Effective January 1, 2015, Ohio's minimum wage will increase to $8.10 (up from $7.95) per hour for non-tipped employees and to $4.05 (up from $3.98) per hour for tipped employees, plus tips (remember tips must add enough to the tipped employees base wage or the employer is liable for the difference).
The increased minimum wage will apply to employees of businesses with annual gross receipts of more than $297,000 per year. The increase to $8.10 will place Ohio's minimum wage level at 10th highest in the United States (tied with Michigan) behind California, Connecticut, Illinois, Massachusetts, New Jersey, Nevada (for employers with no health insurance benefit), Oregon, Vermont, Washington and the District of Columbia.
Why the annual changes?
This wage increase was not a change enacted by a majority of current members in the Ohio House or Senate and it wasn't a law that Governor John Kasich signed in the last four years (nor any other Ohio Governor in the last 20 years for that matter). It was a vote of the people nearly eight years ago. On November 7, 2006, Ohio voters passed a constitutional amendment that will increase the state minimum wage annually based on the Consumer Price Index (CPI). Thus, the state minimum wage is tied to the CPI for urban wage earners and clerical workers for the 12-month period prior to September. The Ohio Constitutional Amendment is available by clicking here.
For employees at smaller companies (with annual gross receipts of $292,000 or less per year in 2014 or $297,000 or less per year after January 1, 2015), and for 14 and 15-year-olds, the state minimum wage is $7.25 per hour. For these employees, the state wage is tied to the federal minimum wage of $7.25 per hour, which requires an act of Congress and the President's signature to change.
What should employers do?
As we head into the final months of 2014 and employers begin budgeting for 2015, the wage increase should be taken into consideration for those entry level jobs. In addition, employers should review the corresponding added cost for mandatory expenses such as workers' compensation, unemployment compensation and other taxes or insurance that may be based on wages. A small amount of due diligence upfront by employers that review their wage policies could help ensure compliance with local, state and federal wage and hour laws and forego a costly wage and hour lawsuit. A final note for employers is to make sure they post the current 2015 Ohio minimum wage poster before January 1. The poster can be found by clicking here.