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Nevada Supreme Court Rules Employers Need Only Offer Health Insurance to Take Advantage of Lower-Tier Minimum Wage

On October 27, 2016, the Nevada Supreme Court issued an opinion clarifying certain provisions of the Minimum Wage Amendment (MWA) to the Nevada Constitution.

In 2006, the MWA established a two-tiered minimum wage to encourage employers to make health benefits available to Nevada employees. The MWA permits an employer to pay the lower-tier minimum wage to an employee if the employer “provides” qualifying health benefits. On the other hand, employers must pay the upper-tier minimum wage if they do not provide qualifying health benefits. To qualify for the lower-tier minimum wage, the MWA also requires that the employee’s health benefit premiums be capped at 10 percent of the employee’s gross taxable income from the employer.

The Nevada Supreme Court held that minimum wage employers in Nevada need only “offer” a qualifying health plan to employees in order to take advantage of the lower-tier minimum wage (as opposed to requiring employees to be enrolled in a qualifying health plan to qualify for the lower-tier rate). Moreover, with respect to the MWA requirement that health benefit premiums be capped at 10 percent of an employee’s gross taxable income, the court concluded that the cap does not include tips in its calculation of taxable income.

The Supreme Court also held that the rulings were retroactive to the inception of the MWA.

The Nevada Department of Labor is expected to issue guidance on this opinion in the near future.

Read the Opinion