In Pennsylvania, running your company’s payroll requires more than simply paying your employees on time. Businesses in the Keystone State must adhere to several state regulations regarding minimum wage, overtime pay, benefits, income tax, and many other important HR and accounting considerations.
Whether you’re just starting a business or are rapidly growing your team, Gusto compiled a guide to everything you need to know before you pay your team in Pennsylvania. We gathered the most important regulations, detailed how payroll tax works in Pennsylvania, and showcased how Gusto can help you understand and comply with these requirements as your company—and your payroll—grows.
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Key Pennsylvania regulations payroll professionals need to know
Pennsylvania minimum wage
The current Pennsylvania minimum wage is:
- $7.25/hour for non-tipped employees
Pennsylvania pay stubs
Pennsylvania employers must provide employees with pay stubs that include:
- Number of hours worked during the pay period
- Pay rate
- Total gross wages for the pay period
- All taxes deducted
- Other employee-authorized deductions, such as benefits
- Start and end dates of the pay period
Pennsylvania pay periods
Pennsylvania businesses must pay their workers no more than 15 days after a pay period has ended, but you and an employee may agree to an alternative pay period. Pennsylvania does not mandate how often an employer must pay their employees. Employers may choose the payroll frequency that best suits their needs.
Determining time worked in Pennsylvania
In Pennsylvania, work hours are defined as any hours you require an employee’s presence on company grounds. It also includes travel time to complete business matters. Overtime pay begins when an employee works more than 40 hours in a workweek.
Pennsylvania overtime pay and tracking
With limited exceptions, you must pay employees time and a half after 40 hours worked in a week.
Pennsylvania final wage payment
If an employee parts ways with your business for any reason, you must pay all wages earned up to their point of departure by the next scheduled payday.
Income tax withholding in Pennsylvania
Pennsylvania employers must withhold a flat income tax of 3.07% from employee paychecks. Most locals in Pennsylvania also require employers to deduct Earned Income Tax (rates vary by locals) and Local Services Tax (usually a flat $10 or $52 annually). You can check to see if your employee must have these taxes withheld by checking their work and home address on Pennsylvania’s website.
Pennsylvania benefits
Workers in Pennsylvania are entitled to federal benefits such as Social Security and the Family and Medical Leave Act (FMLA). Under state law, the following benefit regulations are also important to note:
- Workers’ compensation: Pennsylvania law requires most employers to purchase workers’ compensation insurance.
- Health insurance: Under the Patient Protection and Affordable Care Act (ACA), any Pennsylvania employers with 50 or more full-time (or equivalent) employees must offer health insurance benefits. While Pennsylvania law does not require employers with fewer than 50 employees to offer health insurance, those who do offer this benefit are required to cover certain mandated benefits that go beyond the ACA’s minimums. Pennsylvania businesses can deduct health insurance costs from employee paychecks.
- Sick leave: Employers don’t have to offer sick leave benefits under state law, but certain cities such as Pittsburgh and Philadelphia do require paid sick leave. Check with your local authorities to confirm if you are required to offer paid sick leave.
- Jury Duty: Employers must allow unpaid time off for jury duty. Employees cannot be dismissed for attending jury duty.
Voting: Pennsylvania law does not require employers to offer time off to vote.
Finding the right payroll provider in Pennsylvania—Why Gusto?
1. Unlimited payroll
You have no payroll limits when you use Gusto. Our flexible payroll management platform can help you pay and manage a team of any size. With Gusto, you can pay contractors, hourly and salaried employees, workers paid at different rates, and remote team members with just a few quick clicks.
2. Tax filings and payments
No matter where in Pennsylvania your business is located, Gusto works seamlessly with local, state, and federal authorities to help ensure your obligations are met. Gusto reports new hires, files relevant tax forms, and allows you to make payments, all in one dashboard. We keep up with the latest list of requirements to make compliance easier for your business.
With Gusto, I think of payroll as a 30-second job now rather than 30 minutes and scary. The website is so friendly and a joy to use.
Pankaj Garg, Business Owner of Integrative Pain Clinic, LLC
3. Going paperless
Our user-friendly software can auto generate tax documents, including W-2s, 1099s, year-end tax forms, and quarterly tax forms. With just a few clicks within our platform, we email your team members their forms to e-sign, which you can then e-file or e-fax wherever they need to go.
4. Easy reporting
The same system that manages your payroll and tax obligations can generate reports to help you stay on top of where your money is going. Through our platform, you can also generate and download reports at no additional cost, including:
- Paid time off
- Tip credits
- Payroll history
- Contractor payments
- Bank transactions
- And more
5. Employee benefits
Offer your team the benefits they need. Through Gusto, you can offer and administer employee benefits such as:
- Medical insurance
- Flexible spending accounts
- 401(k) programs
- And more
Frequently asked questions about payroll in Pennsylvania
What does a Pennsylvania employer need to track?
Pennsylvania employers must track the number of hours an employee works during a pay period. Additionally, employers must track employee pay rates, pay period gross wages, tax and other employer-authorized deductions, and pay period start and end dates.
How often do employees in Pennsylvania get paid?
All wages earned during a pay period must be paid within 15 days of the close of the last pay period, or as per industry standards or a separate agreement between employee and employer.
What types of payroll taxes are paid in Pennsylvania?
Pennsylvania employers withhold the following payroll taxes from Pennsylvania employee paychecks:
- A flat 3.07% state personal income tax
- A local Earned Income Tax (EIT) of at most 4%
- A local Local Services Tax in some locals of at most $52 a year
- A 0.06% state unemployment tax contribution (SUI)
Do employees in Pennsylvania pay state taxes?
Yes. All Pennsylvania workers pay a flat income tax rate of 3.07% and a 0.06% state unemployment tax (SUI) contribution. Employees may also be required to pay two local taxes.
How much does an employer pay in payroll taxes in Pennsylvania?
Employers must also pay towards Pennsylvania’s state unemployment tax. Their tax is assessed on the first $10,000 of an employee’s wages. The employer’s rate can range from 2.3905% to 11.0333%. New employers will typically pay either 3.6890% or 10.2238% depending on their industry.
