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Court News Ohio

Outside Salespeople Still Exempt from Minimum Wage Even After Voter-Approved Ballot Measure

The Ohio Supreme Court ruled today that Ohio’s minimum wage law that exempted outside salespeople from the definition of “employee” did not conflict with the same definition in the Ohio Constitution. The ruling reverses a judgment by the Second District Court of Appeals.

In a majority opinion, Justice Judith Ann Lanzinger wrote that the drafters of the successful Fair Minimum Wage Amendment defined “employee” by incorporating the “meanings” of that term from the federal Fair Labor Standards Act (FLSA). Because they used the word “meanings,” the Supreme Court reasoned the amendment contained all categories of employees excepted and exempted by the federal law including outside salespeople. The Court held that R.C. 4111.14(B)(1), a state statute that explicitly incorporated both the FLSA exceptions and exemptions, was constitutional.

Dispute Centered on Implementation of Amendment
The lawsuit brought by John Haight and Christopher Pence argues that R.C. 4111.14(B)(1) conflicts with the language of the Fair Minimum Wage Amendment to Article II, Section 34a of the Ohio Constitution. Enacted to implement the amendment, the statute contains the exemptions found in the FLSA that includes outside salespeople while the five categories specified in the amendment do not.

Cheap Escape Company, owned by Robert and Joan Minchak, employed Haight and Pence as outside salesmen to solicit advertising business for the J.B. Dollar Stretcher Magazine. The salesmen argued they were to be paid by commission or a combination of draws and commissions. The two alleged the Minchaks reduced or stop paying the draws to certain sales representatives they believed were underperforming. The amount of the draws paid to those who failed to earn a commission fell below the minimum wage mandated by the Ohio constitution.

In February 2012, Haight and Pence filed a lawsuit in Montgomery County Common Pleas Court to declare R.C. 4111.14(B)(1) unconstitutional because the statute contained definitions of employee that are not specified in the minimum wage amendment. Claiming they were entitled to a minimum wage, the salesmen sought unpaid wages and damages from the Minchaks.

The trial court ruled the statute was constitutional, and the salesmen appealed to the Second District, which reversed the judgment of the trial court. The appellate court concluded the General Assembly exceeded its authority by defining “employee” more narrowly when enacting the legislation to implement the Fair Minimum Wage Amendment. The Minchaks appealed to the Supreme Court.

Amendment Cited FSLA Definitions
Justice Lanzinger wrote the minimum wage amendment provided that the terms “employer,” “employee,” “person,” and “independent contractor” have the same meanings as in the FLSA. It also stated that laws may be passed to implement the amendment, and could increase the minimum wage, but could not restrict any provision of the amendment.

Shortly after voters approved the minimum wage amendment, the General Assembly enacted legislation to implement it, including R.C. 4111.14 which defined “employer,” “employee,” “person,” and “independent contractor” as having the same meanings as the FLSA. The FLSA includes a provision that exempts eight categories of employees, including outside sales representatives, from the federal minimum wage and maximum hour requirements.

However, the minimum wage amendment itself expressly stated only five categories of employees were exempt: tipped employees, employees with mental or physical disabilities, employees of solely owned and operated family businesses, employees under age 16, and individuals employed in or about the property of the employer or individual’s residence on a casual basis.

Justice Lanzinger wrote “meanings” applies to more than one definition. If the amendment drafters wanted to limit the FLSA definitions that apply, they could have specified that only certain sections of the FLSA would apply and not the entire act.

“Since there is no limitation, the constitutional provision’s use of the plural term ‘meanings’ indicates that the entirety of the FLSA is to be considered when determining who is covered under its protections,” she wrote.

She also noted that the five exemptions written into the minimum wage amendment are not generally part of the eight categories in the federal law, which includes such categories as executives and administrators, summer-camp employees, fishing-operation employees, and immediate family members working in agriculture.

Chief Justice Maureen O’Connor and Justices Sharon L. Kennedy and Judith L. French joined Justice Lanzinger’s opinion.

Justice Terrence O’Donnell concurred with the judgment and the majority’s statement that the statute did not clearly conflict with or restrict the meaning of employee in the state constitution.

Voters Specified Only Five Exempt Categories, Dissenting Justices Assert
In a dissenting opinion, Justice William M. O’Neill noted the amendment was passed with nearly 57 percent of Ohioans approving. He explained the amendment expressly stated the exemptions to paying minimum wage and that it contained language that prevented laws from being passed that restricted any provision.

“There is no possible stretch of the English language which can disguise the fact that the statute has the effect of restricting a provision in the constitutional amendment, which had been recently approved by more than two million voters,” he wrote.

By incorporating the federal law exemptions, legislators modified the decision of the voters, and that section of the law should be declared unconstitutional, Justice O’Neill concluded.

“The voters have spoken, and the General Assembly and this court must listen,” he wrote.

Justice Paul E. Pfeifer joined Justice O’Neill’s opinion.

2014-1241. Haight v. Minchak, Slip Opinion No. 2016-Ohio-1053.

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