How Pennsylvania’s new minimum wage regulations will impact workers

FILE - A cyclist rides past the Pennsylvania Capitol in Harrisburg, Pa., on March 22, 2021.

For the first time in 45 years, Pennsylvania workers woke up to updated Minimum Wage Act regulations Friday morning.

The new state regulations revise how employers pay tipped employees and process noncash tips, among other changes. They also align Pennsylvania regulations with federal ones.

These regulations were proposed by Gov. Tom Wolf, who has been a staunch supporter of raising the state’s $7.25 minimum wage and securing more benefits for workers throughout his term.

The updated regulations, now in effect, include:

• Employers cannot deduct credit card and noncash payment processing fees from their employees’ tips. For example, if someone leaves a $10 tip with their credit card and it costs $0.20 to process the tip, the employer must give the tipped employee $10 rather than $9.80.

• A tipped employee must make at least $135 in monthly tips before an employer can reduce his or her salary to $2.83 an hour. Previously, employers could reduce the salaries of tipped employees who made $30 in tips monthly.

• Employers must clarify to patrons that service charges are not gratuities for tipped employees. They also must leave a line on the billing statement for patrons to leave a tip if they wish to do so.

• For salaried employees who work under the fluctuating workweek method, employers must calculate their overtime pay based on a 40-hour workweek.

• Tipped employees must spend at least 80% of their time on duties that generate tips, in accordance with federal regulations. This is known as the 80/20 rule.

• Tip pooling is allowed but, in most cases, excludes managers, supervisors and business owners, in accordance with federal regulations.

Bobbi Linskens, spokeswoman for the Restaurant Opportunities Center of Pittsburgh, expressed she “didn’t know why it took so long” for some of these changes to be enacted. She envisions the credit card fee regulation will have the most direct impact on Pennsylvania workers.

“Lots of the general public didn’t realize it was legal for restaurants to charge employees credit card processing fees,” Linskens said.

State Sen. Wayne Fontana, D-Brookline, believes the updated regulations will “certainly help working families.”

“This change could make a difference, but those folks need a bump up, too, in other ways,” he said.

Hospitality employers

The only “real differences” hospitality industry employers can expect stem from the credit card fee and service charge regulations, said Robert Pritchard, a Pittsburgh-based shareholder at the Littler Mendelson law firm and co-chair of the firm’s wage and hour practice group.

Pritchard said both of these changes will be “reasonably manageable” for employers. He believes the credit card fee regulation will usher in the “biggest impact” of the two.

“That is a big change for employers who used to require employees to absorb the cost,” he said.

The other regulations either won’t heavily impact the hospitality industry or are already common practice for employers, Pritchard said.

For example, while the $135 regulation could impact employers with tipped workers who work only a few times a month, most tipped employees meet the $135 monthly threshold.

Additionally, while it might seem like the 80/20 and tip pooling regulations would cause waves in Pennsylvania, these won’t have a “significant impact” on employers because they already were federal regulations, Pritchard explained.

Pritchard advised Pennsylvania employers to regularly check the U.S. Department of Labor and Pennsylvania Department of Labor & Industry websites to stay in the loop of updated regulations.

“It is important to remain up to date,” he said.

Minimum wage push

Linskens called the updated regulations a “small step” for Pennsylvania workers. Like many, she has the state’s minimum wage on her mind.

Pennsylvania is one of 13 states with the federal minimum wage of $7.25. Two states have minimum wages below that number, and five don’t have a minimum wage.

Wolf continuously has pushed to raise the Keystone State’s minimum wage to $12 an hour and eliminate the $2.83-an-hour minimum wage for tipped workers.

Fontana voiced support for the minimum wage increase.

“We’ll keep pushing it and trying to refine it to make it work,” he said. “It’s so obvious to me that these are poverty wages.”


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