Nevada Alert: On 10/9/15 Court Stays Controversial Decision on Employer Requirements to Utilize Lower-Tier Minimum Wage

By Sutton Hague Law Corporation on October 19, 2015 in Legal Update
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By Charity Felts on October 19, 2015

On October 9, 2015, Carson City District Judge James Wilson issued an order staying his August 12, 2015 decision in Hancock v. State of Nevada Office of the Labor Commissioner.  In the August 12 decision, the court held that employers must pay the top tier of the state minimum wage (currently $8.25) unless an employee actually accepts the health insurance provided by the employer, and, further, that employers may not consider tips or gratuities as employee income in determining whether or not the employer-provided health insurance is “affordable” under the Nevada minimum wage law.  The Office of the Labor Commissioner appealed the decision to the Nevada Supreme Court on September 8, 2015.

Judge Wilson issued a stay to the August 12 decision while the state’s highest court reviews the district court’s invalidation of Nevada Administrative Code (“NAC”) sections 608.104(2) and 608.100(1).  In its appeal, the Labor Commissioner seeks to clarify its interpretation of constitutional provisions of Nevada’s minimum wage structure and the enforcement of the related provisions of NAC sections 608.100 through 608.108.

The legal questions on appeal concern whether tips received by employees should be included as income to calculate the 10% health insurance premium, and whether an employer must actually provide qualified health insurance to its employees in order to pay the lower tier minimum wage, as opposed to simply offering or making qualified health insurance available.

In the order granting the stay, the district court found that the Hancock decision affects the Labor Commissioner’s approach to the minimum wage calculation in its enforcement proceedings and should be permitted to continue unimpeded until Nevada’s high court has finally reviewed the issues raised in the case.

Now that the Hancock order has been stayed, Nevada employers can choose to maintain the status quo in hopes that the Nevada Supreme Court will rule in favor of the Labor Commissioner, or employers can choose to follow the reasoning of the Hancock decision and reevaluate the affordability of health insurance offered without reference to tip and gratuities as well as pay the higher-tier minimum wage ($8.25) to employees who have not elected to receive employer-provided health insurance coverage.

SHLC will continue to monitor the progress of the appeal filed by the Labor Commissioner.  If you need assistance with minimum wage law compliance, please do not hesitate to contact the attorneys in our Reno or Las Vegas offices.