The Ultimate Guide to Ohio Minimum Wage Laws for Employers

Ohio's minimum wage impacts how businesses pay employees across the state. Employers who understand wage laws can avoid compliance issues and ensure their payroll practices align with legal standards. Staying informed about annual adjustments tied to inflation is key to preparing for changes.

Ohio's wage laws include specific requirements that go beyond the federal minimum wage. Differences based on business size and employee category mean that employers need to pay close attention to the details. Monitoring monitoring regulatory updates ensures accurate payroll and helps businesses avoid penalties.

This guide breaks down the rules, inflation-based adjustments, and the factors employers must track to navigate Ohio's minimum wage laws effectively.

Understanding Ohio Minimum Wage Laws

Ohio’s minimum wage system is governed by the Ohio Constitution and state laws. A constitutional amendment passed in 2006 requires annual adjustments to the state's minimum wage based on inflation. This approach ensures wages reflect the rising cost of living, helping workers maintain consistent purchasing power.

The state's minimum wage for 2025 is $10.70 per hour for non-tipped employees and $5.35 per hour for tipped employees. These rates apply to businesses with annual gross receipts of more than $394,000. Smaller businesses with annual receipts below this threshold and employees aged 14-15 follow the federal minimum wage of $7.25 per hour.

Employers need to track the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to stay up to date. The CPI-W measures inflation over a 12-month period ending in August, which determines annual wage adjustments effective January 1. For instance, a 2.4% increase in the CPI-W between September 2023 and August 2024 resulted in the 2025 increase. Consistently monitoring this data allows businesses to anticipate wage changes and plan payroll budgets accurately.

Minimum Wage Rates for 2025

Ohio's minimum wage increased on January 1, 2025. Employers must adjust payroll systems to meet the updated rates immediately.

• Non-tipped employees will earn $10.70 per hour.

• Tipped employees will receive $5.35 per hour.

The higher state minimum wage applies to businesses with annual gross receipts above $394,000. If gross receipts fall below this threshold, the federal minimum wage of $7.25 per hour applies instead. Employers must carefully calculate annual gross receipts to confirm which rate to follow.

Compared to 2024, the 2025 rates reflect a slight increase. Non-tipped employees earned $10.45 per hour last year, while tipped employees earned $5.25. The change reflects a 2.4% inflation adjustment based on the CPI-W.

Employers should review revenue records to ensure they apply the correct minimum wage rate. Missteps in determining eligibility can create compliance risks, including penalties or back wages.

Tipped Employees in Ohio

Ohio allows employers to pay tipped employees a base wage of $5.35 per hour in 2025. This rate equals 50% of the state minimum wage for non-tipped employees. However, total earnings—including tips—must meet or exceed $10.70 per hour. If an employee does not reach this threshold, employers must make up the difference to comply with state wage laws.

Examples of Tipped Roles

Certain jobs consistently fall into the tipped employee category. In Ohio, common examples include:

• Servers: Waitstaff who earn the majority of their income through tips left by customers.

• Bartenders: Employees who mix and serve beverages while receiving tips from patrons.

• Delivery Drivers: Individuals who deliver food or goods and often receive gratuities directly from customers.

These positions rely on tips to supplement hourly wages, and employers are responsible for ensuring workers meet the state-required minimum hourly earnings.

Managing Tip Credits Effectively

Tracking tip credits accurately ensures compliance with wage laws. Employers must maintain precise records of tips reported by employees and verify that combined wages meet the $10.70 minimum.

Some best practices include:

• Daily Tip Reporting: Require employees to report all tips, including cash and credit card tips, at the end of each shift to maintain accurate payroll data.

• Regular Audits: Periodically review payroll records to confirm that base pay and tips combine to meet the required hourly wage.

• Clear Communication: Set clear expectations with employees about reporting tips and explain the importance of accurate documentation for payroll compliance.

Employers cannot deduct fees, such as credit card processing costs, from an employee's reported tips. The full amount of tips earned must count toward the worker's total hourly earnings. Adhering to these practices helps avoid compliance issues and ensures employees are paid fairly under Ohio's minimum wage laws.

Exemptions and Special Cases

Ohio's minimum wage laws don't apply universally. Certain roles and situations are exempt or require special handling, and understanding these distinctions is necessary to comply with wage regulations.

Specific Employee Exemptions

Some employees fall outside Ohio's minimum wage requirements due to the nature of their work or employment arrangement. These include:

• Federal employees: Individuals working for the U.S. government, such as postal workers or military personnel, are not bound by Ohio's wage laws.

• Occasional babysitters: Babysitters hired for casual, short-term jobs in private homes are exempt. However, full-time domestic workers like nannies are not.

• Outside sales representatives: Employees who primarily work off-site and earn commissions instead of hourly pay are excluded.

• Volunteers for non-profits: Individuals donating their time to non-profit organizations, religious groups, or community programs are not considered employees.

• Minors under 16: Workers under the age of 16 often qualify for different wage standards based on the employer's annual gross receipts or the nature of the job.

Employers must assess each role carefully and document exemptions to avoid errors or disputes.

Small Businesses and Federal Minimum Wage

Ohio allows small businesses with annual gross receipts below $394,000 to follow the federal minimum wage of $7.25 per hour instead of the state rate. This gross receipts threshold increased from $385,000 in 2024 due to inflation adjustments.

Gross receipts include all income a business generates before expenses. Employers must calculate this figure with precision to determine whether the federal or state minimum wage applies. Misclassification can result in compliance issues, back wages, or fines.

For businesses qualifying for the lower federal rate, 14- and 15-year-old workers must also be paid $7.25 per hour. Employers should confirm compliance with child labor laws, including limits on hours worked and job restrictions.

Sub-Minimum Wages for Specific Workers

Ohio permits reduced wage rates in certain cases, provided the employer meets state and federal requirements.

• Workers with disabilities: Employers may obtain a certificate to pay employees with disabilities a rate based on productivity compared to peers without disabilities performing similar tasks.

• Student learners: High school or vocational students participating in work-study programs can earn reduced wages if the employer secures the appropriate certification.

• Apprentices and trainees: Individuals in registered apprenticeship programs or on-the-job training roles may be paid less during their training period, provided documentation supports the wage adjustment.

Employers using sub-minimum wage rates must maintain accurate records, including certifications and documentation showing eligibility. Failure to follow procedures can lead to penalties or back pay obligations.

Required Overtime Pay

Overtime pay rules in Ohio follow both state regulations and the FLSA, ensuring employees receive fair compensation for additional hours worked. Employers are required to pay eligible employees extra for time worked beyond the standard 40-hour workweek.

Time-and-a-Half Rule

Ohio mandates that employees covered under wage laws earn time-and-a-half for any hours exceeding 40 in one workweek. This means an employee earning $18 per hour would receive $27 per hour for overtime work. The calculation is straightforward and applies to the total hours worked in a seven-day period, regardless of how those hours are distributed across individual days.

Employers should also remember that holidays or weekends do not automatically count as overtime unless the total hours surpass 40 for the week. Payroll accuracy is key to staying compliant and avoiding disputes.

Exempt Roles

Not every job qualifies for overtime pay. The FLSA outlines exemptions based on an employee's job duties and salary. Employers must carefully review each role before determining overtime eligibility.

Positions commonly excluded from overtime include:

• Executives: Managers responsible for directing teams and making decisions on hiring, promotions, or terminations.

• Administrative professionals: Employees handling non-manual tasks related to business operations, such as payroll management or compliance officers.

• Licensed professionals: Workers in fields requiring advanced education, including accountants, attorneys, and architects.

Exempt employees must also meet specific salary thresholds to qualify. Misclassifying roles as exempt roles can lead to compliance violations, resulting in back pay for overtime owed. Employers should maintain detailed documentation of job descriptions and salary criteria to support proper classification.

Recordkeeping and Posting Obligations

Ohio employers must follow specific rules for workplace postings and maintaining employee records. These requirements help ensure transparency, compliance, and accuracy in payroll and wage practices.

Mandatory Workplace Poster

Every employer in Ohio must display the official Ohio Minimum Wage poster in a location visible to all employees. The poster outlines the current minimum wage rates, employee rights, and employer obligations. It should be placed in a high-traffic area, such as a break room, near a time clock, or any other easily accessible space. For remote employees, making the poster available digitally, such as through an employee portal, ensures compliance.

The Ohio Department of Commerce updates this poster annually. Employers must replace outdated versions promptly to reflect any changes in minimum wage laws. Failure to post the correct version can result in fines or other penalties during inspections.

Employee Recordkeeping Requirements

Accurate and detailed recordkeeping is a non-negotiable responsibility for Ohio employers. State law requires maintaining specific records for every employee, including:

• Personal information: Full name, address, job title, and date of birth for employees under 19.

• Hours worked: Daily and weekly totals for all hours worked to confirm compliance with state and federal overtime rules.

• Wage details: Pay rates, total wages earned, itemized deductions, and net pay for each pay period.

These records must be retained for a minimum of three years. Employers using electronic systems for payroll and recordkeeping must ensure that all data is securely stored and easily accessible for audits or legal requests.

Penalties for Noncompliance

Failing to meet Ohio's recordkeeping or posting requirements can lead to significant consequences. Employers may face fines, back pay orders, or increased scrutiny from state and federal agencies. Inaccurate or incomplete records can complicate investigations and result in additional penalties.

To avoid these issues, review employee records regularly to ensure accuracy. Confirm that wage posters are up to date and correctly displayed in required locations. Proper training for HR teams and managers on compliance practices can further reduce the risk of errors. Taking these steps helps create a compliant and transparent workplace.

Enforcement and Penalties

The Ohio Department of Commerce’s Bureau of Wage & Hour Administration holds employers accountable for following minimum wage laws in Ohio. The Bureau investigates complaints, audits payroll records, and ensures businesses comply with wage regulations. Every employer must take enforcement seriously, as oversight or noncompliance can lead to significant consequences.

Common Violations

Certain violations appear repeatedly during investigations. These mistakes often stem from misunderstanding wage requirements or failing to prioritize compliance:

• Paying tipped employees incorrectly: Employers sometimes fail to ensure that tipped workers' combined base pay and tips meet or exceed the full minimum wage of $10.70 per hour. This oversight can lead to back pay claims and penalties.

• Ignoring overtime pay requirements: Misclassifying employees as exempt or neglecting to calculate overtime for hours worked beyond 40 in a week is a frequent violation. Accurate tracking of hours worked is non-negotiable.

• Not displaying the required wage poster: Failing to post the official Ohio Minimum Wage notice in a visible location violates state law. Employees must have easy access to their wage rights, and outdated or missing posters can result in fines.

Legal and Financial Repercussions

Breaking minimum wage laws in Ohio carries serious consequences. The Bureau can impose fines, mandate back pay for affected employees, and escalate cases to legal action if necessary.

Employers who underpay workers may be ordered to compensate the difference between what was paid and what should have been paid. In overtime disputes, additional damages may be required, matching the unpaid overtime owed. These payouts can quickly add up, especially for businesses with multiple violations.

Legal risks extend beyond fines. Employees can file lawsuits against employers who fail to meet wage obligations. Deliberate violations, such as falsifying payroll records, may lead to criminal charges, further increasing liability. Beyond financial penalties, noncompliance can harm a company's reputation, making it harder to attract talent and retain employees.

Compliance should be a priority for every employer. Conducting regular payroll audits, maintaining accurate records, and keeping employees informed about their wage rights are simple but effective ways to avoid enforcement actions.

Best Practices for Staying Compliant

Compliance with Ohio's minimum wage laws starts with clear processes and well-informed teams. Mistakes can lead to financial penalties or legal complications, so it's important to focus on accuracy and transparency in every aspect of wage management.

Train Managers and HR Teams

Managers and HR professionals play a key role in enforcing wage compliance. They need thorough training to accurately classify employees and manage payroll processes.

• Clarify exemptions: Provide detailed guidance on which roles qualify for exemptions, such as executive or administrative positions, and ensure job descriptions align with these classifications.

• Address overtime rules: Educate managers on the importance of tracking work hours and correctly calculating overtime pay when employees exceed 40 hours in a workweek.

• Detail tipped employee requirements: Ensure payroll teams know how to apply tip credits accurately and confirm tipped employees' earnings meet or exceed the required minimum hourly wage.

Regular training sessions and periodic updates on wage laws help reduce errors and improve compliance efforts.

Use Reliable Payroll Systems

Payroll errors can be costly and avoidable. A dependable payroll system simplifies wage calculations and ensures accuracy.

• Automate updates: Select systems that automatically adjust for annual minimum wage increases based on Ohio's inflation-tied rules.

• Integrate time tracking: Use a solution that records employee hours seamlessly, making overtime calculations straightforward.

• Monitor compliance: Implement payroll software capable of flagging inconsistencies in pay rates, hours worked, or tip credits to prevent errors before they occur.

Automating key processes allows payroll teams to focus on accuracy and efficiency, minimizing the risk of noncompliance.

Communicate Clearly with Employees

Open communication about wages and rights fosters trust and reduces misunderstandings. Employees are more likely to feel confident in their pay when they understand how it's calculated.

• Provide clear pay details: Use pay stubs that outline hours worked, overtime, tips, and deductions.

• Explain tip policies: Offer clear instructions on how tip reporting works and how tips contribute to meeting hourly wage requirements.

• Notify employees of updates: Share updates on Ohio's minimum wage changes annually to keep employees informed.

Encouraging employees to ask questions about their pay can prevent confusion and reduce the likelihood of disputes.

Consolidate Payroll and Compliance Management

Managing payroll, time tracking, and compliance across separate processes increases the potential for errors. A well-integrated system simplifies operations and keeps everything aligned.

• Unify processes: Use a single platform to manage payroll, time tracking, and wage compliance for consistency.

• Automate compliance checks: Implement tools that verify wage and overtime calculations automatically, ensuring they meet Ohio's requirements.

• Enhance employee access: Provide self-service options for employees to view pay stubs, report tips, and update personal details in one place.

Centralizing these functions reduces administrative burden and helps maintain compliance without added complexity. Ohio's minimum wage laws are updated every year, reflecting inflation and the cost of living. Staying informed about these changes is vital for employers to meet compliance requirements and ensure employees are paid correctly. Whether you operate a large business or a smaller one, understanding how Ohio calculates and enforces wage rates can help you avoid errors and penalties.

The specifics of Ohio's wage system, including tipped employee rules, exemptions, and federal thresholds, require attention to detail. Employers must also monitor annual adjustments tied to the Consumer Price Index to plan for payroll changes effectively. For 2025, those updates are already in effect, and businesses should act accordingly.

Navigating Ohio's minimum wage laws can be complex, but with the right tools and information, you can ensure compliance and support your employees effectively. We're here to help you streamline payroll, time tracking, and compliance management, so you can focus on growing your business. Book a demo today to see how our platform can simplify your HR processes and keep you ahead of Ohio's evolving wage requirements.