Proposed Regulations: Calculation of Overtime Payments for Salaried Employees & Tipped Worker Minimum Wages

Date: November 29, 2021

The state Department of Labor and Industry recently announced proposed regulations for the calculation of overtime payments for salaried employees and additional regulations for tipped workers.

For salaried employees, the proposal would require overtime payments be calculated based on a regular 40-hour work week and not the total hours worked including overtime, which may be irregular and inconsistent from week to week.

For tipped workers, the proposal would clarify that tipped workers can only be paid the tipped minimum wage ($2.83) when engaged in work that generates tips.

Specifically, an employer would only be able to take a tip credit when an employee performs work that directly generates tips or performs work that directly supports tip-producing work, provided that the directly supporting work does not (1) exceed, in aggregate, 20 percent of the employee’s hours worked during the work week or (2) is performed for a continuous period exceeding 30 minutes.

Additionally, the proposal would clarify that employers have to pay the minimum wage ($7.25) for any time when an employer cannot take a tip credit and would raise the tipped employee threshold from $30 per month to $135 per month. Employers would also be required to keep records of the names and positions of each employee participating in a tip pool and the amount distributed to that person. Further, employers would be prohibited from charging tipped employees credit card fees.

Take action now to share how this will impact your business. The public comment period is open until December 20th.

Related Content: Small Business News | Pennsylvania

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