Nevada Supreme Court Clarifies Minimum Wage Law

Author: Michael Cardman, XpertHR Legal Editor

November 2, 2016

Nevada's highest court has settled three key points regarding the state's minimum wage law.

In Mdc Rests. v. Co. V. and Perry v. Terrible Herbst, the Supreme Court of Nevada held that:

  • Employers need only to offer employees a qualifying health plan, but need not necessarily enroll them in such a plan, in order to pay a lower minimum wage;
  • Employers may not include employees' tips when calculating their gross taxable income; and
  • The statute of limitations for violations of the minimum wage law is two years.

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.

The plaintiffs in the Mdc cases had argued that their employers must actually enroll employees in health benefit plans to take advantage of the lower minimum wage, and that the 10 percent cap does not include tips in its calculation of taxable income.

The court rejected their first claim, finding that the plain language of the minimum wage law only requires employers to offer health benefits when it is read as a whole. "The text treats 'provides' and '[o]ffering' as synonyms, and then defines what is meant by '[o]ffering,' and by association, what is meant by 'provides,'" the ruling states.

However, the court agreed with the employees that employee tips do not count toward taxable income for determining the 10 percent wage cap for premiums, noting that the state constitution forbids the total cost of premiums from being more than "10 percent of the employee's gross taxable income from the employer" (emphasis added).

Finally, in the Perry case, the court ruled that a two-year statute of limitations applies to the minimum wage law. Because the law itself does not express a limitations period, the court applied the "most closely analogous limitations period," which was a two-year period under a state regulation.