Getting it Right
Ohio’s minimum wage law (Section 34a of Article II of the Ohio Constitution) marked its one-year anniversary November 7, with employers still coming to terms with its requirements, particularly those regarding record-keeping and disclosure. In part, the difficulty stems from Am. Sub. H.B. 690, signed into law by outgoing Gov. Bob Taft on Jan. 2, 2007. While the bill eased certain requirements in the amendment that employers believed were burdensome, the exceptions to the amendment’s broad rule that employers must keep detailed payroll on their employees also created confusion out of clarity.
Ohio’s Minimum Wage Amendment specifically states that, “an employer shall 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.”1 As used within this context, “employee” is broadly defined to include all employees. As such, an employer is required to maintain records for all of its employees, but as stated above, the recordkeeping requirements will likely not be the same for all employees.
As written in the Bills, recordkeeping requirements for a specific employee will be determined by whether such employee is defined as “exempt” or “non-exempt” under the overtime requirements of the Fair Labor Standards Act. The Fair Labor Standards Act, at 29 U.S.C.S. § 213, provides an extensive list of exempt employees.2 Exempt employees of note include any employee employed in a “bona fide executive, administrative, or professional capacity,” in the capacity of “outside salesperson,” or as a “computer systems analyst, computer programmer, software engineer, or other similarly skilled worker.”3 Furthermore, to qualify for exemption, employees generally must meet certain tests regarding their job duties, as laid out in the Department of Labor’s regulations, and be paid on a salary basis at not less than $455 per week (certain exceptions regarding pay rate apply to computer employees). Non-exempt employees include all employees not defined as exempt employees.4
As mentioned above, the Amendment requires employers to maintain records of name, address, occupation, pay rate, hours worked for each day worked, and each amount paid an employee for each employee. Although much of the required information is self-explanatory, a few points require greater attention, particularly due to the impact of an employee’s exempt or non-exempt status. With respect to employees who are not exempt from the overtime pay requirements of the Fair Labor Standards Act, the Bills indicate that “pay rate” means an employee’s base rate of pay.5 With respect to employees who are exempt from the overtime pay requirements of the Fair Labor Standards Act, “pay rate” means an employee’s annual base salary, but does not include bonuses, stock options, incentives, deferred compensation, or any other similar form of compensation.6 With respect to employees who are not exempt from the overtime pay requirements of the Fair Labor Standards Act, the Bills indicate that “hours worked for each day worked” means the total amount of time worked by an employee in whatever increments the employer uses for its payroll purposes during a day worked by the employee.7 With regard to such information, an employer will likely not be required to keep a record of the time of day an employee begins and ends work on any given day.8 The biggest difference in recordkeeping requirements for exempt and non-exempt employees is that, under the Bills, 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.9 As defined in the Bills, “each amount paid an employee” means the total gross wages paid to an employee during each pay period, which is determined in accordance with an employer’s individual payroll practices.10 This particular item of information is not affected by the exempt or non-exempt status of an employee.
The Bills indicate that no one particular method or form of maintaining such a record or records is required under the Amendment, but an employer is required to maintain such records in a form that allows the employee or person acting on behalf of that employee to reasonably review the information requested by such employee or person.11 As such, records of the required information may be maintained in one or more documents, databases, or other paper or electronic form. Additionally, such records are required to be maintained for a period of three years from the employees last day of employment.13
1 Ohio Constitution, art. II, § 34a.
2 29 U.S.C.S. § 213 (2006).
5 House Bill 490; Senate Bill 401.
13 Ohio Constitution, art. II, § 34a.