Why Ohio's Minimum Wage Legislation is Unconstitutional

Ohio lawmakers are ramming Issue 2 implementing legislation through the lame duck session. This highly partisan legislation is unconstitutional. It should not become law.

Issue 2 added Section 34a of Article II to Ohio's Constitution. Section 34a allows Ohio lawmakers to pass laws that implement Section 34a, but not restrict it.

On November 28, 2006 Rep. Seitz introduced House Bill 690 for this purpose. It quickly went to the State Government Committee, which held a couple of hearings and then voted today along party lines to approve it as introduced. A vote by the full House is expected next week. You can follow its status here.

I compared Section 34a to HB 690 to see if HB 690 faithfully implemented Section 34a. It does not. The three biggest problems are that HB 690:

1. Takes the Section 34a minimum wage away from Ohio employees if they are exempted from the federal minimum wage law.
2. Takes away the record keeping requirements for employees who are exempt from federal overtime law; and
3. Gives immunity from suit to employers that provide information requested by an employee under Section 34a.

This section shall be liberally construed in favor of its purposes. Laws may be passed to implement its provisions and create additional remedies, increase the minimum wage rate and extend the coverage of the section, but in no manner restricting any provision of the section.

Section 34a Covers Ohio Employees Exempted from Federal Minimum Wage Law

Section 34a was enacted by a vote at a general election. It says that:

• "every employer shall pay their employees" the new minimum wage.
• "employer" and "employee" shall have "the same meanings as under the Fair Labor Standards Act," (FLSA) and
• "only the exemptions set forth in Section 34a apply to Section 34a."

The term "employee" under the FLSA is very broad. It basically means any person who is paid as an employee, with a few exceptions contained in the definition itself. The FLSA applies the minimum wage to some of these employees but exempts others. The FLSA's exemptions from the federal minimum wage are in 29 USC 213(a).

Section 34a adopted the FLSA's definition of "employee", but not all of the FLSA's exemptions. Rather, Section 34a exempts three, but only three, groups of employees from its minimum wage rights. The are:

1. “Tipped” employees (i.e., employees who receive tips as part of their pay) but only so long as tips make enough to pay the minimu wage.
   
   
2. Family members of family owned businesses. and
   
   
3. Employees who work “in or about the property of the employer or an individual’s residence on a casual basis” are not covered by the new minimum wage law.

HB 690 Exempts Many More Employees

Even though "only the exemptions set forth in Section 34a apply to Section 34a," HB 690 says:

The term "employee" incorporates any applicable exemptions from the minimum wage requirements in the Fair Labor Standards Act and from the definition of "employee" in this chapter.

Section 213(a) of the FLSA exempts entire groups of employees from the federal minimum wage. Employees exempted from the FLSA include white collar workers, outside sales people, switchboard operators, employees of small newspapers and others. Since none of these employees are exempted by Section 34a, HB 690 restricts the provisions of Section 34a and is therefore unconstitutional.

Section 34a requires Records for All Employees, Including Exempt Employees

Section 34a also requires:

An employer (to) maintain a record of the name, address, occupation, pay rate, hours worked for each day worked and each amount paid an employee for a period of not less than three years following the last date the employee was employed.

(emphasis mine). That information must be provided to the employee upon request. As noted above, Section 34a defines "employee" broadly to basically mean every employee, with only the limited exceptions noted above.

Although Section 34a's record keeping requirements cover almost every employee, HB 690 pulls the following from the air:

An employer is not required to keep records of "hours worked for each day worked" for employees who are exempt from the overtime pay requirements of the Fair Labor Standards Act or this chapter.

HB 690 thus restricts the rights of a huge class of employees (i.e., those exempt from federal overtime) from Section 34a's record keeping and reporting requirements. It is unconstitutional again for this reason.

HB 690 Creates Employer Immunity From Section 34a.

Section 34a does not grant any employer immunity from minimum wage payment liability, but HB 690 does. Also pulled from the air is the following:

An employer who provides such information specified in Section 34a of Article II, Ohio Constitution, shall be immune from any civil liability for injury, death, or loss to person or property that otherwise might be incurred or imposed as a result of providing that information to an employee or person acting on behalf of an employee in response to a request by the employee or person.

It is difficult to discern why this immunity is in this bill. If it is meant to protect an employer from suit by an employee for releasing the employee's records to an unauthorized person, it does not do that. Instead, read literally, it provides immunity from suit for "loss . . . incurred or imposed as a result of providing that information to an employee." The only loss that can be incurred as a result of providing information showing a minimum wage violation is the lost wages that the employee can then prove she is owed.

HB 690 has other problems and restrictions, but these are the most obvious.

Conclusion

These restrictions are significant and unconstitutional. Enactment of HB 690 fails to faithfully implement the voters law, deprives thousands of Ohio's workers of the rights created by Issue 2 and will result in expensive litigation to remove the unconstitutional restrictions.

To make matters worse, Ohio employers will pay these litigation costs, since Issue 2 requires employers to pay their employees' legal expenses. None of this is good policy or law. Please urge your senator and representative to oppose HB 690 and SB 401.