Last November, Nevadans passed a Constitutional amendment that created a two-tiered minimum wage system and required annual increases in Nevada’s minimum wage rates. Employers who offer qualified health insurance to their employees and any dependents at a premium rate of not more than 10% of the employee’s gross taxable income are eligible to take advantage of a “lower tier” minimum wage rate of $5.15/hour; all other employers must pay the “higher tier” minimum wage rate of $6.15/hour.
On July 1, 2007, Nevada’s lower minimum wage tier rose from $5.15/hour to $5.30/hour and the higher minimum wage tier rose from $6.15/hour to $6.33/hour. The passage of a federal minimum wage bill will also raise minimum wage rates every July 24 through 2009. Effective July 24, 2007, the federal minimum wage rate will increase from $5.15/hour to $5.85/hour. The federal minimum wage will increase again on July 24, 2008, to $6.55/hour and for a third time on July 24, 2009, to $7.25/hour.
One question facing Nevada employers is how to marry the increases in Nevada’s minimum wage with increases in the federal minimum wage, particularly when it comes to Nevada’s daily overtime laws. Nevada employers who are eligible to pay the lower tier must pay the federal minimum wage rate of $5.85/hour because it is higher than Nevada’s lower tier minimum wage rate of $5.30/hour. To avoid daily overtime, Nevada employers must pay time-and-one-half the minimum wage. This begs a second question: what is the “minimum wage” for employers eligible to pay the “lower tier” minimum wage?
On July 1 the Labor Commissioner released a bulletin that set the wage rates below which daily overtime must be paid at $7.95/hour and $9.50/hour, which is time-and-one-half of Nevada’s minimum wage rates of $5.30/hour and $6.33/hour. The Labor Commissioner is empowered to enforce only state minimum wage and overtime laws, hence its decision to establish the wage rates below which daily overtime must be paid using Nevada’s minimum wage rates. The Labor Commissioner’s office will not require employers who are eligible to take advantage of the lower tier minimum wage rate to pay daily overtime to employees who are paid at a rate of $7.95/hour or more.
Notwithstanding the Labor Commissioner’s bulletin and current enforcement position, a more prudent course of action for Nevada employers who can take advantage of the “lower tier” minimum wage rate and want to avoid daily overtime may be to pay no less than $8.78/hour, which is time-and-one-half the higher federal minimum wage of $5.85, effective July 24, 2007. The Labor Commissioner’s position will not eliminate the possible risk of employee forum shopping between the Nevada Labor Commissioner and Federal Department of Labor, State and Federal Courts, and potential supremacy of law debates in litigation.
This Client Alert has been prepared by Lewis and Roca LLP for informational purposes only and is not legal advice. Readers should seek professional legal advice on matters involving these issues.
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