Gov. Tom Wolf has commended the Independent Regulatory Review Commission (IRRC) for unanimously approving the final rules updating Pennsylvania’s Minimum Wage Act by changing rules on how employers pay tips and ensuring employees who work fluctuating hours are fairly compensated over the course of the day currently.
“We are pleased with the commission’s move to ensure that all Pennsylvania workers are paid fairly for their jobs,” Gov. Wolf said. “Our embarrassingly low minimum wage has far-reaching implications that go beyond underpaid workers and their families. When people earn a decent wage, they can contribute to the economic health of their communities and communities. If they don’t earn enough to pay for basic necessities, they depend on government benefits.”
The regulations will now be submitted to the Office of the Attorney General (BA). Upon approval by the OAG, the regulations will be published in the Pennsylvania Bulletin and become effective 90 days thereafter.
“The world of work has changed significantly since these regulations were first enacted in 1977, but tip workers remain a significant and critical portion of the Pennsylvania workforce. They are the only workers whose net pay ultimately depends on the generosity of their clients rather than the commitment of their employer. This update to the Minimum Wage Act rules aims to protect tipped workers in the 21st century and ensure consistency for employers,” said Jennifer Berrier, Secretary of the Pennsylvania Department of Labor and Industry (L&I).
The final regulation covers five main areas for tipped workers, including:
• A 1977 inflation-adjusted update to the definition of “tipped employees” that increases the amount an employee must be tipped monthly from $30 to $135 before an employer can increase an employee’s hourly wage from $7.25 per hour to so little as possible can reduce $2.83 per hour.
• Alignment with a recently enacted federal employer tip credit rule that allows employers to accept tip credits under certain conditions, including that the employee spends at least 80 percent of their time on tasks that directly generate tips, commonly known as 80/ 20 rule.
• Align with a recent update to federal regulations to allow tipping among employees, but in most cases excluding managers, supervisors and business owners.
• A ban on employers from deducting credit card and other cashless payment processing transaction fees from an employee’s tip left with a credit card or other cashless payment method.
• Employers must clarify that automatic service charges are not a benefit for a tipped employee.
This final regulation also updates the definition of the “standard rate” for employees whose overtime pay is calculated using the variable-week-week method, and clarifies that for purposes of calculating overtime, the standard rate is based on a 40-hour week.
This proposed regulation is part of Gov. Wolf’s broader workplace safety agenda and the government’s commitment to fight for fair wages, paid sick leave, secure jobs and quality jobs. The governor signed an executive order on behalf of Pennsylvania workers in October 2021 and has repeatedly urged the General Assembly to finally pass worker-assistance legislation.
Gov. Wolf has asked the General Assembly to pass SB 12, sponsored by Sen. Tina Tartaglione, or HB 345, sponsored by Rep. Patty Kim, to raise the Pennsylvania minimum wage to $12 an hour with a path to $15 and local exemption . The governor also supports eliminating the $2.83 an hour minimum wage for tip workers and introducing a fair wage for all Pennsylvania workers.
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