Pennsylvania Announces New Regulations for Tipped Workers

Today, the Pennsylvania Department of Labor and Industry (DLI) announced the final-form regulations that change Pennsylvania’s Minimum Wage Act. These changes will update how their employers pay tipped workers and ensure that salaried workers with inconsistent schedules are fairly compensated for overtime. This regulation change is the first alteration since the regulation’s original conception in 1977. These regulations are scheduled to go into effect on August 5, 2022.

According to the DLI, there are five main points of the final-form regulation. The most notable is an adjustment for inflation since 1977 to change the value of tips received before an employer can reduce the hourly rate of an employee from $7.25/hr to lows of $2.83/hr. The current value amount before this change in hourly rate can be made is $30. When the final-form regulation is implemented on August 5, the new value will be $135.

Other points include:

A prohibition on deducting non-cash transaction fees from an employee’s tip that has been included on a non-cash method of payment. A requirement for employers to clarify that automatic service charges are not gratuities.

An alignment with tip credits and the 80/20 rule. The 80/20 rule states that employers may include gratuities into the minimum wage calculations, provided that the employee is spending at least 80% of their time performing actions that directly generate tips.

And an alignment with federal regulations that allows tip pooling among employees but, in most cases, excludes management.

The Department of Labor and Industry will host webinars to educate business owners and affiliated parties on the new regulations and allow them to ask questions. These webinars are scheduled to take place at 10 am on Tuesday, July 12, and at 10 am on Tuesday, July 19. Information on these webinars and how to register will be posted on the Department of Labor and Industry’s website.

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