Employees are advised to file a wage claim with the Pennsylvania Department of Labor & Industry as soon as possible, as employers are only required to keep records for three years.

What are the Recordkeeping Requirements for Overtime Wage Compliance in Pennsylvania?

Pennsylvania employers are required to maintain accurate records of employee wages, hours worked, and overtime to comply with state and federal laws. As per 34 Pa. Code § 63.64, the records to be kept by employers are:

  • Employee identification information
  • Hours worked
  • Employee’s regular hourly rate, total wages paid, overtime rate, and the amount of overtime pay earned
  • Payroll records, including payment dates, amounts paid, deductions made, and payment method

Employers are required to retain payroll records for at least four years, while daily attendance records should not be retained for more than two years.

Learn more about Pennsylvania Labor Laws through our detailed guide.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.