New Ohio Law Limits Overtime Compensation

April 13, 2022

Beginning July 6th of this year, Ohio employers will be impacted by a new set of rules for hourly employees in regard to their overtime pay. Last week, Governor DeWine signed Ohio Senate Bill 47 into law. It was touted as a much-needed legal gauntlet to protect Ohio businesses against an anticipated siege of lawsuits by employees claiming they were not paid overtime compensation for work performed outside of regular work hours.

The new law incorporates specific language found in the Portal-to-Portal Act, an amendment to the federal Fair Labor Standards Act (FLSA), which would cover employee time spent before and after work in such activities as checking email. The Portal-to-Portal Act provides that time spent in preliminary and postliminary activities – those activities undertaken before and after the “whistle blows” – are not subject to federal minimum wage and overtime requirements. In other words, it is non-compensable time. The Portal-to-Portal Act is most known for its interpretation that commuting to and from work from one’s home is not compensable time.

Recently, the U.S. District Court for the Northern District of Ohio ruled that time spent in line to undergo a security screening after clocking out was a postliminary activity covered under the Portal-to-Portal Act and therefore such time was not compensable as overtime (Thomas v. Amazon.com Servs., 462 F. Supp. 3d 828 (N.D. Ohio 2020)). In that case, plaintiffs had filed a collective action arguing that Ohio’s wage laws did not incorporate the Portal-to-Portal Act and were entitled to overtime compensation. The Court concluded that in adopting Section 7 of the FLSA in 2019, the Ohio General Assembly did in fact intend to incorporate the provisions of the Portal-to-Portal Act.

It appears that with SB 47, the Ohio General Assembly wished to clarify that either:

  1. The Portal-to-Portal Act was incorporated when Ohio law adopted Section 7 of the FLSA, or
  2. Assert that such Act will apply to Ohio employers.

However, given ambiguities created by the peculiar language of SB 47 and legal caveats to the Portal-to-Portal Act expressed in the FLSA regulations, time spent by Ohio employees performing preliminary and postliminary activities such as checking email may still be compensable time.

SB 47 Prompts Questions

The ambiguity in SB 47 is first embedded in its incorporation of Sections 2 and 4 of the Portal-to-Portal Act only as an amendment to R.C. §4111.03 which statute is specific to overtime.  Ohio’s minimum wage is guaranteed in the Ohio Constitution, Art. II, §34b, not §4111.03 and the Ohio Constitution does not provide for any exemptions regarding minimum wage. The federal Portal-to-Portal Act expressly applies to both minimum wages and overtime compensation. Secondly, as a result of SB 47 the new R.C. §4111.03 now reads that an employer does not have to pay “overtime at a wage rate of one and one-half times the employee’s wage rate for hours worked in one workweek” despite the language in the Portal-to-Portal Act which would have included exemptions from minimum wage requirements as well. SB 47 however only mentions overtime and is silent as to minimum wages. Thus, it is unclear whether the preliminary and postliminary activities referenced in SB 47 are intended to be exempt from all compensation or just overtime. That conundrum is exacerbated with the further amendment by SB 47 in creating new section 4111.031 which parrots the language of the Portal-to-Portal Act but again only in reference to “the overtime wage rate” whereas the Portal-to-Portal Act specific language that includes an exemption from paying minimum wages for such time.

Most Ohio Businesses Will Not Benefit from SB 47

To the extent SB 47 is construed to include all the exemptions under sections 2 and 4 of the Portal-to-Portal Act of the FLSA, SB 47 is superfluous, as Ohio employers already enjoy protection under the Portal-to-Portal Act. In fact, courts have construed the FLSA and Ohio’s wage laws similarly as they invariably led to the same result. To the extent SB 47 is read to only apply to the exemption from overtime, it will not be any help to most of Ohio’s businesses, but it may well be a boon to Plaintiffs’ lawyers if employers mistake the scope of these amendments and fail to pay minimum wage (as opposed to overtime pay) for those activities which would be excused under the FLSA but would now constitute a violation of Ohio’s law.

Nuances Surrounding Preliminary and Postliminary Activities

Even if SB 47 is read to include all compensation, as does the Portal-to-Portal Act, Ohio employers must still be cognizant of the nuances surrounding what is and what is not a preliminary or postliminary activity under the FLSA. Activities such as reading emails is not per se either.  Although Ohio’s law now speaks generally to preliminary and postliminary activities, the exceptions under the FLSA for preliminary and postliminary activities only include those activities unrelated to the principal activities which the employee performs as part of his work duties or that are integral or indispensable to the job.

Therefore, whereas time spent commuting from home to work is not compensable, time spent commuting from home to a job site not in the ordinary course of the employee’s job or commuting from job site to job site will be compensable time. Ordinarily, time spent changing clothes at the workplace for the convenience of the employee is treated as a non-compensable preliminary or postliminary activity. However, if the employee holds a position which requires certain clothing appropriate for a specific job or environment such as safety related clothing in a chemical processing plant, then changing clothes would constitute an integral part of the employee’s principal activity. Such time would not fall under the Portal-to-Portal Act and would be compensable time for purposes of minimum wage and overtime requirements. Preparatory time or time spent in activities such as calibrating equipment, greasing a machine, picking up tools from the tool shed, or booting up a computer prior to actually commencing the primary activity of the employee’s job is also generally considered to be compensable time and subject to overtime wage rates. Checking emails could very well be found to be compensable time.

De Minimis Time

The FLSA makes exceptions for de minimis time, which is time that is indefinite and insignificant beyond the scheduled working hours. From an administrative perspective, De minimis time is generally difficult to be precisely recorded for purposes of determining compensation. However, claims for de minimis time are closely scrutinized and generally comprise periods of time from a few seconds to a couple of minutes. Courts will consider three factors to determine whether time worked is de minimis:

  1. The administrative difficulty in recording the time
  2. The aggregated amount of time worked without compensation
  3. Whether the work is of a type performed on a regular basis

An employee who spends a few minutes each evening reviewing emails may be entitled to compensation given the regularity of the tasks and the aggregation of time over the workweek spent on that task as opposed to an employee who checked his email once on a Saturday during the month. Such work may be compensable even if not authorized and even if performed in violation of a policy requiring approval before working overtime. In order to be compensable, such work would have to be known or reasonably known to the employer; however, such knowledge may be actual or constructive.

Ohio Employers Are Subject to FLSA

Most Ohio employers are subject to the FLSA which covers all employers with over $500,000 in sales or business produced. Additionally, even if the employer is not covered, their individual employees can be if their duties involve work performed in interstate commerce or the production of goods intended for interstate commerce. Since the majority of businesses in Ohio are subject to the FLSA, SB 47 does not provide any additional exemptions for such businesses when determining compensable time with one exception. Ohio’s minimum wage rate, and consequently its ultimate overtime wage rate, is higher than the federal rates. Therefore, in regard to preliminary and postliminary activities determined to be compensable under the FLSA and perhaps not under SB 47, Ohio businesses would only have to pay the overtime rate based on the federal rate not the higher state rate.

What is clear is that Ohio employers need to scrutinize their compensation policies with respect to preliminary and postliminary activities and de minimis time to assure compliance with federal and state law. Whether time spent before and after the workday is compensable under the FLSA will depend on

  1. Whether the activity is related to the principal activity.
  2. How much time was spent.
  3. Whether the employer had actual or constructive knowledge of the activity.
  4. Whether the employee has sufficient evidence to corroborate the time allegedly spent.

Most Ohio businesses will be subject to that determination and cannot disregard the analysis of whether a preliminary or postliminary activity is compensable based on the amendments provided by SB 47.

If you have any further questions regarding the above analysis of SB 47 or further inquiries about Federal and Ohio wage laws, please contact Maribeth Meluch (MM@kjk.com; 614.427.5747) or another member of KJK’s Labor and Employment practice group.