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Changes to state and federal laws will impact Ohio employers in 2020
JEFF SMITH
MELISSA DIALS
Special to the Legal News
Published: January 7, 2020
Salary History Bans Imposed in two Ohio Cities
In 2020, Cincinnati and Toledo will become the latest of a growing number of jurisdictions to implement a salary history ban on employers. The ordinances generally prohibit employers from inquiring about or relying on the prior salary history of applicants in setting starting pay.
The purpose of each ordinance is to reduce pay inequity and ensure employee wages are based on job responsibilities and level of experience rather than on an applicant’s prior salary, which can perpetuate existing discrimination in the workforce. Both laws include a number of exceptions to their general prohibitions.
For example, Cincinnati and Toledo employers may still engage in discussions with applicants about their compensation “expectations.”
Cincinnati’s ordinance will go into effect on March 13, 2020, and Toledo’s ordinance on July 4, 2020. Both ordinances apply to employers that have 15 or more employees located within the applicable city’s limits.
The trend of jurisdictions adopting ordinances that prohibit employers from asking about salary history does not appear to be slowing down.
Therefore, employers—especially those with operations in multiple jurisdictions - should consider whether it makes sense to employ a patchwork system of asking for salary history where it is permitted (and refraining from doing so where it is not), or simply eliminating the inquiry altogether for ease of compliance and administration.
In the meantime, employers with operations in Cincinnati and Toledo should take steps now to ensure compliance.
For example, employers are encouraged to begin amending their employment applications now to lessen the risk of liability for considering an application with salary information that was completed before the effective date of the applicable salary history ban.
Employers also should update their procedures for conducting reference and background checks to ensure they do not request salary history. Additionally, employees involved in the interviewing and hiring process should be trained on the new laws to avoid violations.
There are also developments in Federal law that impact how employers pay their employees:
Overtime changes. The DOL announced in September 2019 a final rule to update the FLSA’s overtime regulations. The rule updates the earnings certain employees must meet to be considered “salaried” employees. The new rule raises the “standard salary level” from the current $455 per week to $684 per week. This is the equivalent of approximately $35,568 per year for a full-time employee.
The rule also raises the total annual compensation level for “highly compensated employees” from $100,000 to $107,432 per year.
Finally, the rule allows employers to use non-discretionary bonuses and incentive payments, including commissions, to satisfy up to 10% of the standard salary level. According to a press release issued by the DOL, “[t]he Department estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the increase to the standard salary level. The Department also estimates that an additional 101,800 workers will be entitled to overtime pay as a result of the increase to the [highly compensated employee] compensation level.”
Credit for Tipped Employees. The FLSA allows an employer whose employees receive tips to take a “tip credit” for the amount between the wage it pays to an employee and the federal minimum wage.
If an employee does not receive sufficient tips to make up the difference, the employer is responsible for that difference.
Under the new rules proposed by the DOL, employers would be able to take tip credit for all of the time spent by an employee performing “related duties,” including all work that is not directly tip-producing, provided such duties are performed within a reasonable time before, after, or contemporaneously with the tipped duties.
For further explanation, the DOL explains “related duties” could include rolling silverware and filling salt and pepper shakers. In addition to the tip credit rules, the DOL also proposed rules related to tip pooling, including recordkeeping rules for employers that implement mandatory tip pools.
Finally, the Supreme Court has taken up an LGBTQ issue, which could impact discrimination cases.
The Supreme Court heard oral arguments on two significant Title VII cases in 2019 and is expected to issue its decisions on those cases in 2020.
One of these cases arose out of the 6th Circuit, the Federal circuit in which Ohio is situated. In R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission, the 6th Circuit similarly found in favor of a transgender employee who was fired from her position at a funeral home.
Aimee Stephens, formerly known as Anthony Stephens, claimed she was terminated after announcing her intention to transition from male to female. The basis of Stephens’ claim is that she was discriminated against on the basis of her gender identity – again, a category not expressly covered by Title VII.
The funeral home attempted to seek a religious exemption under the federal Religious Freedom Restoration Act, but the 6th Circuit found no merit in the argument. Instead, the Court held that Title VII prohibits discrimination on the basis of gender identity, because of its prohibition on discrimination on the basis of sex and sex stereotypes.
The Court noted that discrimination based on a person’s transgender status is necessarily discrimination on the basis of sex: “it is analytically impossible to fire an employee based on that employee’s status as a transgender person without being motivated, at least in part, by the employee’s sex.”
Stay tuned for further changes in 2020, as there are proposed changes for joint employment rules by the DOL, and the NLRB is further changing Union Election Rules.
Jeff Smith and Melissa Dials are Partners in the Cleveland office of Fisher Phillips. Smith is a member of the firm's Employee Benefits Practice Group, and Dials counsels employers on a wide variety of day-to-day employment and labor issues.