The Ohio Fair Minimum Wage Amendment Among the many changes Ohio citizens voted for in yesterday’s election is an amendment to the Ohio Constitution called “the Ohio Fair Minimum Wage Amendment”. Many of our clients have already called with questions about the new law. What follows is a summary of the key provisions of the amendment. As you will see, the name of the amendment, initiated and heavily promoted by the Ohio AFL-CIO, is essentially a misnomer.
First, 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.
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 his 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.
In addition, employees with mental or physical disabilities that would otherwise adversely affect their opportunity for employment are also exempted from the new minimum wage. However, a license must be issued by the state before employers can utilize this exemption. The law also mandates an annual increase in the minimum wage, based on the rate of inflation.
Far more onerous for most employers are the record-keeping and record-disclosure requirements. The new law requires employers to keep records of the name, address, occupation, pay rate, hours worked for each day worked, and amount paid to each employee. These records are to be kept for a period of three years following the employee’s last day of employment. Further, the law requires this information to be “provided without charge to an employee or person acting on behalf of an employee upon request.” The amendment does not specify whether the employee must authorize an individual or entity purporting to act on his behalf, or whether an employee may request information concerning other employees. Many might also be surprised to know that the law makes no difference between hourly and salaried employees – the record keeping and disclosure requirements would be applied to both.
The burdens imposed by this amendment are numerous. Many companies use Social Security numbers as unique employee identifiers, for example. Unless the company spends the time and money required to redact the number from the records, the employees could be exposed to identity theft, and, of course, the employers could in turn be exposed to liability resulting from such theft. In addition, disclosing employees’ pay records could reveal confidential company information that would be of value to an employer’s competitors and union organizers. In fact, given the fact that this new amendment was initiated by the AFL-CIO, it is the utility of such information in organization campaigns that may well have been the prime motivation for their involvement and promotion of the law.
At this point it is far too early to discuss the legal implications of the amendment with any detail. An attempt will almost certainly be made to defeat the bill on a variety of constitutional grounds currently being debated by employer groups. Other portions of the law, such as the uncertainty surrounding the need for authorization and permission mentioned above, or the methods by which employers can demonstrate the amount in tips an employee earns, will require judicial interpretation. For the time being, companies with employees earning less than the new minimum wage should adjust their payroll accordingly. If faced with a request for payroll disclosure, our office should be consulted.
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