What is the definition of an “employee?” It seems like a simple question, but that simple question formed the basis of a case that we reviewed here – at the Ohio Supreme Court – earlier this year.
The case involved two men – John Haight and Christopher Pence – who were employed as sales representatives by the Cheap Escape Company. Cheap Escape – which was owned by Robert and Joan Minchak – published J.B. Dollar Stretcher Magazine. Haight and Pence solicited advertising business for the magazine.
The two men alleged that although they were to be paid either by commissions plus a draw (in the nature of an advance) or by commission only, the Minchaks stopped paying or reduced the amount of the draw for certain sales representatives – depending on length of service or performance.
According to Haight and Pence, the draw that was available to sales representatives who failed to earn a commission fell below the minimum wage. Because of that, they filed a class-action lawsuit that sought, among other things, a declaration that certain provisions of the minimum wage-law are unconstitutional.
First, a little background: In November 2006, Ohio voters approved the Fair Minimum Wage Amendment to the Ohio Constitution. The amendment established a minimum rate that employers must pay their employees and requires annual adjustments of that amount.
The amendment said that terms such as “employer” and “employee” would have the same meanings as under the Fair Labor Standards Act (“FLSA”), a federal law that was enacted in 1938. In defining “employee,” the FSLA also established certain exceptions as to who would not be considered an employee.
Ohio’s minimum-wage amendment also established exceptions regarding the definition of “employee,” different from the FSLA. For instance, the amendment stated that “employee” shall “not include an individual employed in or about the property of the employer or individual’s residence on a casual basis.”
Shortly after the amendment passed, the legislature enacted a minimum-wage law. The new law stated that, as with the amendment, terms such as “employer” and “employee” shall have the same meanings as the FLSA. By incorporating the language of the FSLA, the new law took in all the exemptions listed in the FSLA.
When Haight and Pence requested a declaration from the trial court that as employees, they were entitled to minimum wage, they argued that – because the minimum-wage law contains exemptions from the definition of “employee” that the Ohio Constitution does not – the law is unconstitutional.
Haight and Pence acknowledged that they could advance their minimum-wage claim only if they were considered “employees,” but they contended that exempting salespeople from the definition of “employee” – as permitted by the minimum-wage law – would conflict with the definition of “employee” in the Constitution.
The trial court disagreed and declared the law constitutionally valid. However, the court of appeals reversed that decision, concluding that the Ohio legislature exceeded its authority when it defined “employee” differently, and more narrowly, than did the Constitution. After that, Haight and Pence brought their case before us.
The Fair Minimum Wage Amendment set forth five exemptions: tipped employees, employees with mental or physical disabilities, employees of solely owned and operated family businesses who are family members of the owner, employees under the age of 16, and individuals employed in or about the property of the employer or individual’s residence on a casual basis.
Haight and Pence argued that because the minimum-wage law allows more exemptions from the definition of “employee” than those set forth in the amendment, the law is unconstitutional.
By a five-to-two majority, our court disagreed with their argument. The majority concluded that the term “employee” as defined in the minimum-wage law is constitutionally valid because it does not clearly conflict with or restrict the meaning of that same term under the Fair Minimum Wage Amendment.
Justice William M. O’Neill and I cast the dissenting votes. Why? The Ohio Constitution expressly states that the only exemptions to the requirement to pay a minimum wage are those that are set forth in that amendment. Those exceptions are for children under 16; employees who work for a business that grossed less than $250,000 in the preceding year; workers employed on a casual basis at an employer’s residence; employees who receive tips, if the tips and wages combined equal the minimum wage; workers at a family-owned business who are family members of the owner; and workers with mental or physical disabilities.
The amendment also states: “This section shall be liberally construed in favor of its purposes. Laws may be passed to implement its provisions and create additional remedies, increase the minimum wage rate and extend the coverage of the section, but in no manner restricting any provision of the section…”
The minimum-wage law was introduced a mere 21 days after passage of the amendment and was passed less than a month later. As Justice O’Neill noted, “That is a rapid response.”
The new law restated that “employee” has the same meaning as in the FLSA. However, the law then incorporated the exclusions contained in the FLSA. “There is no possible stretch of the English language,” Justice O’Neill wrote, that can disguise the fact that the minimum-wage law “has the effect of restricting a provision in the constitutional amendment, which had been recently approved by more than two million voters.”
The court of appeals got this case right. “The exemption found in the federal minimum-wage law for outside salespersons, and other exemptions, were not included in Ohio’s constitutional amendment and cannot be reasonably interpreted as such.” By incorporating into Ohio law the exemptions set forth in the federal law, the legislature modified the decision of the voters of the state of Ohio and impermissibly narrowed and restricted the meaning of the word “employee” in the amendment.
Accordingly, Justice O’Neill and I believed that that portion of the law should be declared unconstitutional. “Simply stated, the Ohio legislature cannot surreptitiously override the will of the people of Ohio. The voters have spoken, and the legislature and this court must listen.”
Paul Pfeifer is an associate justice of the Supreme Court of Ohio.