RULES AND REGULATIONS
Title 34--LABOR
AND INDUSTRY
DEPARTMENT OF LABOR AND INDUSTRY
[34 PA. CODE CH. 231]
Food-Service Employee Incentive Program
[31 Pa.B. 3765] The Department of Labor and Industry (Department), by this order, amends Chapter 231 (relating to minimum wage) by adding §§ 231.91--231.99.
A. Statutory Authority
These final-form regulations implement section 3 of the act of December 21, 1998 (P. L. 1290, No. 168) (43 P. S. § 333.105a note) (Act 168), which requires the Department to adopt regulations to enforce and carry out the newly added provisions of section 5.1 of the Minimum Wage Act of 1968 (MWA) (43 P. S. § 333.105a).
B. Background and Purpose
Section 2 of Act 168 amended the MWA by establishing a Food-Service Employee Incentive Program (Program) for new employees hired by restaurant and food-service employers. Section 3 of Act 168, in turn, requires the Department to develop regulations to implement the Program, and postpones the effective date of section 2 of Act 168 until that time. The Program will be in effect for 3 years following the Department's promulgation of regulations. At that time, section 2 of Act 168 will expire under its own terms unless renewed by the General Assembly. The Department is required to prepare and submit a report to the Senate Labor and Industry Committee and the House Labor Relations Committee within 30 months after section 2 of Act 168 takes effect.
Under the Program, new employees in the restaurant and food-service industries and their employers may voluntarily agree to a training program during which the employees will receive a training wage. The training wage may not be less than the statutory minimum wage. The employees covered under these regulations are dishwashers, bus-persons, servers, sales staff, cooks, hostesses/hosts and cashiers.
While the employee is being trained, the difference between the employee's training wage and the entry-level wage that the employee is entitled to upon completion of the employer's training period, will be deposited by the employer into an escrow account referred to as the Employee Incentive Account (Account). Upon completion of the training program, or the employee's promotion, these escrow payments are to be remitted to the employee in equal installments over a period equal to the period of training. However, if the employee quits or is fired for willful misconduct before the end of the training period, the employee forfeits the moneys deposited for them in the Account.
C. Summary of Comments
The Department published a notice of proposed rulemaking at 30 Pa.B. 5152 (October 7, 2000), with an invitation for public comment. No public comments were received by the Department. However, the Independent Regulatory Review Commission (IRRC) recommended four changes to the proposed rulemaking in the interests of clarity and consistency with the statute.
1. Enforcement. IRRC recommended adding a section incorporating the Department's enforcement procedures under the Wage Payment and Collection Law (WPCL) (43 P. S. §§ 260.1--260.12), since Act 168 expressly adopts the WPCL for resolution of claims. See 43 P. S. § 333.105a(j).
2. Accounts. IRRC further suggested insertion of the phrase ''no less than'' between the phrases ''consisting of'' and ''the difference'' in § 231.95(b) (relating to employee incentive account) to ensure consistency with the statute.
3. Records Access. In § 231.95(f), employers are required to grant the Department access to records within 7 days following written or verbal notice. IRRC requested clarification as to who will give the notice.
4. Distribution of Form. In § 231.96(d) (relating to writing required), the Department proposed to make a recommended notification/acknowledgement form available on its Internet website and through other means. IRRC asked that the other means be set forth in the final-form regulations.
The Department accepted all of these comments and recommendations when adopting final-form regulations, as discussed.
D. Summary of Changes from Proposed Rulemaking
1. Section 231.91(d). This section was added to inform or remind wage employees of their rights under the WPCL, as incorporated in Act 168, to assign their claims to the Secretary of Labor and Industry (Secretary) for investigation and possible collection action. Information about wage-claim assignments can be accessed from the Department's Internet website http://www.li.state.pa.us/PWAGE/summary.pdf, or by contacting any of the district offices of the Department's Bureau of Labor Law Compliance. Employees, however, are not required to assign their claims to the Secretary. The WPCL authorizes recovery of plaintiff's attorney fees for employees that successfully sue to recover unpaid wages on their own. See 43 P. S. § 260.9a(f).
2. Section 231.95(b). The phrase ''no less than'' was inserted under IRRC's specific recommendation to achieve statutory consistency.
3. Section 231.95(f). Consistent with section 231.31(c) of the MWA's existing regulations, the Secretary and authorized representatives have been designated as the persons empowered to issue notices for records. This type of notice is usually issued by either a labor investigator or supervisor in the Department's Bureau of Labor Law Compliance. The Bureau's Director or legal counsel may also issue this notice.
4. Section 231.96(d). The Department defined the ''other means'' of making available the notification/acknowledgement form to be e-mail, fax or regular mail.
E. Fiscal Impact
These final-form regulations will have no impact on local government. Even if a unit of local government, such as a school district, has food-service employees, they are exempt from both the MWA and the WPCL. The Commonwealth and its political subdivisions are not included in either statute's definition of the term ''employer.'' See 1976 Op. Atty. Gen. No. 29 (MWA); Philipsburg-Osceola Educ. Ass'n. v. Philipsburg-Osceola Area School District, 633 A.2d 220 (Pa. Cmwlth. 1993) (WPCL). Similarly, these final-form regulations do not affect employers or employees outside the restaurant and food-service industries, or employers or employees in those industries that choose not to participate.
Any costs to the Commonwealth will result from the increased enforcement duties assigned to the Department by Act 168, and not by these final-form regulations. These duties will be undertaken by existing Department staff, and are perceived to be minimal.
No precise estimate can be made as to increased costs, if any, to participating employers and employees, since their actual costs are dependent on several variables, including the number of participating employees and the agreed-upon training and entry-level wages. The objective of Act 168, however, is to create an incentive for new employees in the restaurant and food-service industries to remain at their jobs, and thereby produce mutual benefits that exceed any initial costs. If the costs exceed the benefits in the long run, employers and employees will refrain from participating.
The Department estimates the following average training costs and employer savings when employees leave prior to completing their training:
Average Savings Estimated per Early Job Title Training Separation Hosts and Hostesses $328.80 $219.30 Waiters and Waitresses $251.16 $107.07 Food Servers, Outside $341.46 $384.42 Counter Attendants $269.64 $163.83 Cooks, fast food $290.88 $117.39 Cooks, short order $352.32 $282.51 F. Paperwork Requirements
These final-form regulations will require written notification and acknowledgement to and from participating employees. One record of this notification and acknowledgment will suffice for both purposes. Additionally, the Department recommends that the schedule for installment payments from the Account be revised if the employee is promoted before completing the employee's training period. These records must be maintained with other payroll records required to be kept by employers under the MWA, and are considered to be important to the protection of both employers and employees who participate in the Program. The Department will develop, and make available, a sample form for use by participating employers and employees to further reduce this already minimal burden.
G. Compliance with Executive Order 1996-1
In accordance with Executive Order 1996-1, the Department, in developing these final-form regulations, sent preliminary drafts to the Majority and Minority Chairpersons of the Senate Labor and Industry and the House Labor Relations Committees, as well as employee and employer organizations. Additionally, Department personnel met with a representative of the Pennsylvania Restaurant Association and staff from the House Labor Relations Committee in the developmental phase.
H. Sunset Date
Act 168, by its own terms, provides that section 5.1 of the MWA will expire 3 years after the effective date of these final-form regulations (July 14, 2004). Accordingly, § 231.91(b) (relating to authority and effective date) provides that §§ 231.91--231.99 will expire within 3 years unless section 5.1 of the MWA is extended by the General Assembly. The Department is required to prepare and submit a report to the Senate Labor and Industry Committee and the House Labor Relations Committee within 30 months after section 2 of Act 168 takes effect.
I. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), the Department submitted copies of the notice of proposed rulemaking, published at 30 Pa.B. 5152, to IRRC, the House Labor Relations Committee and the Senate Labor and Industry Committee for review and comment.
In adopting final-form regulations, the Department considered the comments received from IRRC. The Department did not receive comments from the public or the House or Senate Committees.
Under section 5.1(d) of the Regulatory Review Act (71 P. S. § 745.5a(d)), on May 16, 2001, these final-form regulations were deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on May 17, 2001, and approved the final-form regulations.
J. Additional Information
Information about these final-form regulations can be obtained from Robert E. Moore, Director, Bureau of Labor Law Compliance, Department of Labor and Industry, Room 1301, Labor and Industry Building, Seventh and Forster Streets, Harrisburg, PA 17120, (717) 787-4763; fax (717) 787-0517; e-mail robmoore@state.pa.us.
K. Findings
The Department finds that:
(1) Public notice of the Department's intention to adopt Chapter 231 by this order has been given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) The final-form regulations adopted by this order are necessary and appropriate for the administration of Act 168.
L. Order
The Department, acting under its authorizing statute, orders that:
(a) The regulations of the Department, 34 Pa. Code Chapter 231, are amended by adding §§ 231.92--231.94 and 231.97--231.99 to read as set forth at 30 Pa.B. 5152; and by adding §§ 231.91, 231.95 and 321.96 to read as set forth in Annex A.
(b) The Department shall submit this order, 30 Pa.B. 5152 and Annex A to the Office of Attorney General and the Office of General Counsel for approval, as required by law.
(c) The Department shall certify this order, 30 Pa.B. 5152 and Annex A and deposit them with the Legislative Reference Bureau, as required by law.
(d) The regulations shall take effect upon publication in the Pennsylvania Bulletin.
JOHNNY J. BUTLER,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 31 Pa.B. 2855 (June 2, 2001).)
Fiscal Note: Fiscal Note 12-55 remains valid for the final adoption of the subject regulations.
Annex A
TITLE 34. LABOR AND INDUSTRY
PART XII. BUREAU OF LABOR STANDARDS
CHAPTER 231. MINIMUM WAGE
FOOD-SERVICE EMPLOYEE INCENTIVE PROGRAM § 231.91. Authority and effective date.
(a) This section and §§ 231.92--231.99 set forth the rules governing the Food-Service Incentive Employee Program for participating restaurant and food-service operations employers and their employees in this Commonwealth under section 5.1 of the Minimum Wage Act of 1968 (act) (43 P. S. § 333.105a).
(b) This section and §§ 231.92--231.99 will expire, along with section 5.1 of the act on July 14, 2004, unless section 5.1 is extended by the General Assembly.
(c) Under section 5.1(j) of the act (43 P. S. § 333.105a(j)), a claim arising under the Food-Service Employee Incentive Program provisions shall be brought under the Wage Payment and Collection Law (43 P. S. §§ 260.1--260.12).
(d) Any employee, labor organization or party to whom wages are payable under the Food-Service Employee Incentive Program may request the Secretary, or an authorized representative, to take an assignment in trust and to bring legal action to collect the wages, as provided by section 9.1 of the Wage Payment and Collection Law (43 P. S. § 260.9a).
§ 231.95. Employee incentive account.
(a) The employer shall maintain at least one escrow or restricted account designated as an Employee Incentive Account (Account) in accordance with section 5.1 of the Minimum Wage Act of 1968 (43 P. S. § 333.105a).
(b) The employer shall deposit sums consisting of no less than the difference between the training wage and the entry-level wage into the Account on each regular payday during the training period. The employer shall credit the deposit in the name of each participating employee.
(c) Funds in the Account shall be the property of the employer until the employer is required to make payments to the employee. Funds in the Account are nontransferable and nonassignable.
(d) The employer shall maintain complete, detailed payroll records. The records shall include a listing of all deposits and withdrawals from the Account.
(e) The employer shall maintain the records at the place of employment or at a central recordkeeping office within or outside this Commonwealth. The employer shall maintain these records for 3 years in accordance with § 231.31 (relating to contents of record).
(f) Access to records maintained by the employer under this section shall be provided to the Department's repre-sentatives within 7 days following written or verbal notice by the Secretary or an authorized representative.
§ 231.96. Writing required.
(a) The employer shall provide written notification to the employee prior to the commencement of the training program of the following:
(1) The training wage and the starting date of training.
(2) The length of the training period and the position for which the employee is being trained.
(3) The entry-level wage which the employee will receive upon completion of the training period.
(4) The financial institution where the employer maintains the Food-Service Employee Incentive Account.
(5) The installment-payment schedule to be following after the employee completes the training period, provided that the employer shall revise this schedule with the employee's written consent when the employee is promoted prior to completion of the training period.
(b) The employer shall obtain a signed acknowledgement that the employee has read and understands the written notification.
(c) The employer shall maintain a copy of the signed acknowledgement for 3 years, along with other records required to be kept under §§ 231.31--231.35.
(d) The Department will prepare a recommended notification and acknowledgement form that an employer may use. The Department will make these forms available on its Internet website and by electronic mail, facsimile transmission or regular mail, upon request.
[Pa.B. Doc. No. 01-1272. Filed for public inspection July 13, 2001, 9:00 a.m.]
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