Ohio Senate Bill 25 & Potential Increase in Overtime Threshold

The attorneys at Nardone Limited regularly assist our clients with labor, employment, and human resource issues, including guidance on: (i) federal and state regulatory compliance; (ii) discipline, discharge, and documentation; (iii) discrimination and harassment complaints and charges; and (iv) policies, procedures, and the development of employment handbooks.  Please review our prior articles regarding: (i) Issues to Address in Your Employee Handbook; (ii) How the Fair Labor Standards Act and Ohio’s Minimum Wage Laws Affect Your Dental Practice; (iii) EEOC Releases 2014 Charge Statistics; and (iv) Unemployment Compensation and Other Concerns After Terminating an Employee.  As an employer, it is important to keep up-to-date on the ever-changing federal and state laws, rules, and regulations that affect you as an employer, your employees, and their terms and conditions of employment with you.

Ohio Senate Bill 25 Overview

Ohio Senate Bill 25 (“SB 25”) was introduced on February 2, 2015 and was assigned to the Ohio Senate Committee of Transportation, Commerce, and Labor for review on February 4, 2015.  Although SB 25 is still in the review process, it is still important for employers to be aware of the changes SB 25 could bring to you and your employees.  If SB 25 passes, the following changes to Ohio’s labor and economic system would take place: (i) an increase in Ohio’s minimum wage; (ii) an increase in the current salary threshold in which one is eligible for overtime; and (iii) the standardization of the term “employee.”  Within this article, we will discuss how the increase in the current salary threshold might affect Ohio employers.

Increase in Overtime Threshold

SB 25 proposes to increase the limit for which an employee is eligible for overtime pay from the current threshold of $23,000 to $50,000 in 2016 and $69,000 in 2017.  In simplest form, this means employers may be required to pay employees overtime for each additional hour over 40 an employee works if their salary is $23,000 or less.  SB 25 proposes this threshold increases to $50,000 in 2016 and $69,000 in 2017.

The largest change an employer may face is the alteration in payment structures for both salaried and hourly workers.  With more employees eligible for overtime pay, employers may: (i) increase the amount of hourly workers while decreasing the number of salaried employees; (ii) reorganize the structure of salaried employees; and (iii) outsource certain tasks to third-party contractors in order to prevent an increase in overtime hours.

The Bottom Line

The bottom line is that employers need to consider possible solutions to reduce the potential financial impact to their business if SB 25 becomes law.  In addition to employer concerns, salaried employees should also be concerned that their employer might be required to change their status from that of a salaried employee to an hourly one. With this change, an employee will no longer have certain flexibility with their schedule typically associated with being a salaried employee.

Nardone Limited has advised many employers on changes in federal and state employment laws, such as the ones that will occur if Ohio Senate Bill 25 passes.  We will keep you updated on the progress of SB 25.  Please see our prior article: Ohio Senate Bill 25 and the Potential Minimum Wage Increase, and keep an eye for an additional article discussing SB 25’s proposed change on standardizing the term “employee.”