Wage Claims Generally

Overtime Compensation

A federal statute, the Fair Labor Standards Act, and state law equivalent constitutional and statutory provisions collectively regulate wage issues for employees working in Ohio. This includes both minimum wage standards and the duty imposed on an employer to remit premium overtime compensation (i.e., a minimum of 150% of the employee’s agreed or imputed hourly wage) when an employee works more than 40 hours in any given workweek or more than 8 hours in any given workday.

Employers are exempt from paying overtime compensation for certain classes of employees. Generally, this would include management personnel in whom discretion is vested with respect to making or enforcing company policy or exercising independent judgment in making decisions of great significance to the company’s business, those with the authority to hire or fire employees, those discharging fiduciary duties for the business enterprise (e.g., employees responsible for a company’s finances or bank accounts), and those holding administrative office duties and professional employees who must be licensed in order to discharge their assigned duties.

Not surprisingly, most disputes with employers over wage issues will involve the employer’s having classified an employee as exempt from an obligation to remit premium overtime compensation. This happens either when the employer treats the employee as someone entitled only to compensation remitted on a salaried basis or when an employee changes jobs and his or her work no longer qualifies his or her position as one exempt from overtime compensation rules. Employees should bear in mind that courts generally do not look at the title assigned to a position or whether any given position always has been treated as exempt. Rather, the focus in any overtime enforcement action will be on the actual duties and expectations for the employee’s position irrespective of any past practices or even the employee’s agreement to be regarded as exempt or his or her acquiescence in the employer’s treatment of the position as exempt.

Even if you are paid on a salaried basis and your position is exempt from overtime compensation guidelines, or if your position is not exempt and yet you are paid on a salaried basis anyway, the law still requires a minimum weekly salary to be paid. The minimum weekly salary standard is subject to periodic review by the U.S. Department of Labor. If one’s salary is less than the minimum weekly salary, you are entitled to overtime compensation even if your employer otherwise could claim your position properly should be regarded as exempt.

State law standards for overtime compensation essentially follow the federal overtime compensation laws and regulations. However, there are important differences between state law and federal law when it comes to bringing claims for unpaid overtime compensation and the damages you can recover under each set of guidelines, so you should consult with an experience employee rights lawyer to understand whether you should bring claims under both federal law and state law. In addition to the value of the underpaid overtime premium compensation not remitted, an employee usually is allowed to recover so-called “liquidated” damages (i.e., an additional 200% of the unpaid amount), plus reimbursement of reasonable attorney fees and expenses of taking the employer to court, plus reimbursement of all court costs advanced in bringing the lawsuit.

If you believe you may have an overtime compensation claim, do not delay. Your claim can extend back to any paycheck tendered to you within the previous two years unless you can prove that your employer willfully violated the law, in which case you can go back three years. What this amounts to, then, is a “rolling” clock, i.e., if you were to bring your claim today, you could go back two years from today, but if you were to delay in bringing your claim by one month, you could go back only two years from the date you commence your claim, so you would have lost a month’s worth of unpaid overtime compensation by waiting.

Minimum Wages

Thanks to an amendment to the state constitution that voters approved several years ago, the minimum wage rate for Ohio workers is higher than the federal minimum wage rate.

Just about every employer will be aware of this standard and therefore very few employers fail to remit minimum wages. However, this issue can come up where employees are paid on a salaried basis and either should have been paid hourly or have not been paid a minimum weekly salary and the total compensation remitted for a pay period does not amount to the payment of a minimum wage based on the hours worked during such period.

This issue also can come up when an employer requires an employee to defer “punching in” or “punching out” until certain pre-work routines are completed. For example, an employer’s operation that must maintain a sanitary or “clean” work environment may not require an employee to clock in or clock out only after changing and/or showering at the beginning of the work day and/or only before changing or showering at the end of the work day, as the time required to change clothes and/or shower could be compensable. If that extra time would cause an employee to work more than 8 hours during any given workday or 40 hours during any given workweek, the employer could be on the hook for unpaid overtime compensation. At a minimum, such extra time would be compensable under the minimum wage laws.

Documenting and Preserving Your Claim

As you might imagine, a court generally will want something more than your word for it that you worked more than 40 hours in any given workweek or more than 8 hours in any given workday or that you were paid a salary that did not even afford you a minimum wage.

Keeping good records is the key to a successful claim. Many times, those records can be subpoenaed from your employer, but an employer is not required to keep such records for any particular period of time, so best practices should include the employee’s keeping a calendar or diary or other written account of all hours worked each workweek or each workday.

Time records maintained by the company can be used for this purpose as long as the employer does not purge such information by the time you bring a claim and you have no cause to dispute the information recorded by management regarding the amount of time you worked during any given pay period or workday.

Your paystubs also could record valuable data in this regard, but they are useful only if (1) you keep each of your paystubs (or keep a permanent record of any payroll data only accessible online) and (2) you agree with the employer’s account of the number of hours you worked during the pay period. If your employer’s paystub data is inaccurate or incomplete, please insist on immediate adjustments, as your failure to do so could be regarded later as acquiescence in the accuracy of your employer’s records.

If you or your lawyer give qualifying written notice to your employer of a claim being made for unpaid overtime compensation and/or minimum wages, Ohio’s law on “spoliation” of evidence may impose adverse consequences on an employer who nevertheless destroys documentation supporting your claims after receiving such notice.

Enforcement of Wage Claims and Class Actions

There are two ways to proceed. One is to file a claim with the Wage and Hour Division of the U.S. Department of Labor. The agency will look into your claim at no charge to you, but you must be willing to accept that the agency will have no duty to pursue your claim in court if your employer will not cooperate through negotiation of a settlement agreement or consent decree or any other form of agreement resulting from mediation and could agree to let your employer off the hook if you do not agree with the terms the agency negotiates.

The other way to proceed would be to hire a private employee rights attorney who will be obligated to look after your interests and follow your instructions. Of course, a fee will be charged for this service, but you will be in control of your destiny because no settlement would be able to proceed without your express approval.

Bear in mind that many wage claims can be prosecuted as class actions on behalf of other similarly situated employees. This could result in spreading total attorney fees and expenses among a broader array of claimants and likely would result in allowing the employee who serves as the “class representative” in the litigation the right to receive a fee for his or her service in overseeing the litigation and working with the attorney in prosecuting the class action.

Ohio’s Prompt Pay Act

Ohio also has a specific statute known as the Prompt Pay Act that requires employers in this state to remit wages on agreed periodic pay periods, but in any event no less frequently than once a month. The statute imposes liability on an employer who underpays an employee or withholds any part or all of an employee’s wages without having substantial justification for doing so. In addition to having to cover the unpaid or underpaid amount, with prejudgment interest, the employer can be ordered to remit “liquidated damages” equal to the greater of 6% of the unpaid or underpaid amount or $200.00 per pay period, whichever is greater. “Wages” are defined in the statute to include “fringe benefits,” such as paid time off, paid sick leave, earned vacation leave, and employer contributions to a group healthcare plan.

Often times, this issue will surface in the context of an employer that does not tender a final paycheck in a timely manner after the employment relationship ends. Because the Prompt Pay Act requires an employer to remit wages not less frequently than once a month, generally it can be inferred that state policy gives an employer 30 days to reconcile a payroll account and charge a final paycheck with any amounts the employee may owe the employer for unreturned company property, excess wages, commissions, or bonuses remitted in prior periods, damages to company property, and the value of similar claims against the employee. Thus, if you are still waiting for your final paycheck for more than 30 days after your last day of work, you should consider consulting with an experienced employee rights lawyer to evaluate your employer’s possible liability under the Prompt Pay Act.

This statute can be used in conjunction with overtime compensation claims and minimum wage claims.

Commissioned Independent Sales Representatives

If you are not regarded as an employee or “statutory employee” and your principal compensates you “in whole or in part” on a commission basis for your services as a “sales representative,” a specific statute in Ohio affords you extra protections.

A “commission” is defined as a rate of compensation “expressed as a percentage of the dollar amount of orders, sales, or profits” for an enterprise engaged in “manufacturing, producing, importing, or distributing one or more products for sale to customers who purchase products for resale or for consumption or utilization in the manufacturing process” or “providing services to customers.” However, the statute does not apply to commissioned insurance agents.

Commissions due and payable for qualifying sales representatives must be remitted in a timely manner in accordance with (1) a written contract between the principal and the sales representative as and when such compensation becomes due under “terms unambiguously and clearly specify[ing] when the commission is due,” or (2) the past practices used by the principal and sales representative in determining the amount of compensation payable and the deadline for remitting such compensation if the agreement between the principal and the sales representative is not in writing or the terms of the parties’ written agreement are “ambiguous or unclear,” or (3) in accordance with “the custom and usage prevalent” in the State of Ohio for the industry in which the principal and sales representative conduct business if there is no written contract and no prior history of performance that can be discerned from past practices of the principal and the sales representative.

Once the services of a sales representative come to an end by involuntary discharge, resignation, or expiration of the contract between the principal and the sales representative, the principal must remit to the sales representative “all commissions due … at the time of the termination within [30] days” of the end of the parties’ relationship and must remit “all commissions that become due after the termination within [13] days of the date the commissions become due.” A failure to comply subjects the principal to liability equal to the total amount of unpaid or underpaid commissions plus “exemplary damages” taking the total amount payable to “an amount not to exceed three times the amount of the commissions owed” if the evidence shows that the principal’s failure to comply “constituted willful, wanton, or reckless misconduct or bad faith.” “Bad faith” and willful misconduct are presumed under the statute if the principal fails to respond to a written demand for satisfaction of unpaid or underpaid commissions within 20 days of receiving such demand by certified mail. In addition, the statute also allows a sales representative to recover his or her attorney fees and expenses reasonably incurred in successfully prosecuting his or her claim in court along with an order requiring all court costs to be reimbursed by the principal.