On June 1, 2011, Governor Brian Sandoval approved SB 328, which adds another exemption from overtime requirements by expanding the definition of “professional” to include individuals employed in creative arts. This new exemption follows closely on the heels of the Nevada Labor Commissioner’s determination that Nevada’s minimum wage will not increase on July 1, 2011. Both developments are summarized below.
Creative Professional Exemption Now Allowed in Nevada
SB 328, which becomes effective on July 1, 2011, expands the professional exemption from overtime to include creative professionals as defined by 29 C.F.R. § 541.302. Although the Fair Labor Standards Act (FLSA) had long recognized “creative professionals” as exempt from overtime regulations, prior to the passage of SB 328, Nevada defined “professionals” only to include lawyers and other professions that are regulated by state statute (e.g., architects, designers, engineers, surveyors and medical professionals). As a result of SB 328, an employee will be exempt from Nevada’s overtime requirements when his or her primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor as opposed to routine mental, manual, mechanical or physical work. The work must be in a “recognized field of artistic or creative endeavor,” including music, writing, acting or graphic arts.
The crux of this exemption is the use of invention, imagination, originality or talent, as opposed to work that depends upon intelligence, diligence and accuracy. While determined on a case-by-case basis, examples of fields recognized by this exemption include actors, musicians, composers, conductors, soloists, painters, cartoonists (who are merely told the title or concept and must rely on their own creative ability), essayists, novelists, short-story writers and screen-play writers. The imagination requirement is generally not met by copyists, animators and retouchers of photographs, as this work has been deemed not creative in nature.
SB 328 maintains one exception to the expanded definition of “professional” – building contractors (as defined by NRS 624.020) will not be able to avail themselves of this newly recognized exemption. Additionally, it should be noted that the new exemption is prospective and not retroactive. Though creative professionals are now exempt from overtime as of July 1, 2011, these employees may still have a claim for overtime compensation if they were previously misclassified as exempt.
Nevada’s Minimum Wage Stays the Same
Since the 2006 amendment to the Nevada Constitution that established the state’s two-tier minimum wage schedule, employers have experienced a yearly increase in the minimum wage. This has been due to the amendment’s mandate that, each year, the Nevada Labor Commissioner increase Nevada’s minimum wage to match either increases in the federal minimum wage or increases in the Consumer Price Index. Typically, any change in the minimum wage is announced in April and goes into effect on July 1 of each year.
In somewhat of a surprise announcement on April 1, 2011, the Labor Commissioner determined that the state’s minimum wage will not increase above current rates. As such, Nevada employers, until July 1, 2012, will continue to be obligated to pay employees an hourly wage of at least $7.25 (if the employee is eligible for qualified medical benefits from his or her employer) or $8.25 (if qualified medical benefits are not made available by the employer). Of course, this also means that the thresholds for when an employer is obligated to pay daily overtime under Nevada law will remain the same. Employees who earn less than $10.88 or $12.38 per hour (again, depending on the availability of qualified health benefits) are entitled to overtime pay any time they work in excess of eight hours in a 24-hour period, regardless of whether they actually work more than 40 hours in a given week.