Ohio’s New Minimum Wage Law
By Peter M. Burrell
On November 7, 2006, Ohio voters passed Issue 2, which amended Ohio’s constitution, requiring employers to pay an increased minimum wage of $6.85 per hour. This new minimum wage went into effect on January 1, 2007. In addition to private employers, the amendment also applies to every political subdivision, including counties, cities, townships, school districts and other governmental authorities. This amendment will affect employers in a number of significant ways.
The Ohio Legislature passed “implementing” legislation - House Bill 690 - which Governor Bob Taft signed on January 2. HB 690 differs from Issue 2 in certain respects, so a court challenge to HB 690 is likely. Until the legal status is clarified, employers should proceed with caution before exempting employees from the minimum wage based on the following exemptions, which may be challenged:
Agricultural worker
Newspaper delivery employees
Seasonal amusement or recreational employees, including summer camp counselors
Outside salespeople
The minimum wage will increase by the rate of inflation for the prior 12 months (to be determined on September 30 of that year). The new rate will go into effect on January 1 of the following year. For example, if the annual rate of inflation is 5% on September 30, 2007, the minimum wage will increase to $7.19 on January 1, 2008.
There are new record keeping requirements as well. Employers must keep a record of the following information for three years after each employee’s last day of employment:
Name
Address
Occupation
Pay rate
Hours worked for each day worked
Each amount paid an employee
The employer, upon request, is required to provide this information without charge to an employee or his/her representative. Employees under the age of 16 and employees of small businesses (less than $250,000 in annual gross revenue) are not entitled to the new minimum wage. However, employers are required to pay those employees at least the federal minimum wage.
An employer may pay an employee as little as half the new minimum wage rate, so long as the employer can show that tips make up at least the other half of the employee’s wages. (A restaurant server is a classic example.) In addition, family owned businesses do not have to pay the new minimum wage to their own family members.
The State of Ohio can also issue licenses allowing employers to pay individuals who have a disability that adversely affects their opportunity for employment a wage rate below the new minimum.
Employers who fail to comply with the new minimum wage law face complaints by employees, persons acting on their behalf and/or any other interested party to the State of Ohio. The State is required to promptly investigate and resolve the complaint. The State of Ohio may also investigate on its own initiative. Employers must provide the State of Ohio with any records related to the investigation and other necessary requested information. The new law leaves the door open for class action lawsuits.
The penalties for violating the new law are severe. Within 30 days of the State’s finding of a violation, an employer must:
Pay the employee’s back wages;
Pay damages equal to an additional two times the back wages;
Pay the employee’s costs and reasonable attorneys’ fees.
Put simply, that is three times the employee’s back wages, in addition to his/her attorneys’ fees. Employers who retaliate are subject to compensatory and punitive damages as well.
admin @ March 7, 2007