Nevada’s New Minimum Wage Goes into Effect November 28.

This post by Bill Sims

Posted in Business Start-Up, Employees, Payroll

As a result of the balloting on November 7, 2006, many, if not most, of Nevada’s small businesses will have to give their minimum wage employees an increase in pay from $5.15 to $6.15 per hour.

The new law, which is coming very rapidly into effect, established two separate tiers for minimum wages for the first time.

If employers are not providing “qualified health insurance benefits”, they must pay a minimum of $6.15 per hour beginning Tuesday, November 28. “Qualified health benefits” means health insurance that covers the employee and the employee’s dependents. The employee’s share of the premium cost cannot exceed 10% of the employee’s gross taxable income.

Employers who do provide this health insurance coverage will not see an immediate increase in their required minimum wage. The new state law for these employers fixes the minimum wage at $5.15 the same as the federal requirement, for now.

This whole issue will likely get more complex as time goes on. Under the new law, if the federal government raises its minimum wage, both of the new tiers of the Nevada minimum will be increased by the same dollar amount.

The new law also provides a mechanism that requires the minimum wage be reviewed each year and increased by a corresponding increase in the cost of living as measured by the Consumer Price Index (CPI), although no CPI adjustment for any one-year period will be greater than 3%.

It is likely that these increases will be announced in April of each year and any increases will go into effect on the following July 1.

Nevada’s Labor Commissioner Michael Tanchek and his staff have been working diligently to get the word out about these changes, but are concerned that many people won’t know about the change in time. They have put up some information on their website at www.taxcommissioner.com, including a list of FAQs, but since we were unable to reach the site when we checked several times this morning, we will reproduce them here:

  • When does the law go into effect? The Constitutional amendment goes into effect on November 28, 2006.

  • What is minimum wage? Nevada has a two-tiered minimum wage. The first tier is $5.15 per hour for employers who provide qualified health insurance benefits. The second tier is $6.15 per hour for employers who do not provide qualified health benefits. These rates will be adjusted annually to include increases in the federal minimum wage and a yearly cost of living adjustment.

  • When does the annual adjustment become effective? The annual adjustments will be announced in April and become effective on July 1 of each year.

  • If the federal minimum wage goes up, how much will the Nevada minimum wage go up? Each minimum wage tier will increase by the same dollar amount as the federal rate increase.

  • Who is covered under the new minimum wage? The minimum wage applies to all employees in Nevada except employees who are under 18 and either employed by a non-profit organization in “after school” or summer jobs or are hired as “trainees” for the first ninety days of employment.

  • Are there any other exceptions? No. The employees who were exempt under the provisions of Nevada’s minimum wage statute [NRS 608.250 (2)] are no longer exempt and must be paid the new minimum wage.

  • Does the minimum age apply to part-time or temporary employees? Yes. The amendment does not make any distinction between whether an employee is full-time, part-time, or temporary.

  • What is the pay rate for the exempt employees? Nevada does not set the pay rate for exempt employees. Employers must still comply with the federal minimum wage statute for those employees.

  • What are the qualified health benefits? Qualified health benefits means health insurance that covers the employee and the employee’s dependents. The employee’s share of the premium cost cannot exceed 10% of the employee’s gross taxable income.

  • Are tips included in the minimum wage? No. Tips and gratuities are not considered as part of the wages.

  • Does the new minimum wage affect overtime? Yes. All non-exempt employees are entitled to be paid overtime any time they work more than 40 hours in a workweek. However, Nevada law also requires employers to pay overtime on a daily basis to employees who are paid less than one and a half times minimum wage. This daily overtime requirement has been the law for more than thirty years. As the minimum wage goes up, the upper limit for daily overtime goes up with it.

I must say, that given the speed and number of businesses likely to be affected by these changes, I was very surprised not to find a link to information on this topic on the State of Nevada Homepage.

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