Nevada Employers, Beware the Impact of the Increased State Minimum Wage on the Daily Overtime Rate
Many employers with business operations in Nevada are aware by now that Assembly Bill 456, enacted in June 2019, increases the minimum wage in increments of 75 cents annually on July 1 of each year through 2024. Thus, beginning on July 1, 2022, the Nevada minimum wage rate for employees who are not offered “qualified health benefits” under the state’s two-tiered minimum wage system will increase to $10.50 per hour. The minimum wage rate will increase to $9.50 per hour for employees who are offered such qualifying benefits. (See below for details on the tiered minimum wage system and when an employer can pay the lesser amount.)
Nevada employers may want to note that an increase in the minimum wage rate brings an automatic increase in the daily overtime rate as well. Given the July 1, 2022, minimum wage rate of $10.50 per hour, Nevada employers that pay their employees less than $15.75 per hour (or $14.25 per hour for employers that offer qualified health benefits) must pay employees daily overtime for time worked over eight hours in a workday or forty hours in a week. Nevada Revised Statutes section 608.0126 defines “workday” as “a period of 24 consecutive hours which begins when the employee begins work.” This is different from the typical twenty-four-hour period in a calendar day. Employees earning more than 1.5 times the applicable minimum wage are not required to be paid daily overtime, but they are entitled to overtime pay for hours worked over forty in a week. The only exception is if “by mutual agreement the employee works a scheduled 10 hours per day for 4 calendar days within any scheduled week of work.” However, any deviations from the “4-10 rule” could cause overtime to accrue.
This is the first time that employers in Nevada that pay employees a wage of $15.00 per hour will be subject to daily overtime. Due to these minimum wage increases, Nevada employers may want to assess whether their employees will now qualify for daily overtime compensation, how this daily overtime compensation will impact their businesses, whether it makes financial sense to increase hourly rates to avoid daily overtime payments, and whether they have the proper procedures in place to track hours worked.
Nevada’s Two-Tiered Minimum Wage System
Under Nevada’s two-tiered minimum wage system, employers must pay their employees the higher minimum wage rate unless they provide “qualified health benefits” to their employees, both part-time and full-time. In particular, in order for an employer to qualify to pay the lower minimum wage rate, that employer must:
offer a health insurance plan that “[c]overs those categories of health care expenses that are generally deductible by an employee on his individual federal income tax return” (“the health insurance plan must be made available to the employee and any dependents of the employee”) (emphasis added);
provide a health insurance plan in which the share of the cost of the premium for the health insurance plan paid by the employee—regardless of whether the employee selects an employee-only or employee plus dependent(s) plan—“[does] not exceed 10 percent of the gross taxable income of that particular employee attributable to the employer under the Internal Revenue Code [emphasis added]” (voluntary tips are not included in the 10 percent calculation); and
contribute $1 per hour worked toward that employee’s health insurance coverage which the employee enrolled in (or could/would have enrolled in).
Further information on other state minimum wage rates is available in Ogletree Deakins’ Interactive Minimum Wage Chart Map.