Entries by Neil Klingshirn

The Cleveland Plain Dealer reported today that the OCRC will not delay the effective date of the new pregnancy discrimination rules. Governor Strickland asked for extra time to allow businesses to study the impact of the new rule. The Joint Committee on Agency Rule Review is scheduled to consider the pregnancy leave rule on December 3, 2007.

On November 7, 2007 the Ohio Civil Rights Commission (OCRC) voted to approve a proposed update to the OCRC pregnancy discrimination regulations. Those regulations implement Ohio's civil rights act.

The proposed rule states:

Where an adverse employment action taken against an employee who is temporarily limited, in part or in whole, in her ability to work due to pregnancy, childbirth or a related medical condition is based upon an employment policy or practice under which less than twelve weeks of paid or unpaid pregnancy, childbirth or maternity leave is available when medically recommended, such policy shall be presumed to have a disparate impact on women and constitutes unlawful sex discrimination unless justified by business necessity.

*

No employer shall be permitted to place an employee affected by pregnancy, childbirth or a related medical condition on mandatory leave, or otherwise limit or alter her job duties, in the absence of an objective, verifiable safety justification and only when the pregnancy or related medical condition interferes with her ability to safely perform her position. (OAC 4112-5-05).

In plain English, this means that employers cannot terminate or replace an employee who misses 12 or less weeks of work on the recommendation of her doctor. This proposed rule must now be approved by the Joint Committee on Agency Rule Review (JCARR). JCARR is primarily responsible for reviewing proposed and adopted rules. JCARR does not, however, have authority to invalidate rules. This authority is vested solely in the General Assembly. Except for limited authority to suspend adopted rules, JCARR’s authority is principally to recommend that the General Assembly invalidate a proposed or adopted rule.

If this rule goes into effect, the OCRC will have essentially adopted a 12 week leave requirement for pregnant employees. This leave requirement will apply to employers with four or more employees.

I hope Steve Bucci has his malpractice policy up to date. He published a column on Bankrate.com that states your "Employer can Check Your Credit Report." The Cleveland Plain Dealer ran his column in its October 20, 2007 Career Advice Section. In Ohio, this advice could land employers in deep legal trouble.

Bucci wrote in response to a question from a reader, "Carol." She asked whether her husband's employer can periodically review his employee's credit reports. Mr. Bucci answered that an employer can do so, as long as the employee authorized a consumer credit check. Many employees do so when filling out forms at the time of hire. As far as that goes, Mr. Bucci is correct. Employers can check employee credit, if given permission. The rest of the article, however, is terrible advice.

First, an employer cannot use an employee's credit information to make an adverse employment decision without informing the employee beforehand. Mr. Bucci missed that part of the Fair Credit Reporting Act. Instead, he suggests that employers can legitimately decide who to hire or promote based on a credit history. He speculates that paying a bill late means:

• the employee will come to work late;
• the employee has poor judgment;
• the employee will be distracted by unpaid bills; and
• wage garnishments and creditor calls at work (will have) have an impact on an employee's productivity.

Wow. This guy packed four stereotypical beliefs into two short paragraphs.

Does it not make more sense to believe that having bills to pay will:

• make an employee more productive;
• cause her to get to work on time because she needs the job;
• encourage her to work harder to protect her paycheck; and
• volunteer to work overtime when he gets the chance?

The real problem with Mr. Bucci's advice, however, is that Ohio employers who follow it will probably get sued. First, an Ohio employer cannot discharge an employee because the employee's paycheck is garnished by a creditor. Mr. Bucci's advise, that an employer should refuse to hire the employee in the first place, would violate the public policy embraced by this law. Creative employment lawyers would be very interested in that case.

Second, as noted above, employers must tell employees before they act on a poor credit report that they intend to do so. Mr. Bucci did not mention that in his column. The legal effect of this behavior is to create a claim that the employer acted on that information without telling the employee.

Most importantly, however, the Ohio Civil Rights Commission (OCRC) recently issued a policy guidance that addresses the use of consumer credit reports in making hiring and other employment-related decisions. This guidance "examines the
racially discriminatory impact on minority job applicants and advises employers that the use of consumer credit reports should not be used except when job-related and based upon a legitimate, and objectively verifiable, business necessity."

This is serious stuff. A discriminatory impact lawsuit is a class action. The employer is guilty of discrimination and liable for back pay and other damages if a neutral practice, like checking credit scores, has a discriminatory impact on minorities. So, if minorities have worse credit histories than non-minorities, using credit scores will have a disproportionate impact on minorities. In that event, the employer is guilty of discrimination unless it proves it has a legitimate business reason for using the criteria. This is very difficult to prove.

The OCRC issued its policy guidance because research that compares performance evaluations of employees with high and low credit scores shows no correlation to high and low performance evaluations. Therefore, in Ohio, employment lawyers are looking for employers who use credit scoring to deny promotions or new hire opportunities.

If Carol asked me whether her employer can snoop on employee credit reports, I could answer her question with two words: "call me."

The Ohio Department of Commerce has calculated the inflation adjusted Ohio mimimum wage for 2008. Beginning January 1, 2008, Ohio's minimum wage will be $7.00 an hour.

The Ohio Department of Commerce also prepared this handy cheat sheet for Ohio employers who are allowed to pay the federal minimum wage. It shows the minimum wage that will be required as the new federal minimum wage takes effect.

The Ohio Supreme Court today decided Leininger v. Pioneer National Latex. The Leininger decision restricts the public policy exception to employment at will in Ohio. This post assumes that the reader is familiar with Ohio employment at will law and the exception to it created by Greeley v. Miami Valley Maintenance Contrs., (1990), 49 Ohio St. 3d 228.

Greeley’s employment was terminated because he was subject to a court’s wage-withholding order. Although R.C. 3113.213(D) clearly prohibited the employer’s action, that statute provided only for the employer to be fined for a violation and did not grant the employee any civil remedies. The Ohio Supreme Court held in his case that “[p]ublic policy warrants an exception to the employment-at-will doctrine when an employee is discharged or disciplined for a reason which is prohibited by statute.”

Later, Greeley was extended and claims for wrongful discharge were allowed for employment terminations that violated public policy as expressed in sources other than the Revised Code. “ ‘Clear public policy’ sufficient to justify an exception to the employment-at-will doctrine is not limited to public policy expressed by the General Assembly in the form of statutory enactments, but may also be discerned as a matter of law based on other sources, such as the Constitutions of Ohio and the United States, administrative rules and regulations, and the common law.” Painter v. Graley (1994), 70 Ohio St.3d 377, 639 N.E.2d 51, paragraph three of the syllabus.

In 2002, the Ohio Supreme Court seriously restricted Greeley rights by holding that Greeley rights are available only if :

the absence of a cognizable Greeley claim based solely on a violation of the (source of the public policy, there the FMLA) would seriously compromise the Act's statutory objectives by deterring eligible employees from exercising their substantive leave rights.

Wiles v. Medina Auto Parts, (2002) 96 Ohio St. 3d 240, 242-246.

Today, in Leininger, the Court held that an employee does not have a Greeley claim if she was terminated because of her age. Specifically, the Court held that:

A common-law tort claim for wrongful discharge based on Ohio’s public policy against age discrimination does not exist, because the remedies in R.C. Chapter 4112 provide complete relief for a statutory claim for age discrimination.

Does this mean that the Greeley test is now whether the statutory scheme provides "complete" relief?

Apparently not. After discussing Greeley, Wiles and their related decisions the Leininger court stated:

After considering our prior decisions, we conclude that it is unnecessary to recognize a common-law claim when 1) remedy provisions are an essential part of the statutes upon which the plaintiff depends for the public policy claim and 2) when those remedies adequately protect society’s interest by discouraging the wrongful conduct.

(the numbering is mine).

This test raises some questions:

1. When is a remedy provision an "essential" part of the statute? When is it not?
2. What is the test if the remedy is not an essential part of the statute?
3. What is "adequate" protection?
4. To what degree must the remedy "discourage" the wrongful conduct?

To discern how the Ohio Supreme Court might answer these questions, it is worth comparing this to the standard under Wiles, which was, again:

whether the absence of a cognizable Greeley claim based solely on a violation of the (statute, there the FMLA) would seriously compromise the Act's statutory objectives by deterring eligible employees from exercising their substantive leave rights.

Under Wiles, the focus stayed on the employee, and whether the absence of a Greeley claim would deter the employee from exercising the rights that flowed from the source of the public policy. Now the focus is on the wrongdoer and the question is whether the remedy contained in the source of the public policy will sufficiently "discourage" the wrongful conduct to make a Greeley claim "unnecessary."

My take is that the Leininger standard is a significant retreat even from Wiles. It is difficult to see how Greeley remains viable for anything other than its own wage-garnishment facts.

The Ohio Supreme Court today recognized a claim for "false light" invasion of privacy. This claim arises where one party knowingly or recklessly publicizes false information about a person that is highly offensive.

The case, Welling v. Weinfeld, involved the Weinfeld's party center in Stark County and its neighbor, the Wellings. The two did not get along. The Wellings did not like the parties and traffic at the party center and the party center did not appreciate that a rock was thrown through its window.

Suspecting that one of the Welling kids launched the offending rock, Weinfeld distributed a flyer that said:

$500.00
REWARD
for any information which leads to the
conviction of the person(s) responsible
for throwing a rock through the window
of Lakeside Center Banquet Hall
(also known as the “Party Center”)
in the Dee Mar Allotment, in Perry
Township, on Monday, May 8th or
Tuesday, May 9th, 2000.
____________________________________
Any tips will be kept confidential.

Although the flier did not name any names, the Weinfelds distributed the flyer at the factory where a Welling kid worked and at the high school that he attended. He sued, claiming that the flyer placed him in a false light.

When the case reached the Ohio Supreme Court, the court did not decide whether the Welling boy threw the rock or whether the suggestion that he had would offend a reasonable person. Instead, the Court decided whether, assuming that those facts were true, Ohio would allow him to pursue a previously unrecognized "false light" claim. The Ohio Supreme Court said yes, he could. False light invasion of privacy is now a viable cause of action in Ohio.

The elements of a false light invasion of privacy claim are:

1. publicity as to a matter concerning another that places the other before the public in a false light;
2. the false light in which the other was placed would be highly offensive to a reasonable person and
3. the actor had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the other would be placed.

"Publicity" means that the matter is made public by communicating it to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge. Thus, publicity includes any means of communication, whether oral, written or by any other means that reaches the public, or is sure to reach the public.

This case may provide a remedy for employees who are falsely accused of sexual harassment where the accusation reaches, or is communicated in a way that is sure to reach, the public. In that context, the public could possibly mean the workplace community.

This case does not address the main problem of the falsely accused, which is the lack of an adequate means to challenge the falsity of the accusation and lack of a remedy if they lose their job because of it. However, where the complainant takes the complaint to the public, the falsely accused now has the right to prove that it is false in a court of law and recover damages from the accuser if the accusation is offensive to a reasonable person. This is a step in the right direction.

I posted three new FAQ articles.  They cover the arbitration of employment disputes. They include:

1. Overview of Mandatory Employment Arbitrations
2. Avoiding Employment Arbitration Agreements; and
3. Employment Arbitration Practice and Procedure

The articles are written for employees who are asked to sign an arbitration agreement or who discover that their employer claims that they aready agreed to arbitrate their employment disputes. They provide an overview, outline the ways to escape arbitration agreements and discuss strategies and tactics to use in mandatory employment arbitrations.

The Ohio Department of Commerce cleared up most of the confusion created by House Bill 690, the legislation that implemented Ohio's minimum wage. Commerce, which enforces the new minimum wage, included the following exemptions on its new Minimum Wage poster:

INDIVIDUALS EXEMPT FROM MINIMUM WAGE
(ORC 4111.14 (B))

1. Any individual employed by the United States;
2. Any individual employed as a baby-sitter in the employer's home, or a live-in companion to a sick, convalescing, or elderly person whose principal duties do not include housekeeping;
3. Any individual employed as an outside salesman compensated by commissions or in a bona fide executive, administrative, or professional capacity, or computer professionals.
4. Any individual who volunteers to perform services for a public agency which is a State, a political subdivision of a State, or an interstate government agency, if
1. the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform the services for which the individual volunteered; and
2. such services are not the same type of services which the individual is employed to perform for such public agency.
5. Any individual who works or provides personal services of a charitable nature in a hospital or health institution for which compensation is not sought or contemplated;
6. Any individual in the employ of a camp or recreational area for children under eighteen years of age and owned and operated by a non-profit organization or group of organizations.
7. Employees of a solely family owned and operated business who are family members of an owner.

Notably missing from the Commerce exemptions are agricultural, home health and amusement park workers. The Columbus Dispatch reports that the absence of these exemptions "stunned Sen. Steve Stivers, one of the most vocal advocates of exempting home health-care, farm and amusement-park workers from the minimum-wage increase approved in November by Ohio voters." The Dispatch reported that an estimated 20,000 health-care workers and 6,000 to 8,000 farm labor employees will now receive the new minimum wage.

Sen. Stivers is stunned because he thought HB 690 wrote off agricultural and home health care workers from Ohio's new minimum wage. According to the Commerce Department, however, HB 690 does not, in fact, exempt those workers.

What is behind this stunning turn of events? The Commerce Department's decision, which restores the new minimum wage to employees covered by ballot Issue 2, is based on simple legal reasoning.

The starting point is HB 690, which is codifed as Ohio Revised Code section 4111.14. Somewhere between its introduction and final passage the definition of "employee" in 4111.14(B) evolved to exclude:

individuals who are excluded from the definition of "employee" under 29 U.S.C. 203(e) or individuals who are exempted from the minimum wage requirements in 29 U.S.C. 213 and from the definition of "employee" in this chapter.

(emphasis mine) This creates two exemptions to the minimum wage, which are those employees exempted from the definition of 203(e), which is not in dispute here, or

individuals who are exempted from the minimum wage requirements in 29 U.S.C. 213 and from the definition of "employee" in this chapter.

According to the Columbus Dispatch, the Commerce Department is "interpreting that you've got to be in both of those to be exempted from Ohio's minimum wage," quoting Robert Kennedy, superintendent of the Commerce Department's Division of Labor & Worker Safety.

This is a fair interpretation. It turns on the word "and" meaning "and" rather than "or." That is, an employee is only exempt from Ohio's miniminum wage if exempted from both the federal and Ohio minimum wage. Since the rules of statutory interpretation require courts to give words their plain meaning, reading "and" to mean "and" is a sound legal position.

This still begs the question of whether agricultural, home health and amusement park workers are both "individuals who are exempted from the minimum wage requirements in 29 U.S.C. 213" and from "the definition of 'employee' in this chapter." The answer is that the federal minimum wage excludes these employees, but not Ohio's minimum wage.

Chapter 4111 defines "employee" in 4111.14(B) and 4111.03. Quoted above, 4111.14(B) incorporates the definition of "employee" as found elsewhere in Chapter 4111. The definition of "employee" found elsewhere in Chapter 4111 is in Section 4111.03, which exempts the following workers from the definition of employee:

1. Any individual employed by the United States;
2. Any individual employed as a baby-sitter in the employer's home, or a live-in companion to a sick, convalescing, or elderly person whose principal duties do not include housekeeping;
3. Any individual engaged in the delivery of newspapers to the consumer;
4. Any individual employed as an outside salesperson compensated by commissions or employed in a bona fide executive, administrative, or professional capacity as such terms are defined by the "Fair Labor Standards Act of 1938," 52 Stat. 1060, 29 U.S.C.A. 201, as amended;
5. Any individual who works or provides personal services of a charitable nature in a hospital or health institution for which compensation is not sought or contemplated;
6. A member of a police or fire protection agency or student employed on a part-time or seasonal basis by a political subdivision of this state;
7. Any individual in the employ of a camp or recreational area for children under eighteen years of age and owned and operated by a nonprofit organization or group of organizations described in Section 501(c)(3) of the "Internal Revenue Code of 1954," and exempt from income tax under Section 501(a) of that code; and
8. Any individual employed directly by the house of representatives or directly by the senate.

None of these exempted individuals are employed in agriculture, home health care or amusement park work. Thus, the Department of Commerce will not exempt those individuals from Ohio's minimum wage.

The Commerce Department's decision is significant for two reasons.
First, as the enforcement agency for the new minimum wage, Commerce will investigate and recover minimum wages for any employee except those listed above. Second, the Commerce Department's interpretation of the Ohio minimum wage exemptions are generally presumed to be correct, unless overturned by a court. As a result, every employee in Ohio will be entitled to the new Ohio minimum wage except for those listed above, unless and until an employer proves otherwise through a final appeal.

My take: the Department of Commerce made a reasoned interpretation of HB 690 that restored the will of the people.

Nice work.

Yes, you should receive Ohio's new minimum wage, unless your employer grosses less than $250,000 a year, in which case you would receive the federal minimum wage, which is currently $5.15 an hour. Your employer may, however, count tips towards part of your minimum wage.

As a tipped employee, specifically, a pizza delivery driver, the new Ohio minimum wage affects you as follows:

1. The Ohio minimum wage constitutional amendment covers you and does not exempt pizza drivers or tipped employees. You are therefore entitled to receive a minimum wage.
2. The amount of the new Ohio minimum wage is $6.85, with certain exceptions. It will increase each year with inflation.
3. One exception to the amount of the minimum wage that might apply to a pizza parlor is that for a small employer, which is one grossing less than $250,000 a year. A small employers has the option of paying the federal minimum wage, which is currently $5.15, instead of $6.85 If the federal minimum wage goes up, however, which seems likely, the small employer will have to pay the Ohio minimum or the increased federal minimum wage.
4. An employer may pay "tipped" employees as little as one half of the required minimum wage (whether $6.85, $5.15 or a new federal minimum), but only if "the employer is able to demonstrate that the wages paid by the employer are equal to or greater than the minimum wage rate for all hours worked." This means that you still receive the minimum, although part of it comes from tips.

Given this, it should not matter if a pizza driver performs non-tipped duties (preparation, cooking, cleaning, etc.) You should receive $6.85 an hour, unless for a small employer, in which case it would be $5.15 an hour. Up to half of that can be covered by tips.

Good question. The minimum wage law requires payment of $6.85 per hour. If an employee is currently paid $5.15, the employee is entitled to a $1.70 increase. If the employee is earning $6.00, the employee is entitled to an $.85 increase. If the employee is earning $7.25, the employee is not entitled to any increase at all.

What should an Ohio home health care employer do? Under the minimum wage implementing legislation, she can pay the new Ohio minimum wage or claim an exemption for home health care workers created by the minimum wage implementing legislation. Assuming that she prefers not to pay the minimum wage, which is the wiser choice?

Generally speaking, legislation is presumed to be constitutional. In this case, however, the constitutional problems appear on the face of the law, which takes the minimum wage away from tens of thousands of Ohio workers who would otherwise have received it. For this reason, I believe that the exemption is not contitutional and caution employers against relying on it.

However, I am just one attorney. Maybe I have it wrong. So I sought out what other attorneys are saying to see if competent employment counsel have gone on record to defend the constitutionality of the legislative exemptions. Here's what I found:

The Columbus law firm of Bricker & Eckler wrote:

The proponents of the Amendment have indicated that they intend to challenge the constitutionality of this legislation when it does become effective (or before). For at least the next several months, therefore, there will be much uncertainty surrounding these issues and employers should continue to stay tuned.

Bricker & Eckler thus share my concern about the unconstitutionality of this law. However, an attorney from the firm of Schottenstein, Zox & Dunn wrote:

the new legislation has made clear that employers and employees exempt from the minimum wage requirements under the Fair Labor Standards Act are also exempt under the new state law.

Encouraged that I found an attorney with more insight into this matter than me, I wrote to the author of this article, attorney Paul Bittner, and asked if he would share the reason he believed that the minimum wage legislation exemptions were constitutionally sound. Mr. Bittner replied that:

Our article is not intended to resolve the constitutionality of this provision of HB 690, any other provision of HB 690 or for that matter, the constitutionality of Article II, Section 34a itself.

While I understand that there will undoubtedly be many opportunities to further debate HB 690, our article was certainly not intended to be anything more than an informational piece on the contents of the General Assembly’s enactment.

We hope our readership will be attentive to this trend in law and seek counsel regarding their rights and responsibilities including the risks and benefits, related to it. Some employers may wish to vigorously follow the literal language in HB 690; others may wish to be extremely cautious and wait and see how courts may interpret the constitutionality of its exemption provisions.

This is hardly a ringing endorsement of the implementing legislation's constitutionality.

At long last, I found what might pass for a defense of the constitutionality of the implementing legislation in the Ohio Legislative Services Commission's analysis of HB 690:

Section 34 of Article II, Ohio Constitution, . . . states that "laws may be passed fixing and regulating the hours of labor, establishing a minimum wage, and providing for the comfort, health, safety and general welfare of all employees; and no other provision of the constitution shall impair or limit this power," which Section 34a made no attempt to amend, repeal, or otherwise modify.

In other words, the argument is that the constitutional right to pass general minimum wage laws gives the legislature the power to take away a more specific, constitutional ly required, minimum wage.

I don't buy it. Apparently, the Legislative Services Commission was not entirely sold on the argument either, concluding with this comment:

Section 34a stipulates that the section must be liberally construed in favor of its purposes. The section specifies that laws "may be passed to implement 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 . . . ." If a court would find that the bill's provisions are considered a restriction on Section 34a, then the bill may be contrary to Section 34a.

So there it is. Weeks after passage of the legislation much has been written about it, but not in a defense of its constitutionality. Consequently, I suggest that the employer faced with the choice of paying the new minimum wage or relying on the constitutionality of the legislative exemptions should avoid relying on the exemptions.

Abby Levine gets it. In response to the Ohio Senate's passage of HB 690, which basically guts Ohio's new Fair Minimum Wage, Abby says:

my anger over this is not simply that millions of hardworking Ohioans are losing a significant, and long overdue raise. It’s really that the legislators are ignoring their constituents. When people vote on something - people who you represent - you have to respect it, no matter how much you disagree.

"jam," a reader who commented on Abby's blog, argues that the legislature is free to undo a popular referendum if the legislature finds the referendum unwise:

When a referendum achieves something that a majority in the legislature thinks is wrong, they have every right — and perhaps even an obligation — to work (within legal channels, of course) to undo the referendum.

The missing assumption in jam's defense of the legislature is that they have the power to undo the referendum. That assumption is not correct.

Ohio's new Fair Minimum Wage is in the constitution. The constitution says that the legislature cannot pass laws that restrict the new Fair Minimum Wage. Exempting groups of employees from the wage restricts their rights. Therefore, the minimum wage legislation (HB 690) is not constitutional. In the conflict between the legislation and the constitution, the constitution will win.

jam correctly notes that the supporters of Issue 2 can mount a court challenge to the new legislation. True. However, litigation is expensive. Most likely employers will pay the tab, since they have to pay their employee's legal fees in minimum wage litigation. In addition, no one will really know if the exemptions are valid or invalid until the litigation is over.

So, Ohio's lame duck legislature not only thumbed its Republican nose at Ohio's voters and the people they voted to benefit. They have hobbled Ohio's employers with uncertain exemptions and certain litigation costs. That is poor policy and legislation.

Summary:

You are covered by the new minimum wage law but you can pay the federal minimum wage instead of the Ohio minimum wage. You should be very careful before you rely on an exemption from the minimum wage that is contained in a state law, because the new minimum wage is required by Ohio's Constitution and a state law cannot override the Constitution.

Long answer:

The new minimum wage law, which is in Article II, Section 34a of Ohio's constitution, covers you. I dissected Section 34a's coverage issues in a prior post. So long as you are an "employer" and you are paying "employees", as those terms are defined in 29 USC section 206, Section 34a covers you, with some exceptions. If you look at those terms and exceptions, you will see that you are covered and not exempted.

Section 34a does, however, allow an employer with less than $250,000 in gross revenue to pay the federal minimum wage, if it is lower than Ohio's minimum wage. Therefore, as of January 1, 2007, you can pay your employees $5.15 per hour and comply with Ohio's minimum wage law. If the federal minimum wage increases, however, you must pay the increase.

You may see something from your chamber of commerce or trade association telling you that the Ohio passed a law that adds the federal minimum wage exemptions to Section 34a. A current house bill (HB 690) has been approved by the House and will receive a vote soon from the Senate. HB 690 is a law that defines "employee" for purposes of Section 34a to include the federal minimum wage law exemptions. Those exemptions include businesses grossing less than $250,000. Thus, if HB 690 passes, there will be a law that says small businesses like yours are exempt from the new minimum wage law.

That law, however, is probably a nullity. You need to be very careful with this exemption. Section 34a says that implementing legislation cannot restrict rights under Section 34a. Thus, an exemption under HB 690 that is not contained in Section 34a itself is almost certainly unconstitutional. I discussed this issue at length here.

This means that, if you fail to pay the minimum wage in reliance on an exemption that is unconstitutional and a nullity, you will have violated Section 34a's minimum wage requirement. Therefore, in addition to the minimum wage, you will also owe penalties equal to two times the unpaid minimum wage, plus your employee's attorney's fees. Consequently, I highly recommend that you obtain written advise of an employment law specialist that says you can rely on that exemption before you do so. For my part, I am not prepared to provide that opinion.

Regards,

Neil Klingshirn

HB 690 puts Ohio employers at serious risk. It leads Ohio employers to believe that they are exempt from Section 34a when they in fact are not. This can lead to a tripling of minimum wage costs and worse.

To understand how HB 690's sponsor can convince lawmakers to vote for an unconstitutional law, consider the problem that Issue 2 created for summer camps, which have become a bit of a poster child for "minimum wage relief." Before Issue 2, camp counselors were exempt from Ohio and federal minimum wage laws. Ohio summer camps did not have to pay the minimum wage, which allowed the camps to craft creative compensation arrangements for their counselors, such as the payment of a flat stipend at the end of the summer plus, of course, free room and board.

With the passage of Issue 2, however, the camps must now pay $6.85 an hour for every hour worked, which amounts to a huge increase in counselor costs. Worse yet, no one knows how many hours the counselors are considered to have "worked," since they stay at camp most of the summer. So, Issue 2 hit summer camp owners particularly hard.

HB 690's supporters are telling the summer camps that it will exempt them from the minimum wage. HB 690 does not, however, protect the summer camps. The minimum wage requirement is in the constitution. A lower level law, even a state law, has no more effect on the minimum wage requirement than a city ordinance or my proclamations in this blog. Also, an Issue 2 violation does not require intent. A violation occurs and the liability attaches (3x penalties and attorneys' fees) even with complete good faith by the employer that it is in compliance.

So, if HB 690 passes, this is what the summer camps will get:

• a class action law suit covering camp counselors and all "similarly situated" camp counselors in Ohio.
• the employee's legal bill for the class action. A constitutional challenge to a state law will likely go to Ohio's Supreme Court, which will be very expensive. Issue 2 requires the employer to pay the employee's legal fees upon proof of a violation.
• unpaid minimum wages, times three, since employee's are entitled to the unpaid minimum wage, plus an amount equal to twice that.

The real dilemma for the camps will arise on pay day for the counselors. At that point the camps must decide whether to pay the wage or risk the liability. If I was running a summer camp, I would get a written opinion from an employment law specialist with a paid up malpractice policy that HB 690 will me before I risked the liability.

As for the HB 690's sponsors, he should guarantee Ohio employers that HB 690 will protect them. If he cannot give that guarantee, he should withdraw the bill.

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.

These restrictions are each unconstitutional because Ohio's constitution does not permit restrictions on Section 34a's rights. In fact, Section 34a states:

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.