Pennsylvania Employers Must Pay Overtime On Commissions Based On A 1.5 Multiplier Rather than 0.5
Overtime owed on non-hourly wages under Pennsylvania law is 3 times the amount owed under federal law.
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When a mortgage loan officer (MLO) works more than 40 hours in a workweek, they usually are entitled to overtime wages at a rate of 1.5 times their legal regular rate, which is the average hourly rate earned during the workweek based on all wages earned. Many MLOs earn commissions, bonuses, and other non-hourly wages in addition to their hourly rate or base salary. Under federal law, an employer need only pay overtime on such wages at a rate of 0.5x the regular rate, but under the Pennsylvania Minimum Wage Act, employers must pay overtime on non-hourly wages using a 1.5 multiplier.
Example 1 (MLOs paid hourly rate plus commissions):
If a MLO working in Pennsylvania works 50 hours during a workweek and earns $10.00 per hour plus $1,00 in commissions, their regular rate under both federal and Pennsylvania law would be calculated as follows: Step 1: ($1,000 in commissions) + ($500 in hourly wages) = $1,500 in total remuneration. Step 2: ($1,500 total remuneration) / (50 hours) = a regular rate of $30 per hour.
However, under federal and Pennsylvania law, the MLO’s overtime rate will be different. Under federal law, their overtime rate would be calculated as follows: ($30 per hour regular rate) * 0.5 = an overtime rate of $15 per overtime hour, resulting in the MLO being owed an additional $150 in overtime wages ($15 * 10 overtime hours).
Under Pennsylvania law, the MLO’s overtime rate would be calculated as follows: ($30 per hour regular rate) * 1.5 = an overtime rate of $45 per overtime hour, resulting in the MLO being owed an additional $450 in overtime wages. Accordingly, the MLO is owed 3x or $300 more under PA law than they are under federal law.
Example 2 (MLO paid salary plus commissions):
if a MLO working in Pennsylvania works 50 hours during a workweek and earns a salary of $1,000 per week plus $1,00 in commissions, their regular rate under both federal and Pennsylvania law would be calculated as follows: Step 1: ($1,000 in commissions) + ($1,000 in hourly wages) = $2,000 in total remuneration. Step 2: ($2,000 total remuneration) / (50 hours) = a regular rate of $40 per hour.
Under federal law, their overtime rate would be calculated as follows: ($40 per hour regular rate) * 0.5 = an overtime rate of $20 per overtime hour, resulting in the MLO being owed an additional $200 in overtime wages ($20 * 10 overtime hours).
Under PA law, the overtime rate would be calculated as follows: ($40 per hour regular rate) * 1.5 = an overtime rate of $60 per overtime hour, resulting in the MLO being owed an additional $600 in overtime wages or 3x the amount they’re owed under federal law.
Despite the legal requirements for calculating overtime under Pennsylvania law, employers pay only enough overtime to satisfy federal law and not Pennsylvania law, resulting in unpaid overtime wages. If you worked as a loan officer in Pennsylvania and would like to discuss whether your employer complied with Pennsylvania overtime law please contact us today or complete the form below to request a free and confidential consultation. If we determine that you have a valid claim and you choose to proceed, there will be no out-of-pocket costs or fees. Our firm handles cases on a fully contingent basis and will seek reimbursement for fees and costs only from the recovery obtained. If there is no recovery or judgment in your favor, Swartz Swidler, LLC will not seek any fees or costs from you.
Submit Your Information Below for a Free and Confidential Consultation. You may also call us at 856-685-7420 or email Matthew Miller, Esq. (mmiller@swartz-legal.com).