The Ohio constitution was amended in 2006 by voter-approved Ohio Fair Minimum Wage Amendment (“OFMW”), which established a $6.85 minimum wage rate adjusted annually based on a formula tied to the Consumer Price Index. The amendment was widely debated before the election, but neither supporters nor opponents discussed, or likely considered, that the amendment would dramatically alter Ohio wage and hour law by eliminating established (and common) exemptions to the state’s minimum wage requirement, as a state court recently ruled.
The Ohio appeals court found the majority of minimum wage exemptions in the federal Fair Labor Standards Act (“FLSA”) (e.g., the executive, administrative, professional, and outside sales exemptions, among others), which had been routinely applied in Ohio cases for decades, could no longer be used by Ohio employers to defend against a state-law minimum wage claim after passage and implementation of the OFMW. Haight, et al. v. Cheap Escape Co., et al., 2014-Ohio-2447 (Ohio App. 2 Dist. June 6, 2014).
The plaintiffs, commissioned outside sales employees, claimed their weekly commissions did not always meet Ohio’s minimum wage requirements. They argued the FLSA outside sales exemption was inapplicable to minimum wage claims brought pursuant to the OFMW (Article II, Section 34a of the Ohio Constitution) because the amendment incorporated only the FLSA’s broad definition of “employee” (“any individual employed by an employer”), but not exemptions contained in a separate section of the FLSA. A majority of the appellate court agreed and invalidated an Ohio law enacted after passage of the OFMW that incorporat- ed all of the FLSA’s minimum wage exemptions.
Haight is currently on appeal to the Ohio Supreme Court, which will be considering several arguments raised by the employer (and the dissenting opinion) that the language of the OFMW incorporated the FLSA’s minimum wage exemptions.
Until the decision is rendered, Ohio employers should review the compensation paid to “exempt” employees to determine possible minimum wage liability. Although the potential elimination of the FLSA’s minimum wage exemptions likely would affect commissioned employees most directly, other exempt workers with modest salaries could be affected, too.
Employers evaluating current employee compensation should consider the following:
- Tracking the hours of exempt employees whose commissions or salaries could fall below the Ohio minimum wage in any given week.
- The current Ohio minimum wage rate is $7.95 per hour. Employers should ensure that employees classified as exempt receive commissions or salaries equal to at least $318 per week (every week) if they work 40 hours ($397.50 for 50 hours; $477.00 for 60 hours).
- Haight does not apply to Ohio’s overtime laws, which were not subject to the OFMW changes. The standard FLSA exemptions (e.g., professional, administrative, overtime, and outside sales) still apply to overtime claims in Ohio.