Ohio Supreme Court Rejects Challenge to White Collar Exemptions in Minimum Wage Statute

This morning, a divided Ohio Supreme Court rejected a constitutional challenge to Ohio’s minimum wage statute on the basis that the General Assembly’s incorporation of the FLSA exemptions into the Ohio statute violated the Ohio constitution.  Haight v. Minchak, Slip Opinion No. 2016-Ohio-1053.  In particular, the Court held that the General Assembly’s incorporation of the FLSA’s white collar and other minimum wage exemptions into the statutory definition of “employee” at Revised Code § 4111.14 did not “clearly conflict with or restrict” the meaning of “employee” in the 2006 voter-initiative Fair Minimum Wage Amendment to the Ohio Constitution at Article II, section 34a.   The plaintiffs had been commissioned sales people who alleged that they were not paid the mandatory minimum wage by their employer, which, in turn, asserted that they were not covered by Ohio or federal minimum wage statutes as exempt commissioned salespeople. While the FLSA contains an exemption for commissioned sales employees, the Ohio constitutional provision did not.   As previously reported here, the Montgomery County Court of Appeals ruled in favor of the employees, which then brought all white-collar exemptions in the minimum wage statute into question.

The dispute centers on certain language in the FMWA in Article II:

“[E]mployer,” “employee,” “employ,” “person” and “independent contractor” have the same meanings as under the federal Fair Labor Standards Act or its successor  law, except that “employer” shall also include the state and every political subdivision and “employee” shall not include an individual employed in or about the property of the employer or individual’s residence on a casual basis. Only the exemptions set forth in this section shall apply to this section.

* * *

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 or the power of municipalities under Article XVIII of this constitution with respect to the same.  (emphasis added).

The FMWA also contained a number of exemptions from the statute which did not mirror the FLSA exemptions and did not, for instance, include any of the white collar exemptions for administrative, professional or management employees.   When the General Assembly passed implementing legislation in 2007, it defined “employee” to include both the FLSA definition of employee and to also include the exemptions to the minimum wage which existed in the FLSA’s § 213 (i.e., the white- collar exemptions).  

The plaintiffs argued that the exclusion of the white collar exemptions violated the constitutional admonition that “only the exemptions set forth in this section shall apply . . . “  However, the employer asserted that the FMWA broadly incorporated the FLSA and would have specified which specific exemptions to reject if it had not meant to incorporate all of the white-collar exemptions.   

The Court noted that legislation is presumed to be constitutionally valid unless it appears “beyond a reasonable doubt that the legislation and constitutional provisions are clearly incompatible.”   In this case, the FMWA said that it broadly incorporated “meanings” (plural) from the FLSA, which means that more than one definition applies.  This could include both definitions and exemptions (and, thus, creates a reasonable doubt).  Further, it would be logical to assume that the FMWA did not list exemptions which already existed in the FLSA because it impliedly included them.   Indeed, at least one publication from 2006 distributed by at least one group advocating the passage of the FMWA implied as much.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Divided Ohio Appellate Court Rejects Incorporation of FLSA Exemptions into Ohio Minimum Wage Constitutional Amendment

On Friday, a divided Montgomery County Court of Appeals held that Ohio Revised Code §4111.14(B)(1) was – beyond a reasonable doubt --  an unconstitutional attempt by the General Assembly to restrict §34a of the Ohio Constitution and declared it “invalid.”  Haight v. Cheap Escape Co., No. 2014-Ohio-2447.  In that case, the plaintiffs were employed as outside salesmen by the employer and claimed that they were not properly paid the minimum wage as required by 2006’s Voter Initiative 2, which was incorporated into the Ohio constitution at §2.34a.  In that constitutional provision, the “meaning” of “employee” is the same as in Fair Labor Standards Act.  The employer raised as a defense that ORC §4111.14 incorporated the FLSA minimum wage exemptions, which includes exemptions for professional, managerial, and administrative employees and outside salesmen like the plaintiffs.  The plaintiffs then successfully challenged the constitutionality of §4111.14 on the grounds that §203 of the FLSA defines “employee” as – with certain exceptions -- “any individual employed by an employer” and could not include the FLSA exemptions because §34a restricted exemptions  to those exemptions contained in its own provisions (for family members and disabled employees) and the General Assembly from narrowing the reach of its provisions.

The Court recognized that §213 (and other provisions) of the FLSA contained certain exemptions from the FLSA’s minimum wage.  However, even if individuals are exempt from the FLSA’s minimum wage provisions, they remain “employees” as defined by the FLSA.  The Court’s majority found that the intent of §34a was to use the FLSA’s broad definition of “employee” without the FLSA’s many exemptions and that it created its own, very narrow exemptions to the state minimum wage requirements:

As used in this section: "employer," "employee," "employ," "person" and "independent contractor" have the same meanings as under the federal Fair Labor Standards Act or its successor law, except that "employer" shall also include the state and every political subdivision and "employee" shall not include an individual employed in or about the property of the employer or individual's residence on a casual basis. Only the exemptions set forth in this section shall apply to this section.

             . . . .

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 or the power of municipalities under Article XVIII of this constitution with respect to the same.

Section 4111.14 acknowledges that “employee” has the same meaning as in the FLSA, but then specifically states:

“Employee” means individuals employed in Ohio, but does not mean individuals who are excluded from the definition of “employee” under 29 U.S.C. 203(e) [the Fair Labor Standards Act] 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.

The Court rejected the employer’s argument that the “meaning” of employee is broader than the “definition” of employee under §203 of the FLSA and, therefore, the statute does not conflict impermissibly with the constitution:

Section 34a’s statement that “employee” and other terms have “the same meanings as under the federal Fair Labor Standards Act,” coupled with its statement that “[o]nly the exemptions set forth in this section shall apply to this section,” preclude interpreting Section 34a in the manner advocated by the owners of Cheap Escape. The exemptions from minimum wage requirements set forth in 29 U.S.C. 213 do not alter the definition of “employee” set forth in 29 U.S.C. 203. Rather, the exemptions provide that minimum wage (and maximum hour) requirements do not apply to certain categories of employees. In other words, the exemptions remove certain categories of employees from the minimum wage requirements set forth in other parts of the Fair Labor Standards Act, but they do not remove persons in those categories from the definition of an employee. Thus, the definition or “meaning” of an employee under the Fair Labor Standards Act is the broad definition contained in 29 U.S.C. 203(e) – “any individual employed by an employer” – rather than any narrower classification that applies for the provision of particular federal protections, such as wage and hour rules.

This conclusion is bolstered by the statement in Section 34a that “[o]nly the exemptions set forth in this section shall apply to this section.” This provision refutes the owner-employers’ argument that the legislature was permitted to graft exemptions to minimum wage requirements set forth in 29 U.S.C. 213 of the Fair Labor Practices Act onto the definition of an employee contained in 29 U.S.C. 203.

The dissent did not believe it was beyond a reasonable doubt that the legislation conflicted with the constitution because the meaning of employee should include the FLSA exemptions.  Nothing in §34a limits consideration of the “meaning” of “employee” to a particular section of the FLSA.   Moreover, the exemptions contained in §34a are not similarly included in the FLSA.  “Logically, the drafters of Ohio’s constitutional amendment would have specifically mentioned the existing exemptions and exclusions in the FLSA if they believed that these categories were not already excluded from the meaning of “employees” for purposes of Section 34a. Exempting one specific category of employees from Ohio’s coverage, while failing to exempt other previously-excluded categories, makes no sense.”

Unless this decision is reversed, Ohio employers could lose the minimum wage exemption for all employees and will be subject to the recordkeeping and reporting procedures that now apply to non-exempt employees.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: No Violation of Public Policy for Firing Employee For Bringing Weapon onto Employer’s Property.

Today, the Sixth Circuit affirmed summary judgment in favor of an employer which fired an employee for keeping a concealed weapon in his car in the employer’s parking lot in violation of the employer’s policy. Plona v. UPS, No. 08-5624.

According to the court’s opinion, the employer’s policy provided: “All UPS employees are prohibited from using or possessing a firearm . . . while on UPS property or while conducting official UPS business. This includes, but is not limited to: UPS vehicles, facilities (including parking lots, customer premises, etc.) and while on duty or during personal breaks.” The plaintiff “had previously signed an acknowledgment form stating that he was aware of this policy.” After the employer contacted the local sheriff “about a package containing possible contraband,” a K-9 search was conducted of cars in the parking lot. “During the search, one of the dogs identified [the plaintiff’s] car as a vehicle to inspect. [The plaintiff] consented to the search and informed the sheriff’s deputies that he had a firearm in the vehicle. The deputies found a .22 caliber Luger pistol under the front seat and its empty ammunition magazine in the glove compartment. [The plaintiff] did not have a permit to carry a concealed weapon and had not registered the pistol. The deputies confiscated the weapon and reported their findings to UPS. Two UPS officials then met with [the plaintiff], who conceded that he was aware of UPS’s weapons policies and admitted that he had knowingly left the pistol in his car. The UPS officials accordingly discharged [the plaintiff], effective immediately.”

The plaintiff “subsequently filed a lawsuit against UPS in federal court, alleging wrongful discharge. He claimed that his firing was in violation of the public policy regarding firearms embodied in Article I, § 4 of the Ohio Constitution.” The Sixth Circuit disagreed. “Although the Ohio Constitution provides a general right to bear arms, the state certainly does not have a “clear public policy” of allowing employees to possess firearms on the premises of their private employers. To the contrary, the Ohio legislature has specifically provided that employers may limit their employees’ rights to bear arms:

Nothing in this section shall negate or restrict a rule, policy, or practice of a private employer that is not a private college, university, or other institution of higher education concerning or prohibiting the presence of firearms on the private employer’s premises or property, including motor vehicles owned by the private employer.

Ohio Rev. Code § 2923.126(C)(1).” UPS was thus plainly within its rights, as codified in § 2923.126(C)(1), to prohibit its employees from possessing firearms in the parking area. Because [the plaintiff] cannot show that UPS violated a clear public policy of the state of Ohio, his wrongful-termination claim fails as a matter of law.” The Court also held that the plaintiff’s arguments concerning pretext were misplaced since no law had been violated and he was not a member of a protected class. Wanting to keep his gun away from his allegedly suicidal wife, while commendable if true, did not affect the employer’s right to terminate him for violating policy.

Insomniacs can read the full court opinion at http://