Your Guide to the Ohio Minimum Wage

In the dynamic world of business, keeping up to date with evolving wage and labor laws is crucial for maintaining compliance and ensuring fair compensation for employees. In Ohio, the minimum wage, a cornerstone of labor regulations, has undergone recent changes and is subject to ongoing adjustments.

So, what is the minimum wage in Ohio? Is the Ohio minimum wage going up in 2024? And what else do employers in the Buckeye State need to be aware of?

This comprehensive guide explores everything you need to know about the Ohio minimum wage, providing valuable insights for small business owners and HR professionals. We will also explore additional wage laws that employers need to be aware of and share best practices to help businesses comply with these regulations.

• Ohio Minimum Wage: The Basics
• History of The Ohio Minimum Wage
• Ohio Minimum Wage Rates 2023 and Beyond
• Exemptions & Special Cases
• Who Enforces the Ohio Minimum Wage?
• Additional Ohio Wage Laws
• Best Practices for Businesses in Ohio
• How Factorial Can Help You Comply With Ohio Wage Laws
• Detect, Correct and Avoid Payroll Mistakes With Factorial 🚀

Ohio Minimum Wage: The Basics

The minimum wage in the United States is a complex system. This is because, although there is a federal minimum wage, many states and cities have their own higher minimum wages. As a result, there are different minimum wage rates in different parts of the country.

The federal minimum wage is the lowest hourly wage that employers are legally permitted to pay their employees. It is set by the federal government and applies to all businesses across the country. The current federal minimum wage is $7.25 per hour.

In addition to the federal minimum wage, some states have their own minimum wage rates that are higher than the federal minimum wage. State minimum wages apply to all businesses within a particular state. As of January 1, 2023, there were 30 states with minimum wage rates higher than the federal minimum wage. The highest state minimum wage is in Washington, D.C., at $16.11 per hour.

Municipal minimum wages apply to businesses within a particular city or municipality. This is done to reflect the unique economic circumstances of their local communities. For example, the minimum wage in three of Ohio’s biggest cities, namely Columbus, Cleveland and Cincinnati, is $15.00 per hour, which is higher than the Ohio minimum wage governing the state. If an employee works in a city with a higher minimum wage, they are entitled to be paid the higher rate, regardless of the state minimum wage.

A final consideration that impacts the minimum wage is that there are a number of exemptions to the minimum wage law. These exemptions apply to certain types of employees or jobs. More on this below.

History of The Ohio Minimum Wage

The history of the Ohio minimum wage reflects a dynamic landscape of economic and labor market conditions, shaped by both national and state-level policies.

Here’s everything you need to know about the OH minimum wage timeline.

Early Years and Federal Minimum Wage

In 1938, the Fair Labor Standards Act (FLSA) established the first federal minimum wage, setting a national benchmark for hourly wages. This initial minimum wage of 25 cents per hour was a significant step towards ensuring fair compensation for workers across the United States. However, the minimum wage in Ohio, initially aligned with the federal minimum wage, remained stagnant for several decades after this, failing to keep pace with the rising cost of living in the state.

A Shift Towards State-Level Determination

In the 1960s and 1970s, as the cost of living continued to rise, a growing movement called for state-level increases to the Ohio hourly wage, recognizing the varying economic realities across the state.

Eventually, in 1971, Ohio took a step towards establishing its own minimum wage, setting it at $1.60 per hour, slightly higher than the federal minimum wage at the time of $1.45 per hour.

Fluctuations and Adjustments

Throughout the 1970s and 1980s, the Ohio minimum wage fluctuated, adjusting to changes in both the federal minimum wage and economic conditions.

In 1987, Ohio voters approved a ballot initiative that indexed the state’s minimum wage to inflation, ensuring automatic adjustments to keep pace with the rising cost of living.

Recent Developments and Future Outlook

In recent years, the Ohio minimum wage has continued to increase, with the most recent jump occurring in 2023, raising it to $10.10 per hour for non-tipped employees and $5.05 per hour for tipped employees.

The future of Ohio’s minimum wage remains subject to ongoing discussions. While some advocate for further minimum wage increases to address economic disparities and ensure a living wage for workers, others raise concerns about the impact on businesses and job creation.

However, although the debate continues, Ohio’s minimum wage has continued to evolve, reflecting the state’s commitment to balancing economic growth and worker well-being.

Ohio Minimum Wage Rates 2023 and Beyond

In a significant step towards ensuring fair compensation for workers in the Buckeye State, the Ohio minimum wage has undergone recent revisions, effective January 1, 2023. These adjustments reflect the state’s commitment to aligning wages with the rising cost of living and fostering a more equitable economy.

For non-tipped employees, the hourly rate has been established at $10.10, marking an increase from the previous rate. This Ohio minimum wage increase ensures that workers can meet their basic needs and contribute to the state’s economic vitality.

In recognition of the unique circumstances faced by tipped employees, the state has set a minimum wage of $5.05 per hour for this category. This rate, coupled with expected tips, aims to provide a fair and sustainable income for those in the service industry.

These minimum wage rates apply to businesses with annual gross receipts exceeding $372,000. For businesses with lower gross receipts, the federal minimum wage of $7.25 per hour remains in effect.

Looking ahead, the Ohio minimum wage is poised for further adjustments in 2024. The state’s constitutional amendment mandates annual adjustments based on inflation, ensuring that wages keep pace with the rising cost of living. As of January 1, 2024, non-tipped employees will see their hourly rate increase to $10.45, while tipped employees will receive an adjusted rate of $5.25 per hour.

Related: Ohio Employment Law Explained

Exemptions & Special Cases

In addition to the general minimum wage rates, Ohio has several exemptions that apply to certain types of employees or jobs.

These exemptions include:

• Youths under 20. Employers can pay employees under the age of 20 a lower minimum wage for their first 90 consecutive days of employment. This exemption is designed to help young people gain experience in the workforce.
• Students. Employers can pay students a lower minimum wage if they employ them primarily on an occasional or part-time basis. This exemption enables students to work without interfering with their education.
• Employees with disabilities. In some cases, employers can pay employees with disabilities a lower minimum wage if they are unable to perform certain work tasks due to their disability.
• Tipped employees. These employees receive a lower minimum wage than non-tipped employees, as their tips are expected to make up for the difference.

In addition to the exemptions listed above, there are a few special cases that apply to the Ohio minimum wage.

These include:

• Employees of small businesses. Businesses with annual gross receipts of less than $372,000 per year do not have to pay the Ohio minimum wage. These businesses can instead pay the federal minimum wage of $7.25 per hour.
• Employees of certain seasonal, recreational establishments. Employees of certain seasonal, recreational establishments, such as summer camps and amusement parks, are exempt from the Ohio minimum wage during the first 90 days of their employment.
• Employees of certain small newspapers. Employees of certain small newspapers with a circulation of less than 5,000 are exempt from the Ohio minimum wage.

Who Enforces the Ohio Minimum Wage?

The Ohio Department of Commerce’s Bureau of Wage & Hour Administration (WHA) enforces the Ohio minimum wage. The WHA is tasked with investigating complaints of minimum wage violations, conducting audits of employers, and taking enforcement actions against employers who are found to be in violation of the law.

Here’s a breakdown of how the WHA enforces the Ohio minimum wage:

• Complaint-driven investigations. The WHA primarily relies on employee complaints to initiate investigations into potential minimum wage violations. Employees can file complaints online, by mail, or by phone.
• Employer audits. The WHA also conducts random audits of employers to ensure compliance with the minimum wage law. These audits may involve reviewing payroll records, interviewing employees, and inspecting workplace records.
• Enforcement actions. If an investigation or audit reveals that an employer has violated the minimum wage law, the WHA can take a variety of enforcement actions, including:
  • Issuing citations and fines
  • Ordering employers to pay back wages to employees
  • Seeking injunctive relief to prevent further violations
• Educating employers and employees. The WHA also works to educate employers and employees about the minimum wage law and their rights and responsibilities. This includes providing online resources, conducting outreach workshops, and distributing informational materials.
• Collaborating with other agencies. The WHA may also collaborate with other state and federal agencies to enforce the minimum wage law, such as the U.S. Department of Labor’s Wage and Hour Division.

Additional Ohio Wage Laws

Aside from the Ohio minimum wage, the state also has several additional wage laws that employers must comply with. These laws cover a variety of topics, including overtime pay, recordkeeping, and equal pay for equal work.

Here’s everything you need to know.

Overtime Pay Requirements

In Ohio, employers must compensate their employees for overtime work. Overtime work is defined as any hours worked beyond 40 in a single workweek. The overtime pay rate is calculated as 1.5 times the employee’s regular hourly wage. For instance, if an employee’s regular hourly wage is $10, their overtime pay rate would be $15 per hour. This overtime pay requirement applies to all non-exempt employees, regardless of their job title or position.

Moreover, employers are responsible for accurately tracking employee hours and ensuring that overtime pay is correctly calculated and paid. Failure to comply with overtime pay requirements can result in significant penalties. This includes back pay, interest, and liquidated damages. To avoid these penalties, employers should familiarize themselves with the overtime pay requirements and implement effective procedures for tracking employee hours and calculating overtime pay.

Meal and Break Provisions

Employers must provide meal breaks to employees who work more than six hours in a workday. Meal breaks, which can be unpaid, must be at least 30 minutes long. Employers must also provide rest breaks to employees who work more than two hours in a workday. Rest breaks must be at least 10 minutes long and can be paid or unpaid, depending on the employer’s policy.

Recordkeeping Obligations

Ohio employers must maintain accurate and up-to-date records of employee hours worked and wages paid. They must keep these records for a minimum of two years. Moreover, records must be readily accessible to authorized personnel, including government officials and employees upon request.

The types of records that Ohio employers must keep include:

• Employee payroll records. These records should include the employee’s name, address, Social Security number, date of hire, job title, hourly wage, regular and overtime hours worked, and gross and net wages paid.
• Time and attendance records. These records should track the employee’s daily hours worked, including start and end times, breaks, and any absences.
• Wage deductions records. These records should track any deductions taken from the employee’s paycheck, such as taxes, insurance premiums, and garnishments.

Employers should establish a system for securely storing and organizing these records to ensure compliance with recordkeeping obligations. Failure to maintain accurate and complete records can result in penalties and fines. It can also make it difficult to defend against employee claims or wage disputes.

Equal Pay for Equal Work

The federal Equal Pay Act (EPA) prohibits employers from discriminating against employees on the basis of sex in terms of their compensation. This includes wages, benefits, and other forms of payment. In other words, employers must offer men and women equal pay for equal work. The aim is to promote pay parity and pay transparency.

Ohio, like all states, is bound by the provisions of the federal EPA. However, the state also has its own Ohio Equal Pay Law (EPL), which provides additional protections for Ohio workers. The EPL prohibits discrimination in the payment of wages based on race, color, religion, sex, age, national origin, or ancestry for jobs that require equal skill, effort, and responsibility and are performed under similar conditions.

Failure to comply with the EPA or the EPL can result in significant penalties, including back pay, interest, and liquidated damages. Employers can avoid these consequences by conducting regular pay audits, ensuring that their job classifications and pay scales are gender-neutral, and providing equal training and promotion opportunities to all employees.

Ohio Wage Payment and Collection Act

Finally, the Ohio Wage Payment and Collection Act is a state law that safeguards the timely payment of wages to employees. It establishes clear guidelines for employers regarding payroll practices and provides recourse for employees who have been denied their rightful wages.

Specifically, employers must pay their employees all wages earned within a specified timeframe, typically within two business days after the end of the pay period. Moreover, deductions from employee pay must be authorized by law or by a written agreement with the employee. In addition, employers must provide employees with written itemized statements of any deductions made from their paychecks. Finally, upon termination of employment, employers must issue final paychecks within three business days. These paychecks must include any accrued vacation pay or other outstanding wages.

Best Practices for Businesses in Ohio

As an HR professional in Ohio, ensuring compliance with the state’s wage laws is crucial for maintaining a fair and ethical workplace.

Here are some essential best practices that you can follow:

• Understand Ohio minimum wage rates. This includes rates for non-tipped ($10.10/hour) and tipped employees ($5.05/hour), considering the $372,000 gross receipts threshold.
• Classify employees correctly. Identify tipped employees based on regular tip income exceeding $30 per month. Ensure non-tipped employees receive the full minimum wage.
• Implement an accurate payroll system. Establish a reliable payroll system that correctly calculates and pays employee wages, including minimum wage rates and overtime pay.
• Communicate wage policies clearly. Inform employees about their wage rates, minimum wage requirements, and any updates or changes.
• Stay updated on minimum wage changes. Monitor wage law updates from sources like the Ohio Department of Commerce to adjust payroll accordingly.
• Maintain accurate wage records. Keep detailed records of employee wages, including hours worked, pay rates, and deductions. Employers must store these records for a minimum of two years.
• Address employee concerns promptly. Investigate and address employee concerns about wage discrepancies promptly and fairly.
• Promote a culture of compliance. Foster a workplace culture that values legal compliance and ethical practices.
• Seek professional guidance. Finally, if in doubt, consult with an employment attorney for questions or concerns regarding Ohio’s wage laws.

By following these essential practices, HR professionals in Ohio can effectively manage payroll, ensure compliance, protect employee rights, and minimize legal risks.

How Factorial Can Help You Comply With Ohio Wage Laws

Factorial, a comprehensive HR and payroll software solution, can help businesses in Ohio easily comply with the state’s complex wage laws, ensuring accurate and timely payroll processing while minimizing the risk of non-compliance.

Here are some key ways that Factorial can help:

• Automated minimum wage compliance. Firstly, Factorial automatically applies the correct minimum wage rates based on employee classification, location, and hours worked, ensuring compliance with Ohio minimum wage requirements.
• Recordkeeping. Secondly, Factorial can streamline the recordkeeping of employee hours worked, wages paid, and deductions made, ensuring compliance with Ohio’s recordkeeping requirements under the Wage Payment and Collection Act.
• Streamlined payroll management. Thirdly, Factorial streamlines payroll management by automating routine tasks such as payroll calculations, tax filings, and pay stub generation. This automation frees up HR professionals’ time to focus on strategic HR initiatives.
• Accurate payroll calculations. Moreover, Factorial automatically calculates payroll and overtime pay, ensuring that your employees are paid correctly and on time. It also handles complex payroll scenarios, including pay raises, different pay periods, and holiday pay (paid and unpaid time off, including Ohio state holidays). This eliminates the need for manual calculations and reduces the risk of errors.
• Convenient on-demand pay. In addition, Factorial offers on-demand pay, allowing employees to access their earned wages before the regular pay period ends. This feature can be particularly beneficial for employees who need access to funds for unexpected expenses.
• Enhanced payroll security. Finally, Factorial employs robust security measures to protect employee payroll data, including data encryption, access controls, and regular security audits. This safeguards sensitive payroll information from unauthorized access and data breaches.

By adopting Factorial’s comprehensive HR and payroll software solution, Ohio businesses can streamline payroll processing, ensure compliance with Ohio minimum wage laws, protect employee data, and enhance the overall employee experience.