OHIO’S MINIMUM WAGE INCREASES

November 2006

On November 7, 2006, Ohio voters passed Issue 2, the Ohio Fair Minimum Wage Amendment, which amends Ohio’s Constitution (the “Amendment”).  As a result, effective January 1, 2007, Ohio’s hourly minimum wage will increase from $5.15 (the current federal minimum wage) to $6.85.  In addition, the hourly minimum wage for tipped employees will increase from $2.13 to $3.43, and employers must ensure that tipped employees earn the full minimum wage when tips are added to the minimum wage.

The Ohio Legislature will formulate and pass legislation to implement this Amendment.  It is currently seeking input from employer groups and employee representatives.

Yearly Increase of Minimum Wage Tied to Rate of Inflation

Each year Ohio’s minimum wage will increase by the rate of inflation for the prior 12 months. For example, if the rate of inflation for 2007 is 3%, the minimum wage will increase to $7.05 in 2008. 

Exceptions to the Minimum Wage Increase

• Employees of businesses with annual gross receipts of $250,000 or less for the preceding calendar year.
• Employees of a solely family-owned and operated business who are family members of the owner.
• Employees under the age of 16. However, such employees must still be paid the federal minimum wage of $5.15 an hour.
• When permitted by the State, employees with mental or physical disabilities that otherwise affect their opportunity for employment may be paid a sub-minimum wage.

New Recordkeeping and Disclosure Requirements

The Amendment requires significant new recordkeeping and disclosure requirements.  Important to note is that these requirements apply to employers even if they pay employees more than the minimum wage and even if the employer is exempt because it grosses less than $250,000 annually.  These recordkeeping – disclosure requirements are as follows:

• At the time of hire, an employer must provide an employee with the employer’s name, address, telephone number and other contact information and update this information whenever it changes.
• For 3 years following each employee’s last day of work an employer must keep a record of the employee’s name, address, occupation, pay rate, hours worked for each day worked and each amount paid an employee.  Employers must provide this information upon request without charge to an employee or a person acting on behalf of the employee.  The Amendment does not limit the number of requests that may be made for this information.

Ambiguities Presented by the Recordkeeping – Disclosure Requirements

• It is unclear whether the recordkeeping requirement applies to all employees (exempt and non-exempt). The Amendment can be interpreted to include all employees because it does not exclude exempt employees from this requirement and provides that the definition of “employee” is the same as under the federal Fair Labor Standards Act (this definition includes exempt and non-exempt employees).  However, given the difficulty to obtain “hours worked” information for exempt employees, the administrative burden of maintaining such information for all employees and the intent of the Amendment, it may be arguable that a reasonable interpretation of the Amendment is that exempt employees are excluded from the recordkeeping requirements.  This section must be clarified by legislation or Court rulings.
• The Amendment does not define the term “a person acting on behalf of” an employee.  Again it is arguable that it should not include any third party but must be limited to only the “authorized representative” of the employee.  This term also raises issues regarding reference check responses.  These issues will be up to the Legislature and the Courts to resolve.   
• It is unclear whether an employee’s right to view employee information is limited to the employee’s own records or those of other employees.  It is anticipated that union organizers may request such information to support organizing efforts.
• It is unclear whether the request for information may be oral or must be in writing?

Because this is an Amendment to the Constitution, it will be difficult for the Ohio Legislature to resolve these ambiguities through legislation implementing the Amendment.  Also, the disclosure provision raises legal issues including an employer’s obligation to protect the privacy of employee information. 

Ultimately, the ambiguities will be resolved either by the Ohio Supreme Court or the Ohio Legislature.  Until then we urge employers to seek legal counsel regarding compliance with the recordkeeping provisions and requests for employee information.

New Enforcement Procedures and Tough Penalty Provisions

An employee, a person acting on behalf of the employee and/or any other interested party may file a complaint with the State or a lawsuit in court for a violation of the Amendment’s provisions.  A lawsuit must be field within 3 years of the alleged violation, 3 years after a continuing violation ends or 1 year after the State disposes of the complaint, whichever is later.  In addition, the State may initiate its own investigation of an employer’s actions relative to these provisions.  A class action suit is a real threat to employers under these provisions.  The Amendment also includes a non-retaliation provision which provide that an employer may not discharge, discriminate or retaliate against any employee who exercises his/her rights under the Amendment, or against any person who assists or provides information to the employee concerning his/her rights.

This Labor and Employment Law Client Alert is brought to you by Wegman, Hessler & Vanderburg’s Labor & Employment Group:

David R. Knowles                  drknowles@wegmanlaw.com             Telephone: 216.642.3342

Antoinette F. Gideon              afgideon@wegmanlaw.com               Facsimile:  216.520.0145

Christopher A. Holecek          caholecek@wegmanlaw.com

Jennifer A. Corso                    jacorso@wegmanlaw.com

WHV Labor and Employment Law Client Alerts are intended as summarized reports on developments in labor and employment law and are not intended to provide legal advice.  The resolution of legal issues depends on the specific facts of each circumstance and the applicable laws. Readers should not act upon the information contained in these publications without professional legal counsel.