Guide to Pennsylvania employee benefits and HR rules

Is your organization compliant with Pennsylvania's employment laws?

If you have a Pennsylvania-based organization or employ Pennsylvania workers, learning everything you need to know about HR compliance in Pennsylvania is vital. In this guide, we’ll provide a general overview of Pennsylvania's employment and benefits regulations for small to mid-sized businesses.

Topics covered in this guide include:

• Employment laws in Pennsylvania
• What are employees’ rights in Pennsylvania?
• Required and non-required employee benefits in Pennsylvania
• Health insurance in Pennsylvania
• Wage laws in Pennsylvania

What are employment laws in Pennsylvania?

The federal government sets minimum benefits and HR requirements for employers nationwide. But many states create their own employment laws to offer additional employee protections—and Pennsylvania is no exception.

Before opening or expanding your business in Pennsylvania, you should familiarize yourself with state employment laws.

In Pennsylvania, employers must follow several state-specific laws in addition to federal employment laws, such as:

• At-will employment
  • Pennsylvania is an “at-will” employment state, meaning employers and employees can end an employment agreement at any time, with or without cause.
  • However, by law, employers can’t terminate an employee due to discrimination or other illegal factors. Employers may also be liable for wrongful termination of employment if the discharge violated public policy, like attending jury duty.
  • Employees who believe their employer fired them illegally can file a complaint.
• Pennsylvania Human Relations Act (PHRA)
  • This Act prohibits employers from discriminating against employees based on protected classes, such as race, color, religion, ancestry, age, sex, national origin, non-job related handicap or disability, the use of a guide or support animal because of blindness, deafness, physical handicap, or retaliation.
  • Since 2018, the “sex” protected class has included terminology and considerations for pregnancy, childbirth, breastfeeding, sex assigned at birth, gender identity, sexual orientation, and differences in sex development.
  • The Act applies to employers with four or more employees throughout all aspects of employment, including hiring, termination, compensation, tenure, eligibility, and other privileges.
• Equal Pay Law
  • The Equal Pay Law standardizes wages for certain job positions. Under the Act, all business owners must pay their employees the same wages, regardless of sex, if they have vastly similar tasks and responsibilities.
  • Employers can pay unequal wages based on seniority, training, or merit. Besides these three exceptions, employers must pay all employees performing similar work at the same rate.
• Pennsylvania “Ban the Box” Law
  • During the interview process, Pennsylvania employers can request a criminal background check for candidates if it’s related to their suitability for the role.
  • Employers can request information regarding the applicant’s arrests and convictions within the last three years and certain pending arrests and convictions older than three years.
  • Employers can only consider felony and misdemeanor convictions during hiring, not arrests or court proceedings.
  • Employers must notify applicants in writing if they decide not to hire them based on their criminal record.
• Philadelphia Ban the Box Law
  • Generally, it’s illegal for Philadelphia employers with more than ten employees to ask applicants or current employees about their criminal history if the crime didn’t result in a conviction. Additionally, questions regarding an applicant’s criminal record may not appear on the job application.
  • Employers may conduct a background check or ask about a candidate’s criminal history record after the initial interview if the potential employee meets other qualifications for the role.
• Philadelphia Fair Workweek Law
  • Food service, retail, and hospitality employers in Philadelphia must give their employees 14 days advance notice of their work schedule, predictability pay, and other protections to ensure a consistent work environment.
  • This law applies to employers with 250 or more employees and at least 30 locations worldwide, including franchises.
• Prohibition of Excessive Overtime in Health Care Act
  • Employers can’t require direct patient care or clinic care healthcare employees to work longer than their pre-set, regular scheduled shift.
  • If they work more than 12 consecutive hours, Pennsylvania law considers it overtime, and their employer must offer them ten consecutive hours off after the completion of their shift.
• Pennsylvania Child Labor Laws
  • According to the Pennsylvania Child Labor Act, most children younger than 18 can’t work without a work permit unless they’ve graduated from high school.
  • For children younger than 16, the employer must also have a written statement from the parent or legal guardian. Minors younger than age 18 have limitations regarding what jobs they can hold, acceptable hours of employment, and when they can work during the year.
• Pennsylvania Worker and Community Right to Know Act
  • This Act requires employers to inform public employees, private employees without Occupational Safety and Health Administration (OSHA) protections, and all individuals living and working in Pennsylvania about hazardous substances in the workplace and environment.
• Pennsylvania Breach of Personal Information Notification Act
  • Employers must take appropriate steps to keep employees’ sensitive personal data stored on an internet-based or computer system safe.
  • Employers must notify employees as soon as possible if there’s a security breach of employees’ personal information. If more than 1,000 employees receive notification simultaneously, employers must alert all applicable consumer reporting agencies as soon as possible.
• Pennsylvania Clean Indoor Act (PCIA)
  • This Act prohibits smoking in enclosed workplaces, commercial buildings, and other public places. Certain establishments and events are exempt from the Act.
  • Employers must also designate the minimum distance from the building’s entrance before individuals can safely smoke.
  • Under the Act, it’s illegal for employers to refuse to hire, terminate, or retaliate against individuals who demand a smoke-free workplace.
• Construction Industry Employee Verification Act
  • Pennsylvania employers in the construction industry must use E-Verify to confirm the Social Security numbers of their potential new hires or face a penalty.
  • The law doesn’t require other private employers in Pennsylvania to participate in E-Verify.
• Drug testing
  • Individuals with a Commercial Driver’s License must follow federal drug and alcohol testing requirements. Other than that, Pennsylvania has no statewide drug-testing employment laws. But, employers may implement drug-testing rules at their workplace if they choose.
  • The Medical Marijuana Act prohibits employers from terminating, threatening, or discriminating against an employee who’s a licensed medical marijuana user.
  • However, if an employee fails to comply with or pass a drug test as part of an established company policy, the employer can suspend or terminate them, and they may not be eligible to receive unemployment benefits.
• Workplace accommodations for nursing mothers
  • Pennsylvania doesn’t require employers to give nursing mothers breaks to express breast milk. However, the state must follow Fair Labor Standards Act (FLSA) regulations regarding these employees. Under the FLSA, employers must give nursing mothers breaks to express breast milk for one year after the child’s birth.
• Return to work reporting laws
  • Employers must file a report with the Commonwealth of Pennsylvania detailing the names, addresses, Social Security numbers, state of hire, and start dates of all new hires and employees returning to work after a furlough or layoff.
  • Business owners must submit the report within 20 days of a new hire’s start date or an employee’s return to work.
  • If there’s a termination of employment before the reporting process begins, the employer must still submit a report to the state, no matter the length of employment, as long as the employee received wages during that time.
  • Employers don’t need to file a report for employees that didn’t receive wages.

Now that we’ve reviewed a few Pennsylvania-specific laws, we’ll review the state’s employee rights.

What are employees’ rights in Pennsylvania?

Employees in Pennsylvania have many rights under state and federal laws. Regardless of your organization's size, you must know your employees' rights if you have or plan to hire employees in the state.

Some state rights include:

• Fair wages
  • Employers must pay at least the federal minimum wage and follow federal overtime regulations.
• Meal periods
  • Minors aged 14 to 17 and seasonal farm workers must receive a 30-minute meal break if they work five or more consecutive hours. The break can be unpaid or paid.
  • The state doesn’t require employers to provide meal periods for employees aged 17 or older.
• Rest breaks
  • No state laws require employers to give unpaid or paid rest breaks to employees aged 18 or older. But, employers must pay for breaks lasting less than 20 minutes if they choose to offer them.
• ​COBRA & Mini-COBRA Continuation Coverage
  • Pennsylvania employers with fewer than 20 workers must offer employees and their dependents continuation of health insurance for nine months if they lose their employer-sponsored coverage in specific situations under the Pennsylvania mini-COBRA law.
  • To qualify, an employee must be an employer-sponsored plan participant for at least three months.
  • Employers with 20 or more employees must follow federal COBRA regulations.
• Occupational Safety and Health Administration (OSHA) compliance
  • OSHA is a federal agency that outlines safety and health standards for all employees in the workplace. Employers can’t take disciplinary action against employees who report them for OSHA violations.
  • In addition to OSHA, Pennsylvania’s Health and Safety Division and Bureau of Occupational and Industrial Safety oversee workplace safety protocols for public employees.
• Access to personnel files
  • All employees have the right to request and review their personnel files from their employer or HR department to ensure accuracy.
• Right to organize
  • Employees can organize and form a union with their co-workers. They can also speak with their colleagues about various work-related issues, like improved pay, safety concerns, or other conditions of employment.
  • It’s illegal for employers to retaliate, threaten, or terminate employees who wish to organize or engage in protected concerted activity.

Health insurance coverage in Pennsylvania

The state and federal government don’t require business owners in Pennsylvania to offer their workers health insurance benefits if they have fewer than 50 employees. But federal law requires employers with 50 or more full-time equivalent employees (FTEs) to provide affordable health insurance with minimum essential coverage (MEC) that satisfies the Affordable Care Act’s (ACA) employer mandate.

But just because you may have fewer than 50 FTEs doesn’t mean you shouldn’t offer health benefits. Adding a robust health benefit to your compensation package is a great way to attract and retain talented workers.

Traditional group health insurance remains a popular option for many U.S. employers. But, rising healthcare costs can make it challenging for small to midsized businesses on a budget to afford the costly premiums and annual rate hikes.

Small group health insurance premiums in some Pennsylvania counties can get as high as $588 per month. In contrast, the average monthly premium for a 50-year-old on a bronze individual health plan can be as low as $316. This makes covering the cost of individual health plans more feasible for many employers than offering a group plan in many parts of Pennsylvania.

Employers looking to provide an affordable health benefit can take advantage of Pennsylvania’s lower individual plan prices by implementing a health reimbursement arrangement (HRA) or a health stipend.

Health reimbursement arrangement (HRA)

An HRA is an IRS-approved, formal health benefit funded entirely by the employer. It allows you to reimburse your employees, tax-free, for their individual health plan premiums and qualifying medical expenses.

Your employees can use their HRA to choose and purchase the individual health insurance plan that meets their healthcare needs and budget. Employers save money by not buying a group health plan, setting a fixed monthly allowance, and only reimbursing their employees when they incur an eligible medical expense.

Some HRAs, such as the individual coverage HRA (ICHRA), can satisfy the ACA’s regulations for applicable large employers (ALEs), making an HRA a health benefit that can work for organizations of all sizes.

Learn more about each HRA

Health and wellness stipends

With a health stipend, you can give your employees a fixed amount of money to help them pay for their medical expenses and insurance policy premiums. An employee health stipend isn't a formal group health plan, so you can customize your stipend and choose which costs are eligible for reimbursement.

You can offer as much stipend allowance as your benefits budget allows, and employees can purchase the medical items that work for them and their families. This increased flexibility makes stipends a more personalizable option for organizations than group health insurance.

While stipends are taxable for employees, small businesses looking for a benefit that covers more than medical expenses—like mental health counseling, gym memberships, and fitness apps—can do so with a wellness stipend. Offering a health and wellness stipend together gives your employees comprehensive coverage for their overall well-being.

Wage laws in Pennsylvania

Wages in Pennsylvania are subject to various state laws. We've compiled the most important requirements to know below.

Minimum wage

Pennsylvania doesn’t have state-specific or local ordinances regarding minimum wage requirements. Therefore, they use the current federal minimum wage rate of $7.25 per hour.

Pennsylvania’s House of Representatives recently passed a bill to gradually raise the minimum wage to $15 by 2026. If it passes the Senate, this would be the first time the state has increased its minimum wage since 2009.

Employers may also include allowances, which are wages paid to employees that include the cost of board, lodging, and other facilities, in their minimum wage as long as the employee accepts this arrangement upon hire and the actual costs equal the current minimum wage.

Farm laborers, domestic workers, newspaper delivery persons, outside salespersons, and administrative, executive, and professional staff (if they meet a certain salary threshold) are exempt from minimum wage requirements.

Subminimum wage

Employers can pay student workers, learners, or people with disabilities a subminimum wage if they obtain a Special Certificate from the Bureau of Labor Law Compliance.

These groups can’t receive a wage less than 85% of the current minimum wage ($6.16 per hour) and must meet specific requirements regarding when and how long they can work.

Trainees and apprentices must receive the standard minimum wage.

Tipped wages

Employers must pay tipped employees a minimum wage of $2.83 per hour. If the employee’s tips don’t equal the state’s minimum hourly rate, the employer must pay the difference to equal $7.25 per hour. If they make more than minimum wage in tips, the employer doesn’t need to pay anything extra.

The recently passed minimum wage bill in the Pennsylvania House would raise the tipped wage from $2.83 per hour to 60% of the minimum wage.

Hours worked

Employers must pay employees for all hours worked. This includes on-duty waiting time and travel time if employees travel as part of their regular duties during working hours.

The law doesn’t require employers to pay an employee for showing up for their shift if they perform no work.

Overtime pay

Pennsylvania's overtime requirements are similar to the federal overtime standards. Employers must pay employees overtime of 1.5 times their regular pay for any hours they work more than 40 in a standard workweek.

Certain employee classes, such as executive, administrative, and professional workers, are exempt from overtime wages.

Prevailing wages

While Pennsylvania doesn’t have a prevailing wage law, Pennsylvania employees may be eligible to receive prevailing wages if they work on government-funded projects or perform certain government services.

Prevailing wages may differ from the federal minimum wage depending on the employment contract or project.

Pay frequency

According to the Pennsylvania Wage Payment and Collection Law, employers must pay employees all their owed wages—except fringe benefits, bonuses, and commission—on regularly scheduled, predetermined paydays of the employer’s choosing.

The period between the end of a pay period and the regular payday shouldn’t exceed:

• The agreed-upon time in the employer-employee contract, or
• A reasonable amount of time for the company’s industry, or
• 15 days

Pay deductions

Employers may make pay deductions in certain situations. But deductions can’t bring an employee’s gross salary below the state minimum wage. It’s also illegal for employers to require newly hired employees to agree to a "blanket" authorization form to cover future potential deductions.

The following are allowable pay deductions under Pennsylvania law:

• Deductions required by local, state, or federal law.
  • This could include deductions for taxes, social security, FICA, Medicare, or any court-ordered deductions.
• Deductions detailed in written agreements between the employer and employee, such as employee benefits and programs, stock options, personal savings account deposits, charitable purposes, community development activities, or repayment of employer loans.
• Employee purchases or replacements of company goods or services.
• Employee purchases from third parties that the company now owns, affiliates with, or controls.
• Labor organization or union dues, fees, and other lawfully authorized charges.

Pay statements and recordkeeping

Employers should give their employees pay statements each pay period detailing certain information.

Pay statements must include the following:

• Gross wages earned during the statement’s pay period
• Hours worked
• Regular rate of pay
• Allowances (if applicable)
• All withholdings and deductions

Employers must keep true, legible, and accurate records outlining each employee’s wages per pay period during employment, hours worked, and other relevant information for at least three years for authorized authorities upon request.

Pay methods

Under Pennsylvania law, an employer may pay wages by:

• Cash
• Payable checks
• Direct deposit
  • The employee must consent to direct deposit in writing and outline the terms and conditions in which the employee can withdraw consent and terminate the arrangement.
• Payroll card

Notices and posters

Employers must notify newly hired employees on or before their state date about their regularly scheduled start date, rate of pay, and any fringe benefits, bonuses, or commission payments the employee may receive. Employees may receive notification individually, or employers can post the information in a visible physical location within the workplace.

Employers can satisfy the notice requirement for workers under a collective bargaining agreement by distributing copies of the agreement to eligible employees.

Additionally, employers must display various mandatory posters in an easily accessible location in the workplace so employees can stay up-to-date on labor laws. An all-in-one federal and Pennsylvania-specific labor law will typically satisfy poster requirements.

Final pay

When an employee separates from employment—regardless of how they left the company—they must receive their final paycheck containing all their remaining wages on or before the next regularly scheduled payday. Employees can request employers to send their final paycheck by certified mail.

Similarly, if an employee is suspended due to an industry dispute, like a strike, employers must pay all wages due at the time of the suspension on or before the next regularly scheduled payday. However, state law doesn’t require employers to meet this timeline if the dispute interrupts payroll services or for other reasons the company can’t control.

Frequently asked questions