Tuesday, October 21, 2008

Do you know? Ohio’s wage payment statute

Do you know? Ohio has a specific law that details how companies are to pay their employees. O.R.C. 4113.15 provides, in relevant part:

(A) Every individual, firm, partnership, association, or corporation doing business in this state shall, on or before the first day of each month, pay all its employees the wages earned by them during the first half of the preceding month ending with the fifteenth day thereof, and shall, on or before the fifteenth day of each month, pay such employees the wages earned by them during the last half of the preceding calendar month….

(B) Where wages remain unpaid for thirty days beyond the regularly scheduled payday or, in the case where no regularly scheduled payday is applicable, for sixty days beyond the filing by the employee of a claim or for sixty days beyond the date of the agreement, award, or other act making wages payable and no contest court order or dispute of any wage claim including the assertion of a counterclaim exists accounting for nonpayment, the employer, in addition, as liquidated damages, is liable to the employee in an amount equal to six per cent of the amount of the claim still unpaid and not in contest or disputed or two hundred dollars, whichever is greater….

(D) As used in this section:

(1) “Wage” means the net amount of money payable to an employee, including any guaranteed pay or reimbursement for expenses, less any federal, state, or local taxes withheld; any deductions made pursuant to a written agreement for the purpose of providing the employee with any fringe benefits; and any employee authorized deduction.

In plain English, businesses have to pay their employees at least two time a month, at least as frequently on the 1st and 15th of each month. Of course, employers can choose to pay more frequently, but any less often would violate the statute.

If wages go unpaid for 30 days past a regularly scheduled payday, or 60 days if no payday applies (such as a vacation or bonus payout), the employer could be held liable for liquidated damages of the greater of 6% of the unpaid wages or $200, provided that there is not a legitimate dispute over the payment of the wages. For example, if an employee claims that they are owed unused vacation days on termination, or claims that a bonus is owed, and an employer disputes that claim in good faith (based on a policy, for example), the liquidated damages provision would not apply.

This law does specifically speak to the handling of unpaid wages on termination. One reasonable reading of the statute would make them due on the first regularly scheduled payday following the last day of employment. Another reasonable reading would make them due within 60 days after the last date of employment. The more prudent interpretation of the statute would suggest that employers make a habit of including final paychecks with the next regular payroll. However, under 4113.15(B), the employer will not incur any potential liability until 30 days after that next payroll.