Federal and Ohio labor laws allow employers to compensate employees in a variety of manners. An employer may choose to pay an employee a fixed salary, an hourly rate, a percentage of sales or a rate per item produced. Whichever manner is chosen, the employer must comply with the labor laws for the method of compensation. For employers that compensate on a salary basis, it is important to understand that the the minimum wage and overtime laws are still relevant.
The state of Ohio recognizes the same exemptions to overtime and minimum wage laws as the federal government. Under federal statutes, certain employees, such as managers, professionals and administrators, may be classified as exempt employees. These employees must receive a salary equivalent to $455 per week that does not fluctuate if the employee's output varies. Although the employee may receive additional compensation, such as commissions or bonuses, at least $455 must be in the form of a fixed salary. The employer may withhold the salary for any week during which an exempt employee does not work, but as a rule, if the employee works at any time during the week, he is entitled to his full salary. Federal laws allow few deductions from an exempt employee's salary, but the employer may adjust pay for personal absences of at least one full day. Absences of less than one full day should not be deducted.
A nonexempt employee is one who must receive overtime pay if he works more than 40 hours in one week. Neither Ohio nor federal law prohibits an employer from paying a nonexempt employee on a salary rather than hourly basis. However, federal laws require the employer to pay a salary that equates to at least the applicable minimum hourly rate. Furthermore, when computing the hourly rate to use for overtime pay, the hourly rate cannot be less than the minimum wage. Unlike hourly employees who have a fixed hourly rate, the hourly rate for a nonexempt employee is his salary divided by the number of hours worked during the week. For example, if an employee receives $300 weekly for 40 hours, his hourly rate is $7.50. This exceeds both the federal minimum wage--$7.25 as of 2011--and the Ohio minimum wage, which was $7.40 as of 2011. However, if he worked 50 hours, his hourly rate would be $6, which does not meet the requirements. Therefore, the employer would have to base his overtime for the week on a base of $7.40, yielding an overtime rate of $11.10.
Frequency of Pay
Ohio requires employers to issue paychecks at least twice per month, no later than the 15th and 30th of the month. Employers may pay more frequently if they so desire. This applies to both exempt and nonexempt employees, as well as hourly, commissioned and piecework employees. It does not matter whether the employee is full- or part-time.
Neither federal nor Ohio statutes require employers to offer coffee breaks, lunch breaks or other rest periods to employees over the age of 16. However, federal law requires employers to pay for breaks of less than 20 minutes, and if the employee is not relieved of all duties during his lunch break, employers must pay for that time as well.
- U.S. Department of Labor: State Payday Requirements
- Ohio Revised Code: Title 41 XLI Labor and Industry, Chapter 4111.03
- U.S. Department of Labor: Handy Reference Guide to the Fair Labor Standards Act
- U.S. Department of Labor: Hours Worked Under the Fair Labor Standards Act
- U.S. Department of Labor: Compensation Requirements -- Deductions
- Ohio Department of Commerce: 2011 Ohio Minimum Wage
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