As we begin the final quarter of 2012, employers are reminded that effective January 1, 2013, Ohio’s minimum wage rate will increase by $.15 cents per hour, from $7.70 to $7.85 for non-tipped employees and by $.08 cents per hour, from $3.85 per hour to $3.93 per hour, excluding tips. The increased minimum wage applies to Ohio employers with annual gross receipts exceeding $288,000 per year, which is up from last year’s $283,000 threshold.

Exclusions from the Ohio Minimum Wage Law
Ohio employers with 2012 annual gross receipts less than $288,000 are excluded from Ohio’s minimum wage requirements; however, they are still required to pay the federal minimum wage – $7.25 per hour. Employees under the age of 16 also similarly are not entitled to Ohio’s minimum wage and are to be paid the federal minimum wage of $7.25 per hour. To change the federal minimum wage, an act of Congress is first required followed by the President’s signature. There has been no change to the federal minimum wage since July 2009, when the last of three increases under the Fair Minimum Wage Act of 2007 was made.

Constitutional Amendment
So why does the minimum wage keep increasing? The answer: An amendment to Ohio’s Constitution was passed in November 2006 that allows the state to increase the minimum wage on January 1 of each year by the rate of inflation. The Department of Commerce calculates the increase based on the rise of the rate of inflation measured by the Consumer Price Index ("CPI") for the 12-month period prior to September of the current year. From September 1, 2011 to August 31, 2012, the CPI index rose 1.7%. The Amendment also states that the wage rate for non tipped employees shall be rounded to the nearest five cents.

Ohio employers subject to the minimum wage increase should make a note to adjust their pay practices, and update their compliance posters when the time comes. Updated posters are available here.