What Ohio’s HR Laws Mean for Your Business: 2016–2017 Recap + Outlook
Kegler Brown E-mployment Alert February 2, 2017
Smart Summary for Employers
- 2016 saw numerous changes to Ohio’s HR Laws.
- Many have already begun taking effect or will go into effect early in 2017.
- Areas affected include concealed weapons and drugs in the workplace, taxes, workers’ compensation, health care and more.
- Bills affecting unemployment, taxes and civil rights are already being reintroduced in 2017 after not passing last year.
We provide a detailed explanation of these laws and explain how they will affect your business.
Through the end of 2016, The 131st General Assembly passed, and Governor Kasich signed into law, several pieces of legislation affecting employment laws. This guide will help HR professionals prepare for these changes as they begin to take effect in early 2017.
The new laws passed in 2016 affect:
- Concealed handguns on employer’s property
- Drugs in the workplace (medical marijuana)
- Health care mandates
- Minimum wage, mandatory paid sick leave or predictive scheduling laws at the local level
- Taxes on business
- Unemployment compensation debt and employer taxes
- Workers’ compensation
There will also be several bills that did not pass last year but are sure to be reintroduced in 2017. They would affect state laws that include civil rights, unemployment compensation and business taxes that may be included in the state budget. Two bills that deal with civil rights and workforce development have already been introduced in the first week of February.
2016 Ohio HR Recap
Concealed Weapons in Employer’s Parking Lots
SB 199 (Uecker-Gardner) Effective 3/21/17 - The bill: (1) prohibits a business entity from having a policy that prohibits a concealed handgun licensee from transporting or storing a firearm in the person's motor vehicle; and (2) modifies the prohibition against carrying a concealed handgun onto institutions of higher education, day care facilities, aircraft, certain government facilities, public areas of airport terminals, and school safety zones.
What does this mean for your business? When the concealed carry law was enacted over a decade ago state law provided employers with complete control over its private property, including a parking lot. This new law means your workplace policy prohibiting employees who have a concealed carry permit from keeping such handguns in their locked motor vehicle is no longer permitted under state law. But, the law also provides some level of immunity for business owners for damage, injuries or death resulting from such concealed weapons. This is an issue with wide-ranging impacts, especially for employers with businesses in multiple states. We will be sending out an in-depth examination of these changes in the upcoming weeks before the law goes into effect.
Drugs in the Workplace
HB 523 (Huffman) Effective 9/8/16 – The bill: (1) permits a patient, on the recommendation of a physician, to use medical marijuana to treat a qualifying medical condition; (2) specifies that the act does not require an employer to permit or accommodate an employee's use, possession, or distribution of medical marijuana; (3) specifies that the act does not prohibit an employer from establishing and enforcing certain workplace drug policies; (4) considers a person who has been fired for using medical marijuana to have been fired for just cause and ineligible for unemployment benefits in certain circumstances; and (5) maintains the rebuttable presumption that an employee is ineligible for workers' compensation if the proximate cause of the employee's injury was being under the influence of marijuana.
What does this mean for your business? While Ohio joined over half the states in “legalizing” medical marijuana, employers have every right to maintain a drug-free work environment. The new law affords employers even more protection by making employees ineligible for unemployment and workers’ compensation benefits if terminated for violating an employer’s drug-free workplace policy or causing injury to themselves due to being under the influence of medical marijuana. At the time of this publication marijuana remains illegal under federal law; furthermore, there are OSHA rules in effect regarding when employers are allowed to drug test employees that need to be taken into consideration. Look for an update in the coming weeks that addresses the complexities and impacts of Ohio’s medical marijuana in detail.
HB 463 (Dever) – The bill: (1) requires health plan issuers to provide coverage for autism spectrum disorder; (2) requires the Superintendent of Insurance to conduct an actuarial study on the costs of health care mandates under Ohio law that apply to non-ERISA individual and group health insurance plans; and (3) states the intent of the General Assembly to implement a two-year moratorium on new health care mandates and to develop potential tax credits that offset additional employer costs associated with health care mandates.
What does this mean for your business ? In a perfect world, all health care treatments, services and procedures would be free for everyone. But, additional mandated coverage comes at a cost. This bill adds autism spectrum disorder to the list of benefit mandates covered under Ohio health care plans. The bill also requires the Ohio Department of Insurance to conduct an actuarial study of the costs of all such mandates that will help employers identify cost drivers in the system. In addition, the legislature has expressed an intent not to pass any additional mandates during the 132 nd General Assembly (2017-18).
SB 331 (Peterson) Effective 3/21/17 - The bill: (1) prohibits political subdivisions from establishing minimum wage rates different from the rate required by state law; and (2) generally grants private employers exclusive authority to establish policies concerning hours and location of work, scheduling, and fringe benefits, unless an exception applies.
What does this mean for your business? Like other surrounding states, HR professionals are not going to have to worry about local governments enacting minimum wage, paid sick leave or predictive scheduling laws around the state. You will only need to keep up with state and federal laws that apply to these areas of employment law.
Taxes on Ohio Businesses
HB 64 (Smith) Effective 6/30/15 – This bill is the state’s main operating budget. The legislature passed a $1.2 billion tax cut without shifting the tax burden to businesses subject to the Commercial Activity Tax (CAT) or taxing services that currently are not taxable.
HB 390 (Schafer-Retherford) Effective 9/26/16 – This bill repealed the authority of counties to impose a utility service tax on businesses. This local tax could have been up to 3 percent of a business’s electric, natural gas and telecommunications bills.
HB 390 (Schafer-Retherford) Effective 9/26/16 – The bill: (1) requires a one-time loan to be made from unclaimed funds to the Unemployment Compensation Fund to pay for unemployment benefits; (2) requires the Director of Job and Family Services to use the amount transferred from unclaimed funds to eliminate the balance of amounts advanced to the state from the federal government; and (3) requires each experience-rated contributory employer to pay an increased contribution rate for contributions due in 2017 in order to repay the loan from unclaimed funds.
What does this mean for your business? Repayment of the outstanding UI debt means your federal unemployment tax will be reduced from a high of $147 per employee to the lowest amount employers are required to pay each year which is $42 per employee in 2017. Employers will be required to pay a one-time surcharge of $54 per employee in 2017 to repay the unclaimed funds account that was used by the state to repay the outstanding debt.
SB 235 (Beagle-Coley) Effective 3/28/17 – The bill: (1) raises, for a two-year period, the taxable wage base used for the payment of unemployment contributions from $9,000 to $9,500; (2) eliminates the unemployment contribution rate increase for paying principal on federal advances; and (3) freezes, for calendar years 2018 and 2019, the maximum weekly unemployment benefit amounts at the amounts in effect on the act's effective date.
What does this mean for your business? The minor increase in the taxable wage base will require employers to pay a little more in the future to help rebuild Ohio’s Unemployment Compensation Trust Fund to a position of strength and solvency to better weather the next economic downturn. But, the three provisions passed in this bill were only a small gesture from business and labor groups to work toward a more comprehensive UI reform package by April 1, 2017.
HB 207 (Henne-McColley) Effective 8/31/16 – The bill: (1) requires workers' compensation claims to be charged to the Surplus Fund Account instead of a state fund employer's experience in certain circumstances when a claim is based on a motor vehicle accident involving a third party; and (2) eliminates the minimum number of employees required for a private sector employer or board of county commissioners to obtain self-insuring status under the Workers' Compensation Law.
What does this mean for your business? In the past, if your employee was injured on the job due to a third party being at fault, the claim still landed on your experience rating, in many cases making it ineligible to qualify for significant premium savings under programs such as group rating. This bill established a fund to bear the expense of such claims while BWC subrogates the claim (recovers the damages caused by the third party). In addition, this bill eliminated the 500-employee threshold needed to apply for and be granted self-insured status for workers’ compensation insurance in Ohio. That means smaller, state-funded businesses that are financially stable will now have the opportunity to apply for self-insurance.
2017 HR Outlook
In 1959, Ohio became the 16th state to ratify legislation prohibiting discrimination in employment on the basis of race, color, religion, national origin and ancestry. A few years later Congress passed the Civil Rights Act of 1964. Since then we have been running on a parallel and duplicative track with the same types of causes of action under state law that are covered under federal law. SB 268(Seitz), called the “Employment Law Uniformity Act” from the 131 st General Assembly (2015-16), sought to reduce overlapping and duplicative causes of action under state and federal law for both employers and employees. A similar bill, HB 2 (Seitz) was introduced in early February 2017 to address these issues.
HB 2 will: (1) limit the definition of employer for purposes of the Ohio Civil Rights Law by excluding any person acting directly or indirectly in the interest of an employer; (2) prohibit claimants from concurrently pursuing both lawsuits and OCRC charges relating to unlawful discriminatory practices relating to employment; (3) change the time in which lawsuits related to discrimination in the workplace could be brought under Ohio law to 365 days from six years generally; (4) prescribe, for employers, an affirmative defense to liability resulting from an alleged unlawful discriminatory practice related to employment; (5) specify that the remedies for unlawful discriminatory practice in employment set in the Ohio Civil Rights Law are the sole remedies for an aggrieved individual; and (6) consolidate age discrimination lawsuits under the Ohio Civil Rights Law, so that age is treated the same as other protected classes.
As mentioned earlier in this article, business and labor groups, along with Ohio House Speaker Cliff Rosenberger, set a deadline of April 1, 2017, to develop a comprehensive UI reform bill. The groundwork to meet that deadline was established in two bills debated in the 131st General Assembly (2015-16) that were developed after a series of legislative hearings at the Ohio Statehouse and around the state.
HB 394 (Sears) was introduced in 2015 with several recommended changes to UI taxes on employers, benefits to claimants, integrity for eliminating waste, fraud and abuse in the system, strategies for reemploying claimants and repayment of the outstanding UI debt then owed to the federal government. But, while it was supported by many business and professional trade associations, labor organizations vehemently opposed the bill. After several more legislative hearings, HB 620 (Schuring) was introduced.
HB 620 revised several provisions in the previous bill to address concerns raised by both business and labor. But, this legislation was still met with significant opposition from labor.
In this case, hopefully the third time will be the charm. Ohio employers fully fund the state unemployment system for claimants out of work through no fault of their own. If the state does not find the right mix of comprehensive reforms to the UI system to rebuild the state’s trust fund to a position of strength and solvency during relatively good times, Ohio employers will bear the cost of even higher federal taxes during the next economic downturn.
SB 3 (Beagle-Balderson) was introduced in early February 2017. The bill: (1) revises the laws governing the state's workforce development system, (2) amends programs that may be offered by primary and secondary schools, certificates of qualification for employment, and the Opportunities for Ohioans with Disabilities Agency; and (3) designates the first week of May as In-Demand Jobs Week.
Taxes on Ohio Business
While April 15, 2017, is the dreaded tax filing deadline for individuals, the magic date for finalizing Ohio’s state budget and what, if any, tax changes will affect businesses is June 30, 2017. Trending-lower-than-expected revenue projections, along with the impact of Medicaid changes, will lead to Ohio lawmakers looking for ways to tighten their belts by reducing spending without increasing taxes. But, as in the past, early versions of the budget may include tax expansions to services not currently taxed or a marginal increase in the Commercial Activity Tax (CAT) on business.
The Ohio House of Representatives intend to introduce and begin hearings on the state budget in early February. Debate in the House will continue through late March or early April before the full House approves a budget and sends it over to the Senate for further debate. The Senate will conduct hearings through the end of May/beginning of June before passing its own version of the state budget. The differences between the two budgets will inevitably lead to a conference committee where both House and Senate members will reconcile differences. The budget will then be approved by both chambers before heading to Governor Kasich for his signature.