Nevada Sets Bar for Health Benefits Needed for Lower Minimum Wage

Author: Michael Cardman, XpertHR Legal Editor

May 31, 2019

A new law establishes a minimum level of health benefits that an employer in Nevada must make available to employees and their dependents in order to pay a lower minimum wage to the employee.

Nevada has a unique two-tiered minimum wage law, under which an employer currently must pay its employees a lower minimum wage of $7.25 per hour if it provides qualifying health benefits or a higher minimum wage of $8.25 per hour if it does not. The minimum wage law requires, among other things, that the premiums on qualifying health benefits may not exceed 10 percent of the employee's gross taxable income from the employer.

In 2018, the Nevada Supreme Court clarified the definition of "health benefits," holding that the state constitution requires an employer that pays the lower minimum wage to provide a benefit in the form of health insurance at least equivalent to the extra one dollar per hour in wages that the employee would otherwise receive. But, the court held, health benefits need not necessarily cover certain expenses such as hospice care, prescription drugs, or treatment for severe mental illness.

Senate Bill 192 is intended to further clarify the definition of health benefits by establishing exactly which benefits an employer must offer in order to pay the lower minimum wage. The new law takes effect January 1, 2020.

"These changes eliminate any question regarding what qualifies as health benefits under [the state constitution] and ensure that Nevadans who are paid the lowest minimum wage have access to appropriate, affordable, health insurance coverage," said State Sen. Patricia Spearman, one of the bill's co-sponsors.