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Will Employers Now Have to Pay Outside Sales Representatives Minimum Wage?

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Two sales representatives who worked for an advertising company called Cheap Escape and were paid almost exclusively on commission are claiming that they should have been paid minimum wage because of the Ohio Fair Minimum Wage Amendment passed in 2006. The case is currently in the Ohio Supreme Court after Ohio’s Second Court of Appeals ruled for the sales representatives. If the Supreme Court rules the same way, Ohio employers may have to pay minimum wage to employees who were exempt from receiving minimum wage under state and federal law.

The federal Fair Labor Standards Act (FLSA) exempts certain employees such as outside sales representatives from the requirement of being paid minimum wage. The Ohio Minimum Wage Amendment states that “employee” and other terms have the same meanings as under the FLSA, but also states “[o]nly the exemptions in this set forth in this section shall apply to this section.” The Amendment does not specifically list any exemption for outside sales representatives and some other federally exempted employees. After this amendment was passed, the Ohio legislature passed R.C. 4111.14, which incorporated the FLSA exemptions to who had to be paid minimum wage by employers. The employees are arguing that because the Amendment specifically states that the only exemptions that will apply are those listed in the Amendment, and the statute incorporates other exceptions, the statute is unconstitutional.

Ohio’s Second Court of Appeals determined that the statute “impermissibly narrowed” the constitutional amendment, making the statute unconstitutional. The case is now being reviewed by the Ohio Supreme Court, and there could be severe consequences for some employers if the Court rules the statute unconstitutional. Employers may now have to pay outside salespersons and other federally exempted employees minimum wage. There is also dispute as to whether employers would have to pay such employees minimum wage not only going forward, but all the way back to 2007 when the Amendment was implemented. This case has not been decided yet, but affected employers should keep an eye on it to determine whether they will now have to pay certain employees minimum wage.

Joe Burke is a Law Clerk at Lardiere McNair, LLC.  To read more about our firm, please visit www.lmcounsel.com

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