On November 7, 2006, Ohioans approved a new Amendment to Ohio’s Constitution that (1) raises Ohio’s minimum wage from $5.15 per hour to $6.85 per hour; and (2) ties the minimum wage to the rate of inflation based on the consumer price index. The Amendment also imposes new record-keeping and disclosure requirements for the vast majority of employers in Ohio.

The new minimum wage was effective January 1, 2007, and the new record-keeping requirements were likely effective as of December 18, 2006.

On January 2, 2007, the Governor signed House Bill 690, which was passed by the Ohio Legislature to implement the Amendment and clarify many of its ambiguous areas. However, House Bill 690 will not become effective until April 2, 2007. In addition, opponents to House Bill 690 have threatened to legally challenge some of its provisions.

In the meantime, employers must still comply with the new Amendment. Thus, employers need to understand their obligations under the Amendment now and make the necessary changes to comply with its provisions, keeping in mind that once House Bill 690 becomes effective, there are several aspects of employers’ obligations under the Amendment that may change.

The following are basic answers to some initial questions employers should be asking about the impact of this new Amendment. The changes currently expected to occur on April 2, 2007 as the result of House Bill 690 are noted where appropriate next to the heading “House Bill 690.”

Effective Date

When does the Amendment become effective?

The increased minimum wage ($6.85) went into effect on January 1, 2007.

The new record-keeping and disclosure requirements were likely effective as of December 18, 2006, which is the date the Amendment was officially certified by the Secretary of State.

New Minimum Wage

Which employers must pay the new minimum wage?

Nearly all public and private employers in Ohio are likely subject to the new Amendment.

The Amendment and House Bill 690 also appear to apply to out-of-state employers who employ individuals in Ohio.

Limited Exception: Employers with annual gross receipts of $250,000 or less are exempt from paying the $6.85 per hour minimum wage, but they must still pay the federal minimum wage, which is currently $5.15 per hour.

What is the new minimum wage?

Effective January 1, 2007, Ohio’s minimum wage is $6.85 per hour.

Each year thereafter, the minimum wage will increase based on the rate of inflation according to the consumer price index.

Which employees are eligible for the new minimum wage?

“Employees” could arguably be defined broadly in the Amendment to include many individuals previously exempt from minimum wage requirements (e.g., executive, administrative, and professional employees, outside sales employees, the newspaper delivery boy or girl, domestic service/companionship employees, and possibly many others).

The following express exceptions to the minimum wage are included in the Amendment:

• Employees Employed on a Casual Basis—Individuals employed “in or about the property of the employer or individual’s residence on a casual basis” are excluded from the minimum wage requirements.

• Family Business Employees—Employees of a “solely family owned and operated business who are family members of an owner” are excluded from the new minimum wage.

• Employees under 16 years of age—Employees under 16 years of age are excluded from the new minimum wage but must still be paid the federal minimum wage, which is currently $5.15 per hour.

• Tipped Employees—Employees who receive tips may be paid as low as $3.43 per hour (½ the new minimum wage), so long as the aggregate of the tips and wage paid is equal to or greater than the minimum wage rate for all hours worked.

• Mentally or Physically Challenged Employees—Employers may obtain a license from the State to pay employees with mental or physical disabilities less than the new minimum wage if the new wage would otherwise adversely impact their employment.

House Bill 690: Under House Bill 690, the following employees will also be exempt from the minimum wage:

• Employees excluded from the FLSA’s definition of employee (e.g., certain federal employees, certain agriculture employees, and certain public entity volunteers);

• Employees exempt from the minimum wage under the FLSA, including executive, administrative, and professional employees, outside sales persons, and computer professionals.

Record-Keeping Requirements

What are the new record-keeping requirements?

At least until House Bill 690 becomes effective (and possibly longer), employers should maintain records of the following information for all employees not expressly exempt under the Amendment (see below):

• Name,

• Address,

• Occupation,

• Pay rate,

• Hours worked for each day worked, and

• Each amount paid an employee.

Are all employers subject to the new record-keeping requirements?

Nearly all public and private employers in Ohio, regardless of size, are likely subject to the new Amendment.

The Amendment also applies to Ohio employees of out-of-state employers.

Are any employees excluded from the Amendment’s record-keeping requirements?

In the Amendment, there are only two express exceptions to the Amendment’s record-keeping requirements. Namely, employers are not required to maintain the above records for:

• Individuals employed “in or about the property of the employer or individual’s residence on a casual basis;” or

• Employees of a “solely family owned and operated business who are family members of an owner.”

Thus, certain employees currently exempt by regulation from minimum wage and record-keeping requirements (e.g., executive, administrative, and professional employees, outside sales persons and certain computer professionals) may arguably no longer be excluded under the Amendment. Therefore, an employer may have to keep records of hours worked each day worked for its upper management, including CEOs.

House Bill 690: Under House Bill 690, employers will not have to keep records of hours worked for each day worked for those employees who are exempt from the federal Fair Labor Standards Act (“FLSA”) (e.g., executive, administrative, and professional employees, outside sales persons and certain computer professionals).

How long must employers maintain the required records?

The Amendment requires employers to maintain the above records “for a period of not less than three years following the last date the employee was employed.”

The Amendment does not expressly contemplate a rolling 3-year period such as the Fair Labor Standards Act. Thus, employers may have to maintain such records for an employee’s entire period of employment and then keep those records for 3 years following the employee’s termination.

House Bill 690: Under House Bill 690, employee records must be kept for 3 years from the date the hours were worked by the employee and for 3 years after the date the employee’s employment ends. Thus, employers will have to keep records on a rolling three-year basis during employment, and then once an employee’s employment ends, employers will have to keep the last 3-years worth of records for 3 years following the termination of employment.

Does an employer have to create records for any time period prior to the Amendment’s effective date?

No. The Amendment is prospective in nature. However, employers still have obligations under the FLSA and Ohio law to retain earlier records.

What information must employers disclose upon request?

Upon request, employers are required to provide, without charge, an employee’s name, address, occupation, pay rate, hours worked for each day worked, and each amount paid an employee.

To whom must employers disclose requested information?

Employers must provide the information listed above to a requesting employee or person acting on behalf of an employee.

• Under the Amendment, an employee or person acting on behalf of an employee may seek disclosure of the information the Amendment requires an employer to keep for an employee.

• House Bill 690: House Bill 690 clarifies that an employee or person acting on behalf of an employee may only obtain the records of the particular employee making the request. Employers should consult with legal counsel regarding any request for records.

Who is “a person acting on behalf of an employee"?

The Amendment does not define that phrase. Arguably, therefore, anyone may request records on behalf of an employee if the employee so authorizes.

Employers should take steps necessary to ensure that the requesting individual is, in fact, acting on an employee’s behalf (e.g., require the requesting individual to provide written, notarized authorization from the employee).

House Bill 690: “A person acting on behalf of an employee” is defined as: (1) certain collective bargaining representatives, (2) the employee’s attorney, or (3) the employee’s parent, guardian, or custodian.

What other information must employers provide to employees?

At the time of hire, an employer must provide an employee with the employer’s name, address, telephone number, and other contact information.

Employers must update such information when it changes.

House Bill 690: Under House Bill 690, employers have 60 days from the change in information to notify employees of the change.

What protections are afforded an employee asking for information under the Amendment?

Employers are prohibited from terminating or otherwise discriminating or retaliating against an employee who exercises any right under the Amendment.

Enforcement

How are alleged violations of the Amendment enforced?

Complaints to the State: An employee, a person acting on behalf of one or more employees, and/or any other interested party may file a complaint with the state for a violation of any provision of the Amendment or any law or regulation implementing the Amendment.

State Initiated Investigations: The state may on its own initiative investigate an employer’s compliance with the Amendment and any law or regulation implementing its provisions.

Civil Actions: The attorney general, and/or an employee or a person acting on behalf of an employee or all similarly situated employees, may bring a court action for equitable and monetary relief against an employer.

What remedies are available to employees aggrieved under the Amendment?

Where an employer is found by the state or a court to have violated any provision of the Amendment, the employer must pay the employee (1) back wages, (2) damages, and (3) the employee’s costs and reasonable attorney’s fees.

Where an employer is found by the state or a court to have violated any provision of the Amendment and/or House Bill 690, the employer must pay the employee (1) back wages, (2) damages, and (3) the employee’s costs and reasonable attorney’s fees.

“Damages” are to be calculated as an additional two times the amount of back wages.

In the case of a violation of the anti-retaliation provision in the Amendment and/or implementing legislation, an employee may recover $150 for each day that the violation continued, or a greater amount as the state or a court determines is sufficient to compensate the employee and deter future violations.

An employer is required to make such remedy payment(s) within 30 days of the finding by the state or a court.

Such payment will not be stayed pending an appeal by the employer.

The foregoing is intended only to be a general overview of the most significant changes imposed by the new Amendment to Ohio’s Constitution and House Bill 690 (when it becomes effective). Employers should consult with legal counsel about how the Amendment and House Bill 690 will impact them and their specific situations and how to respond to requests for information under the Amendment. If you have any questions about the new Amendment and/or its implementing legislation, please contact:

Betsy Swift
James G. Petrie
Elizabeth C. Stock