A divided Ohio Supreme Court held that Ohio’s minimum wage law exempts employees engaged in an executive, administrative or professional capacity, or as outside salespersons, summer camp employees, fishing employees, small publication employees and family farm employees. In Haight v. Minchak, No. 2016-Ohio-1053, two sales representatives challenged the constitutionality of Ohio’s minimum wage statute (R.C. 4111.14)—arguing that the definition of employee in R.C. 4111.14(B)(1) conflicts with the definition in the Ohio Constitution. The Court held that the definitions did not conflict.
John Haight and Christopher Pence were sales representatives for Cheap Escape Company. They were paid by commissions plus a draw. The Company stopped paying or reduced the draw when its sales representatives underperformed. The compensation the underperforming sales representatives received fell below Ohio’s minimum wage. Haight and Pence filed a class action lawsuit alleging that R.C. 4111.14 was unconstitutional and seeking unpaid wages.
By way of background, R.C. 4111.14 implements the 2006 Fair Minimum Wage Amendment to the Ohio Constitution and exempts certain employees from the definition of “employee” under the law. The Amendment states that “employee” “ha[s] the same meanings as under the federal Fair Labor Standards Act” and that no law may be passed implementing the Amendment that restricts its provisions. The Amendment also states that only the exemptions set forth in the Amendment—tipped employees, disabled employees, employees of family-owned businesses who are family, employees under age 16 and domestic employees—shall apply. R.C. 4111.14 defines “employee” to exclude from Ohio’s minimum wage law individuals who are excluded or exempted from the definition of employee under the federal Fair Labor Standards Act (FLSA). The exclusions set forth in 29 U.S.C. 203(e) were not at issue. The exemptions in 29 U.S.C. 213 were challenged. In particular, the plaintiffs challenged the sales representative exemption.
The trial court held that R.C. 4111.14 was constitutional and that no minimum wage violation existed. The Second District Court of Appeals reversed and held that the General Assembly exceeded its authority by defining “employee” more narrowly than the Constitutional Amendment.
In a 5-2 decision, the Ohio Supreme Court reversed and upheld R.C. 4111.14. The Court reasoned that the Amendment incorporated all “meanings” in the FLSA without limitation, including both the exclusions and exemptions. As for the language in the Amendment stating that only the exemptions set forth in the Amendment applied to the minimum wage law, the Court interpreted that language to mean that only the exemptions set forth in the Amendment supplemented the already incorporated exemptions from the FLSA. For further support, the Court referenced a publication distributed to voters prior to the Amendment’s passage that stated that the interpretation of the Amendment would be easy (and not generate litigation) because the Constitutional Amendment incorporated all case law decided under the FLSA. The Amendment’s proponents argued that any vague terms in the law would be given the meaning from the FLSA’s case law and regulations.
It is unlikely that there are many exempt employees making less than Ohio’s minimum wage; however, the decision has potentially broader application. This decision avoids the potential for class action lawsuits over the requirement that employers keep records of hours worked for all “employees” by defining employees to exclude sales representatives and other employees excluded under the FLSA from recordkeeping requirements for hours worked.