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Find out how Remote can guide you through the complexities of managing cross-border hiring, payroll, taxes, and compliance.

 

Payroll management in Pennsylvania

Pennsylvania has a diverse economy supported by industries such as healthcare, finance, manufacturing, and technology. With state-specific payroll regulations, including a progressive state income tax, local tax requirements, and workers’ compensation mandates, employers in Pennsylvania must ensure compliance with both state and federal payroll laws. Understanding these regulations is crucial for smooth payroll operations and compliance.

Payroll breakdown in Pennsylvania

Employers in Pennsylvania must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

  • Minimum wage: Pennsylvania follows the federal minimum wage of $7.25 per hour, as the state has not set a higher minimum wage.
  • Overtime rules:
    • Pennsylvania follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
    • Some exemptions apply based on job classification and industry.

State income tax

  • Pennsylvania has a flat state income tax rate of 3.07%.
  • Employers must withhold state income tax and remit it to the Pennsylvania Department of Revenue.
  • Local income tax: Many cities and municipalities impose an Earned Income Tax (EIT), which employers must also withhold and remit.
    • For example, Philadelphia imposes a local wage tax of 3.79% for residents and 3.44% for non-residents working in the city.

Unemployment insurance (UI) tax

  • Employers must contribute to Pennsylvania’s Unemployment Insurance (UI) program, managed by the Pennsylvania Department of Labor & Industry.
  • The UI wage base in Pennsylvania is $10,000.
  • UI tax rates vary based on an employer’s experience rating and range from 1.42% to 9.93%.
  • New employers typically pay a 3.5% UI tax rate.

Workers’ compensation

  • Pennsylvania law requires all employers with at least one employee to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.
  • Employers can obtain coverage through a private insurer, self-insurance, or the Pennsylvania State Workers’ Insurance Fund (SWIF).

Payroll tax filing and payment deadlines

  • Employers must register for a Pennsylvania Employer Account Number with the Pennsylvania Department of Revenue.
  • State withholding tax returns must be filed semi-monthly, monthly, or quarterly, depending on employer classification.
  • UI tax reports must be submitted quarterly to the Pennsylvania Department of Labor & Industry.
  • Payroll tax payments can be made electronically through the Pennsylvania e-TIDES system (which is transitioning to myPATH).

Quick facts: Important considerations for employers

  • State minimum wage compliance: Pennsylvania follows the federal minimum wage of $7.25 per hour, though cities like Philadelphia have enacted higher minimum wage ordinances for city-contracted workers.
  • Final paycheck rules:
    • If an employee is terminated, employers must provide the final paycheck by the next scheduled payday.
    • If an employee resigns, the final paycheck must be provided by the next scheduled payday.
  • New hire reporting: Employers must report new hires to the Pennsylvania New Hire Reporting Program within 20 days.
  • Paid sick leave: Pennsylvania does not have a statewide paid sick leave law, but Philadelphia and Pittsburgh require certain employers to provide paid sick leave.
  • Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
  • Right-to-work state: Pennsylvania is not a right-to-work state, meaning employees may be required to join a union if applicable.

Run payroll in Pennsylvania with Remote

Managing payroll in Pennsylvania requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be, book a demo with Remote today.