Earlier this month, Governor DeWine signed into law Senate Bill 47, which aims to take three wage-and-hour concepts that exist under federal law and codify them into Ohio’s wage-hour statute. First and foremost, the new legislation, which becomes effective this July, was meant to benefit employers by restricting the procedural tools employees could use to bring class action lawsuits alleging violations of Ohio’s minimum wage and overtime laws. The legislation was also intended to clarify Ohio employers’ duty to pay employees for certain activities conducted before or after scheduled work hours. However, ambiguities in the law’s drafting make it unclear how much protection the law will actually provide to employers.
An explanation of this new amendment to Ohio’s wage-hour statute necessarily must begin with an understanding of federal wage-hour law. In 1946, the federal Portal-to-Portal Act was enacted to create several significant limits on the application of the minimum wage and overtime requirements of the Fair Labor Standards Act. The Portal-to-Portal Act made it clear that certain specified activities that occur immediately before or after a non-exempt employee’s normal workday do not constitute “work” for the purposes of federal minimum wage or overtime rules. As a result of the Portal-to-Portal Act, federal law does not require employers to pay either minimum wage or overtime to workers for “walking, riding, or traveling to and from the actual place of performance” of the employee’s work or for “preliminary or postliminary activities” such as waiting in line to clock in or undergoing security screenings.
Until now, Ohio’s wage-hour statute was silent on whether these non-compensable activities under the Portal-to-Portal Act were also non-compensable under Ohio’s wage-hour law. However, in practice, Ohio employers seldom if ever were found obligated to pay for these non-compensable activities under Ohio law.
In drafting Senate Bill 47, Ohio’s General Assembly drafted the law in such a way as to only explicitly relieve employers of the obligation to pay overtime for these activities. Inexplicably, Senate Bill 47 does not specifically relieve Ohio employers of the obligation to pay minimum wage for these activities. Given the otherwise pro-employer intent of Senate Bill 47, it might be deduced that Ohio employers do not have to pay minimum wage for these activities. Logic suggests that if an activity is non-compensable for overtime purposes, employers should likewise not be obligated to pay minimum wage for that same activity. However, because the law is silent on its application to minimum wage obligations, it introduces uncertainty over whether a court could find an activity compensable for minimum wage purposes but not for overtime.
Senate Bill 47 also attempts to adopt the federally-recognized de minimis exception, which renders non-compensable those work-related activities that occur outside of normal working hours and that take insignificant amounts of time to complete (e.g. checking email messages, listening to voicemails, reviewing the schedule, etc.). Senate Bill 47 affirms that Ohio employers do not need to pay overtime for these de minimis activities under Ohio law, but it again leaves the minimum wage question unanswered.
Third, and perhaps most significantly, Senate Bill 47 limits employees’ ability to file class action lawsuits under Ohio law concerning unpaid overtime issues. Previously under Ohio law, a single employee could file a lawsuit on behalf of an entire class of coworkers, even if the coworkers never affirmatively agreed to be part of the lawsuit. The existing law operated under what is known as an opt-out system, i.e., employees who are similarly situated to the plaintiff are part of the class unless they actively choose to withdraw. Under the new law, lawsuits for unpaid overtime compensation may only be brought individually or as opt-in collective actions, i.e., employees are not part of the collective unless they actively choose to join. While it is unclear whether this subtle procedural change will extend to plaintiffs asserting minimum wage violations, it should still produce a sizeable benefit for employers faced with defending unpaid overtime claims, since only a small percentage of employees typically elect to join opt-in collective action lawsuits.
While all three of Senate Bill 47’s changes provide noticeable benefits to employers, the new law does not really warrant any changes in wage payment or timekeeping practices for Ohio employers, at least until the new law is interpreted by Ohio courts or amended by the legislature. For example, employers would be mistaken to read the Ohio incorporation of the de minimis exception as a green light to expect non-exempt employees to read and respond to after-hours email messages “off the clock”.
Should you have any specific questions about how this new law may affect your business, we encourage you to reach out to any of our attorneys. Here at K|W|W, your workforce is our priority.