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New Pennsylvania minimum wage act seeks to protect tipped workers

For the first time in 45 years, employees who rely on tips will see a change in pay regulations.

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Pennsylvania workers who rely on tips will likely be seeing a significant change in their salaries.

A new law, which went into effect last Friday, Aug. 5, requires Pennsylvania workers to make at least $135 per month in tips before their employers can pay them below the state’s minimum wage. 

This change marks the first for how employers pay tipped workers since 1977, and ensures that salaried employees with fluctuating schedules are appropriately compensated for overtime.

“These updated regulations not only seek to keep tips in the pockets of workers who rightfully earned them, but to also ensure employers are playing by the same, fair rules.” Secretary of Labor & Industry Jennifer Berrier said in a statement. 

Prior to this new law, tipped workers were only required to earn $30 in tips per month before their employers could reduce their wage from the state’s minimum of $7.25 per hour to the tipped minimum of $2.83. 

The updated law also allows employers to take a tip credit under certain conditions, including that the employee spends at least 80% of their time on duties that directly generate tips.

In addition, it allows for tip pooling among employees, prohibits employers from deducting credit card and other non-cash payment processing transactions fees from an employee’s tip left with a credit card or other non-cash method of payment, and requires employers to clarify that automatic service charges are not gratuities for tipped employees. 

"As a former service industry worker, I have seen firsthand how employees can be taken advantage of due to outdated rules and regulations when it comes to how they are paid," said Secretary Berrier. 

Furthermore, the new regulation updates the definition of “regular rate” for salaried employees whose overtime pay is determined by the fluctuating workweek method, which clarifies that the purpose of calculating overtime is based on a 40-hour workweek. 

"Servers, bartenders, hairstylists, nail techs, bellhops and dozens of other tipped-worker positions rely on the generosity of their customers for their livelihood and deserve regulatory protections that ensure these earned wages are theirs to keep,” added Berrier.

It was also noted in the press release that the new updates do not change overtime compensation for hourly employees. 

This new law is part of Governor Wolf’s broader worker protection agenda, and extends the administration’s commitment to fighting for workers to have fair wages, paid sick leave, safe workplaces and quality jobs. 

In 2021, Governor Wolf signed an executive order on behalf of Pennsylvania workers and has repeatedly called on the General Assembly to pass legislation that supports workers. 

More specifically, the Governor has called on the General Assembly to raise Pennsylvania's minimum wage to $12 an hour with a path to $15 and also remove local pre-emption. He is also a supporter of eliminating the $2.83 an hour minimum wage for tipped workers and establishing a single fair wage for all Pennsylvania workers. 

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