The 80th Session of the Nevada Legislature has now come to a close, and it was quite an active year for matters of labor and employment law. From minimum wage to paid time off, several new laws will be taking effect in the coming months, and Nevada employers will need to act quickly to be ready for the changes.

Here are a few of the most significant developments:

Minimum Wage Increase (AB 456)

In 2017, the Nevada Legislature passed Senate Joint Resolution 6, a proposed constitutional amendment to raise the minimum wage by annual increments until it reached $14 an hour on January 1, 2025. SJR 6 would have eliminated the current two-tiered minimum wage structure under which an employer that provides qualifying health coverage to its employees may pay a reduced minimum wage. Among other things, SJR 6 also would have mandated an award of treble damages against employers who fail to pay state minimum wages, and would have prohibited employers from requiring employees to waive class action in disputes over state minimum wages.

Because it was proposed as a constitutional amendment, SJR 6 had to pass by majority votes in both houses in two consecutive legislative sessions. However, having been approved during the 79th Session in 2017, SJR 6 was defeated this time around. So its journey has come to an end.

In its place, the Legislature has introduced a new constitutional amendment in Assembly Joint Resolution 10. Like SJR 6, AJR 10 will eliminate the two-tiered minimum wage system. However, there is no incremental increase written into this measure; rather, the constitutional minimum wage will simply jump to $12 an hour on July 1, 2024. Luckily for employers, AJR 10 did not retain the treble damages provision of SJR 6, nor the prohibition on class action waivers.

This year, AJR 10 was approved by both houses. As a constitutional amendment, it must be reconsidered by the Legislature in 2021. If it passes again at that time, it must then be submitted to a vote of the people before becoming law.

In the meantime, the Legislature has passed, and the Governor has signed, Assembly Bill 456, which will raise the minimum wage by statute (as opposed to constitutional amendment) starting July 1, 2020. Because constitutional minimum wage provisions cannot be altered by statute, AB 456 retains our current two-tiered structure. As of July 1, 2020, the minimum wage will increase to $8 an hour for employers who offer qualifying health insurance, and to $9 an hour for those who do not. Both tiers will then increase by $0.75 on July 1 of each year, until reaching $11 and $12, respectively, on July 1, 2024. (Note that this date is the same as the date on which AJR 10 is intended to increase the minimum wage to $12.)

We expect that AB 456 may be the subject of legal challenges in the coming months, primarily due to the fact it is a mere statute which purports to alter minimum wage provisions enshrined in the Nevada Constitution. However, until a court rules otherwise, Nevada employers must prepare to comply with this new law and increase their minimum wage as of July 1, 2020.

For the full text of AB 456, click here.

Minimum Wage, Part 2: Qualifying Health Coverage (SB 192)

The Legislature has also sought to clarify minimum requirements for the health benefits employers must offer in order to qualify to pay the lower-tier minimum wage in Nevada. With the passage of Senate Bill 192, employers paying the lower-tier minimum wage must ensure that the health insurance they offer covers services in a number of specific categories, such as ambulatory patient services, emergency services, maternity and newborn care, prescription drugs, and several others.

SB 192 is also likely to be challenged on constitutional grounds. The Nevada Supreme Court has already interpreted the Constitution and described the minimum requirements for the health benefits offered by employers that pay the lower-tier minimum wage. (See our previous blog post on the Supreme Court’s ruling here: www.suttonhague.com/nevada-supreme-court-issues-long-anticipated-interpretation-minimum-wage-amendment.) To the extent SB 192 conflicts with the Supreme Court’s ruling, the new law may be unconstitutional.

SB 192 has been signed by the Governor and will take effect for employers on January 1, 2020. As we have stated in prior blog entries, the safest course for employers is simply to pay the higher-tier minimum wage (currently $8.25), particularly as litigation on this subject is likely to continue. Employers who currently pay employees less than $8.25 an hour should contact qualified legal counsel to evaluate whether the health benefits they offer will meet the requirements of the Constitution as well as SB 192.

For the full text of SB 192, click here.

Mandatory Paid Time Off (SB 312)

As of January 1, 2020, all private employers in Nevada with 50 or more employees will be required to provide paid time off (“PTO”), to accrue at a rate of at least 0.01923 hours of paid leave for each hour of work performed. An employee must be permitted to begin using this paid leave no later than the 90th calendar day of his or her employment. Employers may not deny an employee the right to use the leave, may not require an employee to provide a reason for using the leave, and may not retaliate against an employee in any way for using the leave.

There are some exceptions and limitations in the law. For example, a new business is not required to comply with the law during its first two years of operation. Also, employers may limit the number of PTO hours an employee may use to as few as 40 hours per year, and may also impose a yearly carry-over cap of not less than 40 hours. Employers may also set a minimum increment of PTO—no more than four hours—that an employee may use at any one time.

Nevada employers are encouraged to consult with qualified legal counsel to determine if their current paid time off or vacation pay programs comply with SB 312 in all respects. If not, employers will need to prepare to implement a compliant paid leave program as of January 1 of next year, and should also revise the leave policies in their employee handbooks and other related policy documents.

For the full text of SB 312, click here.

New Hire Drug Testing (AB 132)

With Assembly Bill 132, Nevada will become the first state to prohibit employers from refusing to hire job applicants on the basis of a positive pre-employment marijuana screening. The law will apply to private employers generally, regardless of how many employees they have. There are a few exceptions, however. For example, if the employee is applying to be a firefighter or EMT, or if the job will require the employee to operate a motor vehicle and state or federal law requires drug testing, the employer can refuse to hire based on a positive test for cannabis. There is also a broad exception for any job position which, “in the determination of the employer, could adversely affect the safety of others.”

If an employer requires an employee to take a drug test within the first 30 days of employment, AB 132 also gives the employee the right to submit to a second test, at the employee’s own expense, in order to rebut the results of the employer-mandated test. The employer must accept the results of the employee’s independent drug screening and give it due consideration.

Keep in mind, however, that this new law does not limit other types of post-hiring drug testing that are currently permissible under Nevada and federal law, including post-accident testing or testing based on the employer’s reasonable suspicion that an employee is under the influence.

This law will take effect on January 1, 2020. Nevada employers should review and revise their current drug testing policies and practices, including any policies in their employee handbooks, to conform to the new requirements. Under AB 132, an employer may still prohibit an employee from working while under the influence of marijuana or any other intoxicating substance. However, in light of the trend in Nevada toward protecting recreational use of marijuana, employers are encouraged to consult with legal counsel before taking any action against an employee on the basis of a positive screening for cannabis.

For the full text of AB 132, click here.