capitol building

The Pennsylvania Capitol Builiding in Harrisburg is shown in this Oct. 7, 2015, file photo.

HARRISBURG – Business groups are worried about the impact of a proposal that would change the threshold for when employees can earn overtime.

They're also divided over the question of whether preventing the OT change is important enough to compromise on a minimum wage hike.

Gov. Tom Wolf has indicated that if the Legislature doesn’t move to approve an increase in the minimum wage, his administration will seek to allow more workers to qualify for overtime.

The National Federation of Independent Businesses remains opposed to the minimum wage hike, said Gordon Denlinger, state director for the NFIB in Pennsylvania.

“Small business owners are the ones who are going to take the hit,” Denlinger said. “We’re very concerned” about the impact of a minimum wage hike.

The state House has no immediate plan to vote on a proposed minimum wage hike, said Mike Straub, a spokesman for House Majority Leader Bryan Cutler, R-Lancaster.

The Pennsylvania Chamber of Business and Industry has backed a Senate plan to increase the minimum wage, saying that the OT rule change would be worse than raising the minimum wage.

Chamber CEO Gene Barr said chamber officials still don’t think that a minimum wage hike is a good idea.

“The market is working” and providing most low-wage workers with better than minimum wage, he said.

Barr said that he understands the misgivings of Republican lawmakers in the state House who are balking at the minimum wage increase, but added that he’s “cautiously optimistic” that the House will pass the legislation.

Senate Bill 79, which passed by a vote of 42-7 in November, would boost the state’s minimum wage from $7.25 to $8 by July and to $9.50 by 2022.

All of the state’s neighboring Pennsylvania have higher minimum wages:

Delaware – $8.75

Maryland – $10.10

New Jersey – $8.60

New York – $13

Ohio – $8.30

West Virginia – $8.75

Pennsylvania is one of 21 states whose minimum wage is set at the federal minimum. The other 29 states, including all of Pennsylvania's neighbors, have higher minimums, while half of the 50 states have authorized an automatic future wage increase of some sort.

Wolf coaxed the Senate to act by agreeing to postpone a plan to increase the wage threshold used to determine when employees qualify for overtime. The threshold increased on Jan. 1 from $23,660 to $35,568 due to a rule approved by the U.S. Department of Labor in September. But the Wolf Administration has asserted that the new federal overtime rule doesn’t go far enough and proposed increasing the threshold to $45,500 by 2022.

There are 197,800 workers in Pennsylvania who make less than $8 an hour and nearly 400,000 people make less than $9.50 an hour, according to information provided by the state Department of Labor and Industry.

The state Independent Regulatory Review Commission is scheduled to consider the proposed change to overtime rules at its Jan. 31 meeting unless the House acts on the minimum wage controversy.

Denlinger said that despite the scheduled vote, lawmakers may feel they have flexibility to go beyond that deadline because the overtime threshold in Pennsylvania isn’t scheduled to exceed the new federal threshold until 2021.

Under the Wolf Administration proposal, the overtime threshold would move to $40,580 in 2021 and to $45,500 in 2022, according to the state Department of Labor and Industry.

If the state moves to the $45,500 threshold in 2022, 82,000 workers in Pennsylvania would be newly-eligible to get overtime, according to the Labor Department.

John Finnerty is based in Harrisburg and covers state government and politics. Follow him on Twitter @CNHIPA.

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