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Ohio: Outside Salespeople Are Not Exempt Employees Under State Constitution
 

By Susan R. Heylman  8/26/2014
 

The Ohio minimum wage statute unconstitutionally restricted the definition of employee in the Ohio Constitution to exempt outside salespeople, an Ohio appellate court ruled, declaring the law invalid.

Background

The ruling came in a challenge to the minimum wage law brought by two salespeople who sold advertising space for a coupon magazine and website. They alleged that they were paid mostly by commissions and earned less than the minimum wage required by Ohio law. In response, the owners of the business claimed that, as outside sales representatives, the two salespersons were exempt from the minimum wage law.

The dispute involved the interplay of the Ohio Fair Minimum Wage Amendment—a state issue approved by Ohio voters in November 2006and a minimum wage statute enacted by the General Assembly less than two months later.

The amendment, which was incorporated into the Ohio Constitution at Article II, Section 34a, defined employee to have the same meaning as under the Fair Labor Standards Act (FLSA). Under Section 34a, every employer is required to pay employees a minimum wage, with the amount to be adjusted annually.

The statute enacted by the General Assembly, Ohio Rev. Code 4111.14, restated that the constitutional amendment defined employee with the same meaning as the FLSA. However, the legislature added its own definition of employee to include individuals employed in Ohio but not individuals who were excluded from the definition of employee under the FLSA.

Because the FLSA specifically exempts outside salespeople from minimum wage requirements, the effect of the statute was to exempt outside salespeople from being employees for purposes of the minimum wage amendment.

The trial court concluded that the salespeople were not entitled to be paid the minimum wage. It found that the statute did not unconstitutionally contradict or restrict the meaning of the term employee as set forth in the amendment and was constitutionally valid.

Appellate Decision

The court of appeals reversed, ruling that the definition of an employee in the statute was unconstitutional because it was incompatible with the constitutional definition of employee in Section 34a.

The constitutional definition of employee did mirror that in the FLSA of “any individual employed by an employer,” the court said.  

“The fact that the Fair Labor Standards Act goes on to exempt from its provisions employees who are employed by an employer as outside salespeople is not part of the definition and cannot reasonably be interpreted as such,” the court concluded.

Accordingly, the legislature exceeded its authority to implement the Fair Minimum Wage Amendment when it defined employee differentlyand more narrowlythan that term was defined in Section 34a or the FLSA.

 “To the extent that R.C. 4111.14(B)(1) narrowed the definition of an employee and, thus, the scope of Section 34a, such action must be viewed as an impermissible restriction or modification—rather than a permissible ‘implementation’—of the constitutional provision,” the court said.

The owners of the business filed an appeal of the ruling to Ohio Supreme Court on July 18, 2014.

Haight v. Cheap Escape Co., Ohio Ct. App., No. 25983 (June 6, 2014).

Susan R. Heylman, J.D., is a freelance legal writer and editor based in the Washington, D.C., area
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