Changes to Pa. Minimum Wage Act, modernizing rules for tipped workers, to take effect in August

Regulatory changes to a decades-old law governing Pennsylvania’s minimum wage rules will take effect on Aug. 5, the Pennsylvania Department of Labor & Industry announced on Wednesday. 

The final-form regulations, unanimously approved by the Independent Regulatory Review Commission in late March and published in the Pennsylvania Bulletin on May 7, make several key changes to the 1968 Minimum Wage Act regarding tipped workers, including aligning state law with federal regulations on tip credits and tip pooling. 

The regulatory changes also increase the amount in tips a tipped employee must receive on a monthly basis – from $30 to $135 – before an employer can reduce the employee’s hourly rate from the state minimum wage of $7.25 per hour to as low as $2.83 per hour. 

Other changes include:

• “A prohibition on employers deducting credit card and other non-cash payment processing transaction fees from an employee’s tip included with a credit card payment or other non-cash method of payment,” AND
• “A requirement for employers to clarify that automatic service charges are not gratuities for tipped employees.” 

The regulations also update the definition of “regular rate” for salaried employees whose hours vary from week-to-week to note that overtime is to be calculated based on a 40-hour work week. 

Department of Labor & Industry Secretary Jennifer Berrier said in a statement that the updates “protect tipped workers in the 21st century and ensure consistency for employers.”

“The world of work has changed significantly since these regulations first went into effect in 1977, but tipped workers remain a sizeable [sic] and critical segment of Pennsylvania’s workforce,” Berrier said. “They are the only workers whose take-home pay ultimately depends on the generosity of their customers and not the obligation of their employer.”