OHIO — The Ohio Supreme Court ruled that a law allowing cities to temporarily collect income tax from work-from-home employees outside city limits during the pandemic is constitutional. 

What You Need To Know

  • The court ruled 5-2, saying the state had "a legitimate interest in ensuring that municipal revenues remained stable amidst the rapid switch to remote work that occurred during the pandemic"

  • The decision stems from a claim made by Cincinnati man Josh Shaad during the pandemic, who worked in a Cincinnati office but other days at home from Blue Ash, according to court documents

  • Overall, in the high court's ruling on Wednesday, it found that the law doesn't "violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution, and was a valid exercise of the General Assembly’s constitutional authority"

In March of 2020, lawmakers had passed a measure for local tax procedures for employees who were ordered to work from home instead of in the office during the pandemic. The law stated that the days the employee worked from home would instead be considered as the "principal place of work" for tax reasons, according to court documents.

The court ruled 5-2, saying the state had "a legitimate interest in ensuring that municipal revenues remained stable amidst the rapid switch to remote work that occurred during the pandemic." The decision stems from a claim made by Cincinnati man Josh Shaad during the pandemic, who worked in a Cincinnati office but other days at home from Blue Ash, according to court documents.

After he was directed to work from home full time in June 2020, his employer had withheld the taxes from his 2020 pay for Cincinnati. His employer gave him a partial refund based on the days he worked outside of Cincinnati prior to the pandemic, but because of the stay-at-home order that was put in place, they didn't issue a refund for the local taxes for when he worked from home. 

Schaad then sued Karen Alder, Cincinnati's finance director, alleging "that Section 29 violates the United States and Ohio Constitutions because it authorizes a municipality to tax income that nonresidents earned outside the municipality" and filed an injunction.

The First District Court of Appeals initially dismissed the lawsuit in 2021, which Schaad appealed. The court affirmed the dismissal and rejected Schaad's argument that "that the Fourteenth Amendment’s due process clause prohibits a municipality from taxing a nonresident for work performed outside of the municipality."

The Ohio Supreme Court then agreed to hear the case. Overall, in the high court's ruling on Wednesday, it found that the law doesn't "violate the Due Process Clause of the Fourteenth Amendment to the United States Constitution, and was a valid exercise of the General Assembly’s constitutional authority."

View the full slip opinion from the Ohio Supreme Court below.