TWENTY-FOUR FREQUENTLY ASKED QUESTIONS ABOUT NEVADA’S NEW MINIMUM WAGE LAW [The first 12 are from the Labor Commissioner of Nevada’s website] http://www.laborcommissioner.com
[Information in brackets is added by the Nevada Restaurant Association and its attorneys Snell & Wilmer/Samuel P. McMullen in Las Vegas.]
1. WHEN DOES THE LAW GO INTO EFFECT? The Constitutional amendment goes into effect on November 28, 2006. [It is now Article 15, Section 16 of the Nevada State Constitution (full text can be viewed at “http://www.leg.state.nv.us/Const/NVConst.html#Art15Sec16”).]
2. WHAT IS THE MINIMUM WAGE? Nevada has a two-tiered minimum wage. The first tier is $5.15 per hour for employers who provide qualified health insurance benefits. The second tier is $6.15 per hour for employers who do not provide qualified health benefits. These rates will be adjusted annually to include increases in the federal minimum wage and a yearly cost of living adjustment.
3. WHEN DOES THE ANNUAL ADJUSTMENT BECOME EFFECTIVE? The annual adjustments will be announced in April and become effective on July 1 of each year.
4. IF THE FEDERAL MINIMUM WAGE GOES UP, HOW MUCH WILL THE NEVADA MINIMUM WAGE GO UP? Each minimum wage tier will increase by the same dollar amount as the federal rate increase.
5. WHO IS COVERED UNDER THE NEW MINIMUM WAGE? (Updated 12/04/2006) The minimum wage applies to all employees in Nevada except: a) persons who are under 18 years of age; b) persons who are employed by non-profit organizations in “after school” or summer jobs; or c) persons who are “trainees” for the first ninety days of employment.
6. ARE THERE ANY OTHER EXCEPTIONS? No. The employees who were exempt under the provisions of Nevada’s minimum wage statute [NRS 608.250 (2)] are no longer exempt and must be paid the new minimum wage.
7. DOES THE MINIMUM WAGE APPLY TO PART-TIME OR TEMPORARY EMPLOYEES? Yes. The amendment does not make any distinction between whether an employee is full-time, part-time, or temporary.
8. WHAT IS THE PAY RATE FOR THE EXEMPT EMPLOYEES? Nevada does not set the pay rate for exempt employees. Employers must still comply with the federal minimum wage statute for those employees.
9. WHAT ARE QUALIFIED HEALTH BENEFITS? Qualified health benefits means health insurance that covers the employee and the employee’s dependents. The employee’s share of the premium cost cannot exceed 10% of the employee’s gross taxable income.
10. ARE TIPS INCLUDED IN THE MINIMUM WAGE? (Updated 12/04/2006) No. Tips and gratuities are not considered as part of the minimum wage rate, however they may be used to calculate the employee’s share of the premium costs.
11. DOES THE NEW MINIMUM WAGE AFFECT OVERTIME? Yes. All non-exempt employees are entitled to be paid overtime any time they work more than 40 hours in a workweek. However, Nevada law also requires employers to pay overtime on a daily basis to employees who are paid less than one and a half times minimum wage. This daily overtime requirement has been the law for more than thirty years. As the minimum wage goes up, the upper limit for daily overtime goes up with it.
12. WHAT KIND OF HEALTH INSURANCE IS RECOGNIZED FOR THE PURPOSE OF QUALIFYING FOR THE $5.15 MINIMUM WAGE RATE? Any policy, contract, certificate or agreement offered or issued by a carrier authorized by the Nevada Insurance Commissioner to provide, deliver, arrange for, pay for or reimburse any of the costs of health care services or any federally approved self-funded plans established under the Employee Retirement Income Security Act of 1974 (ERISA), as amended, will meet the requirement for providing health insurance. Medical discount plans as defined by NRS 695H.050 do not qualify as health insurance.
Additional Frequently Asked Questions [Please note that the above twelve (12) questions are imported from the Nevada Labor Commissioner’s website (http://www.laborcommissioner.com) as of November 22. This website has other information and press releases which you might want to review frequently as it is expected to be updated.]
13. Does a qualified health plan include dental and vision coverage or is it strictly health coverage? Is there any other definition about what constitutes “health insurance” for purposes of qualifying for the reduced minimum wage?
The newly-approved constitutional amendment speaks only to “health insurance” so the assumption is that dental and vision coverage is not specifically required to be provided. Whether the term “health insurance” is broad enough to be interpreted to include these specific coverages is a function of clarifying or defining regulations or statutes to come later, if at all. In the absence of more specific requirements to include these as well, “offering” health insurance only should be sufficient as a basis for applying the qualifying test. See the answer to Question 12 above.
14. Is the 10% threshold a global number for the company or is it computed on an individual basis?
Since the constitutional amendment refers to making health insurance available to the employee as opposed to all employees or the company, the 10 percent threshold must be computed on an individual basis for each employee.
15. Must the employee enroll in the insurance or does it just have to be offered?
Since the amendment defines “offering” as “making health insurance available….,” the employee need not enroll in the insurance for the employer to be allowed to continue to pay the employee the current minimum wage of $5.15.
16. Does the definition of gross income for tipped employees include reported tip income? (Updated 12/06/2006) The Labor Commissioner has correctly interpreted the new constitutional provision to confirm that tips cannot be counted as wages against or as a credit to reduce the required minimum wage. However, according to his answer to question 10 above, tips and gratuities “may be used to calculate the employee’s share of the premium costs.” To clarity, in this case, both the question and the Commissioner’s answer refer to the premium costs of the offered health insurance plan.
17. If the company offers a health plan that qualifies and the premium without an employer contribution is less than 10 percent of the employee’s gross taxable income, is the employer required to pay any percentage of the premium?
No.
18. Why was November 28 chosen as the implementation date?
Since the initiative contained no date on which it was to be effective, it is considered self-enacting under the state constitution. Therefore, it is effective when the Secretary of State has canvassed and certified the election. He expects to complete this task on November 28.
19. If the Federal minimum wage is subsequently increased above the state minimum wage, when would the automatic increase to remain $1.00 above the Federal wage be implemented?
Combining the answers to Question 2 and 3 above, the Nevada Labor Commissioner states that the automatic increase would be effective starting on July 1 following the increase.
20. What are the chances of getting relief in the form of a tip credit?
None, unless a new Federal law were to include it with language clearly covering Nevada. This amendment to the Nevada Constitution makes it unconstitutional in Nevada.
21. Do people in their benefit waiting period get paid $1.00 more an hour until their benefits start?
Presumably yes, unless there is a decision that “offering” the health insurance is sufficient even if the employee does not actually qualify until eligible after a specified period. The second question presented by this point is how to communicate and implement the subsequent reduction to the lesser hourly rate once the employee can be finally offered the health insurance coverage.
22. Will the minimum wage go up each year and is it tied anyway to Federal minimum wage?
The Nevada minimum wage will go up by either the increase in the Consumer Price Index or 3 percent, whichever is less. Nevada’s minimum wage must always exceed the Federal minimum wage by at least $1.00. However, the CPI increases are deferred by an increase in the federal minimum wage until the cumulative increases (capped at 3% per year) catch up to the equivalent caused by the federal increase.
23. Will insurance companies be required to change their rules and reduce the number of employees required to qualify as “medical group.”
This constitutional amendment does not require or speak to such a change in any way.
24. Will the state become pro-active and stop the practice of some cleaning businesses paying their employees in cash at less than $5.15 an hour?
The State of Nevada does not condone breaking State or Federal law. However, in real life the extent of enforcement is a function of how the Labor Commissioner prioritizes his staff. To achieve enforcement of the minimum wage law in this case, either those companies who compete with the law-breaking businesses or a person who receives sub-legal wages need to file complaints with the Commissioner.
[The above answers are subject to the amount of clarification, information and decisions made by the Labor Commissioner, and are being provided as a service of the Nevada Restaurant Association to help people decipher the requirements and issues presented to Nevada restaurants and other business in implementing this new constitutional amendment. As such, they are not complete legal or practical analyses or opinions—only general information for the purpose of helping define what further legal or practical analysis one must undertake to understand how to correctly and completely answer these questions (submitted by our members) for implementation in their own business as they relate to each of their specific circumstances.
