Outside salespeople are still exempt from minimum wage under Ohio law

On March 17, 2016, the Ohio Supreme Court held that Ohio’s minimum wage law, which exempts outside salespeople from the definition of “employee,” does not conflict with a voter-approved amendment to the Ohio Constitution and, therefore, remains good law.

Although outside salespeople have been historically exempt from minimum wage under federal law, the plaintiffs in Haight v. Minchak, 2016-Ohio-1053, argued that they were entitled to receive minimum wage under Ohio law because R.C. 4111.14(B)(1)’s definition of “employee” conflicted with the definition of “employee” contained in the Fair Minimum Wage Amendment. In a decision favorable to Ohio’s employers, the Ohio Supreme Court rejected the plaintiffs’ claims, finding that the amendment incorporated the federal meaning of “employee” without limitation and, thus, R.C. 4111.14(B)(1) was constitutional.

Background

To be entitled to minimum wage, an individual must be an “employee” as defined by the applicable law. In 2006, Ohio voters approved the Fair Minimum Wage Amendment to the Ohio Constitution. This amendment establishes the minimum rate that employers must pay their employees and requires annual adjustments to that amount. The amendment further states that the definition of “employee” for purposes of Ohio minimum wage shall have the same meaning as under the federal Fair Labor Standards Act (FLSA). The General Assembly thereafter implemented the provisions of the amendment by enacting R.C. 4111.14(B)(1), the Ohio statute that defines “employee” as “individuals employed in Ohio, but does not mean individuals who are excluded from the definition of ‘employee’ under [the FLSA].” The FLSA excludes several categories of individuals from minimum wage and overtime requirements, including outside salespeople.

Issue before the Ohio Supreme Court

The plaintiffs in Haight v. Minchak, who were employed as outside salespeople for the defendant-employer, filed suit against their employer arguing that the amount they were paid through commissions and other compensation fell below the minimum wage. The plaintiffs argued that because R.C. 4111.14(B)(1) contained additional minimum wage exemptions that the amendment did not contain — specifically, the FLSA exemption for outside salespeople — the statute was unconstitutional.

In rejecting the plaintiffs’ argument, the Court pointed out that both the amendment and R.C. 4111.14(B)(1) state that the term “employee” shall have the same “meanings” as provided in the FLSA. Further, the Court determined that the amendment incorporated the entire FLSA without any limitation. Accordingly, because the meaning of “employee” under the Ohio statute did not clearly conflict with or restrict the meaning of that same term under the Ohio Constitution, the statute was constitutional and the plaintiffs’ claims were without merit.

The decision is good news for employers who can continue to exempt their outside salespeople from minimum wage under both Ohio and federal law.