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An Overview of Ohio's Minimum Wage Law
"Issue 2" is a constitutional amendment that was passed by Ohio voters this
past November. In short, this amendment raises the minimum wage in Ohio
and imposes a number of stringent record keeping requirements for employers.
Recently, Revised House Bill 690 was enacted and signed by the Governor
to clarify many of the ambiguities of Issue 2.
- The amendment raises the state minimum wage from its present rate of
$5.15/hour to $6.85/hour, effective January 1, 2007. From that day forward,
all companies with gross annual receipts of $250,000 or more (a figure to
be adjusted annually), must pay the new minimum wage. A business that does
not meet this criterion must still meet the federal minimum wage of $5.15
an hour, but does not have to pay the new state wage. Likewise, employees
under the age of 16 must still receive the federal wage, but do not have
to receive the new state wage. Finally, the law mandates an annual increase
in the minimum wage, directly reflecting on the rate of inflation for the
previous 12 month period.
- Employers must keep pay and hours worked records for employees who are not
exempt from the Fair Labor Standards Act (FLSA), such as hourly and
administrative employees. As long as an employer was already complying
with FLSA record keeping requirements for these employees, there should
be no change required. (Employers do not have to keep such records for
employees who are exempt from FLSA, such as professional and managerial
employees, which clears up one of the significant ambiguities under Issue
2 as originally drafted.)
- Employers may also pay tipped employees, such as waiters and waitresses,
less than the new minimum wage, but no less than half, provided that the tips
received by the worker combined with the wage add up to at least equal or
more than the new minimum wage. Thus, for example, the minimum a tipped
employee could make in salary for a 40-hour workweek would be $137
(The new minimum wage divided in half ($3.425 an hour) multiplied by 40).
However, that would only apply if the employer can demonstrate that the
employee receives tips in the week that themselves add up to $137. The
methods by which the employer can demonstrate the amount an employee
receives in tips is not set forth in the law.
- Employees have the right to request their pay records and receive that
information within 30 days of making a request. Such requests may also be
made by a representative of the employee. (An employee or his representative
may not request pay records for anyone other than himself, which resolves
another of the ambiguities of Issue 2.)
- New employees are to be given information enabling the employee to
contact the employer.
- There are provisions for dealing with violations of HB 690 (that is,
for failing to pay minimum wage, failure to keep or provide records, or
retaliation).
- Employers must post a summary of Ohio's minimum wage law. This summary
has not yet been issued by the State.
For additional information regarding Issue 2 and its requirements, contact
Hugh Fisher, Director of HR Consulting Services at 216-774-1121 or
hfisher@cohencpa.com.
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