As most employers are aware, Nevada has a two-tier minimum wage system. Currently, Nevada employers are required to pay their employees a minimum of $8.25 per hour unless they qualify to pay the lower tier minimum wage rate of $7.25 per hour. Employers seeking to qualify for the lower tier minimum wage must meet the following requirements: (1) the employer must offer qualifying health insurance benefits; (2) those benefits must be offered to the employee and any dependents; (3) the employee’s share of the cost of the premium for health insurance benefits cannot exceed 10 percent of the employee’s income; and (4) the employer must provide a benefit in the form of health insurance at least equivalent to the one dollar per hour in wages that the employee would otherwise receive. Nevada employers that believe they qualify to pay the lower minimum wage should consider reviewing their health insurance benefits to ensure the benefits meet the stringent requirements of Nevada Administrative Code sections 608.102 and 608.104.
Effective July 1, 2020, Nevada’s minimum wage will increase to $9.00 per hour, and $8.00 per hour for those employers that offer qualifying health insurance benefits. The Nevada minimum wage is set to increase by $0.75 each year on July 1, until 2024 at which time the minimum wage will reach either $12.00 per hour or $11.00 per hour if the employer offers qualifying health insurance benefits.
As the minimum wage rates increase, the daily overtime rate rises as well. In Nevada, daily overtime is based on whether an employee “receives compensation for employment at a rate less than [1.5] times” the applicable minimum wage. Employees earning less than 1.5 times the minimum wage (which is equivalent to $13.50/$12.00 per hour effective July 1, 2020) must be paid daily overtime for time worked over 8 hours in a workday or 40 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 24-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 are entitled to overtime pay for hours worked over 40 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.
Due to these minimum wage increases, Nevada employers may want to assess whether their employees will now qualify for daily overtime compensation (i.e., they make less than $13.50/$12.00 per hour respectively), 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.