WAGE AND HOUR LAW

New minimum and overtime wages effective July 1, 2009

On July 1, 2009, Nevada's minimum wage will increase to $6.55 per hour for employees who are offered a qualified health plan (Tier 1 workers) and $7.55 per hour for employees who are not offered a qualified health plan (Tier 2 workers). That equates to a minimum overtime rate of $9.825 per hour for Tier 1 employees and $11.325 per hour for Tier 2 employees. This article addresses your obligations under both Nevada and federal minimum wage laws and looks at issues that have arisen since the Nevada minimum wage constitutional amendment was passed.

Recap of Nevada's constitutional amendment

As most of you are well aware by now, on November 28, 2006, Nevada's minimum wage law was changed because of an amendment to the state constitution. The minimum wage amendment established a two-tier compensation system: (1) a lower tier conditioned on the employer making a qualified health plan available to employees and (2) a higher tier for employees who are not offered a qualified health plan.

The amendment doesn't distinguish between full-time, permanent, temporary, or part-time employees. Therefore, for example, an employee who is ineligible for a company-sponsored qualified health plan because he is part-time must receive the higher tier minimum wage. By contrast, an employee who declines coverage may receive the lower tier minimum wage because the employer made a qualified health plan available to him.

The amendment abolished most of the exemptions to the minimum wage. As a result, minimum wage requirements now also apply to domestic service employees, outside sales persons, agricultural employees, taxicab and limousine drivers, casual babysitters, and severely handicapped employees.

Gap between federal and state minimum wage rates

Although states are free to set their own minimum wage, you cannot pay a wage that is less than the federal minimum wage. Stated another way, employees must be paid either the federal or Nevada minimum wage ― whichever is highest. Nevada employers that pay the federal minimum wage will likely find themselves making adjustments more than once a year.

On July 24, the federal minimum wage will increase to $7.25 per hour. That means employees to whom a qualified health plan is made available must begin receiving the higher federal minimum wage at that time ― at least until Nevada adjusts its minimum wage rates again in 2010. Employees to whom a qualified health plan is not made available can continue receiving the higher tier wage of $7.55 per hour. Remember, you can be required to pay the Tier 2 rate to some employees and the Tier 1 rate to others, depending on whether a qualified health plan is made available to each individual employee.

Effect of new rates on Nevada's daily overtime

In Nevada, you must pay overtime anytime a nonexempt employee works more than 40 hours in a workweek or more than eight hours in a workday. There are exceptions to the daily overtime rule, but the most widely relied upon exception pertains to employees who are paid a regular wage rate of one and one-half times the minimum wage. Recall that one and one-half times minimum wage is $9.825 for Tier 1 employees and $11.325 for Tier 2. Thus, while you may pay an employee a regular wage that exceeds both federal and state minimum wage, you may still end up owing daily overtime if that wage is less than $9.825 (for Tier 1) and $11.325 (for Tier 2).

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