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The golden reward? Nevada voters are eliminating the two-tier minimum wage system — benefits and employee compensation

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  • Nevada voters passed a minimum wage of $12.00 an hour to take effect on July 1, 2024.

  • The voting initiative will eliminate Nevada’s unique two-tier minimum wage system, which had different wages based on whether the employer offered health insurance or not.

For nearly two decades, Nevada operated a unique two-tier minimum wage system that allowed employers who provided qualified employee health benefits to pay $1.00 less per hour than employers who did not provide such benefits to their employees.1 Nevada’s two-tier minimum wage system — which was exclusive to Nevada — was originally approved by Nevada voters in 2006 by a majority of 69%.2 Known as the Minimum Wage Amendment (MWA), the MWA not only instituted this two-tier system over the coming years, but also established a method for automatically adjusting the state minimum wage based on the federal minimum wage and cost-of-living increases.

Under the two-tier system, Nevada minimum wage rates from 2010 to 2019 were set at $7.25 and $8.25 per hour. In 2019, Assembly Bill No. 456 (AB 456), which provides for a gradual increase in the minimum wage in Nevada on a statutory timetable. This measure increased the minimum wage by 75 cents annually until it reached $11.00 per hour for employers that provided health care and $12.00 per hour for employers that did not provide health care by 2024.3 With the passage of AB 456, the legislature retained the two-tier system specified in the MWA.

Nevada voters decide to abolish the two-tier minimum wage system by Poll Question 2

However, on November 8, 2022, Nevada voters chose to significantly change the landscape of Nevada’s minimum wage system by approving Poll 2 and returning Nevada to a single minimum wage regardless of whether an employer provides qualified health benefits to its employees.

Poll Question 2 is the culmination of several years of legislative action, beginning with the passage of Assembly Joint Resolution 10 (AJR 10) by the Nevada Legislature.4 in 2019 and subsequent approval without amendment in 2021. Under Nevada law, this allowed Poll Question 2 to appear on the ballot for the 2022 Nevada general election for ratification by voters. Because the Nevada Legislature has already approved the language of Poll 2 in two consecutive sessions, Poll 2 only had to prevail in the 2022 general election to become law, which it did.

Poll Question 2 amends the Nevada Constitution to require employers to pay every worker who meets the minimum wage requirements (ienon-exempt employees) a minimum wage of not less than $12.00 per hour, subject to any increases above $12.00 per hour worked as provided for by federal law or later enacted by the Nevada legislature.

Similar to the MWA, Ballot Question 2 also requires that Nevada’s minimum wage be increased based on applicable federal minimum wage increases, provided that the Nevada minimum wage is at any time higher than $12.00 per hour at the federal minimum wage rate set amount increased. For example, if the state minimum wage were to be raised to $15.00 per hour, Poll Question 2 would require that the Nevada minimum wage also be raised to $15.00 per hour, but this is subject to a later state law passed by the Legislature of Nevada could say goodbye.

Poll Question 2 specifically affirms the power of the Nevada Legislature to statute a minimum wage that is higher than the federal minimum wage or higher than the minimum hourly wage required by the Nevada Constitution. While the Nevada Legislature may increase the minimum wage in the future, Ballot Question 2 clarifies that $12.00 per hour must be the minimum and the minimum wage cannot fall below that amount. In other words, Ballot 2 makes the $12.00 per hour minimum wage a constitutional minimum, meaning that the Nevada legislature would not be able to enact a new minimum wage rate below $12.00 per hour without another constitutional amendment.

Because of this revision of the previous Nevada minimum wage system, Ballot Question 2 of the Nevada Constitution removes the previous provisions adjusting Nevada minimum wage rates based on increases in the federal minimum wage, except in the event that the federal minimum wage was $12.00 per hour exceeds, as previously discussed. In addition, Poll Question 2 removes the cost of living increases previously included in the MWA. Ultimately, Voting Question 2 reverts to the sole authority of the Nevada Legislature to raise Nevada’s minimum wage rate above $12.00 per hour. This change will take effect on July 1, 2024.

What Consent to Vote Question 2 Means for Employers in the Silver State

The abolition of Nevada’s two-tier minimum wage system is expected to have a direct impact on employers who pay their non-exempt employees less than $12.00 an hour and who pay their employees differential wages based on the healthcare benefits offering, such as it previously by the soon to be obsolete two-tier system. Prior to the implementation of Ballot Question 2 on July 1, 2024, Nevada employers are encouraged to ensure their payroll system is compliant with Ballot Question 2. While these changes to the Minimum Wage Act may increase wage costs for Nevada employers, they also reduce the amount of time and money expended by employers navigating and complying with the previous two-tier minimum wage system unique to Nevada.

While Polling Question 2 gives the Nevada Legislature sole authority to enact future minimum wage increases above $12.00 per hour, it allows additional increases to be enacted with greater frequency. This means the minimum wage of $12.00 per hour will be the floor for future wage increases and not the ceiling as was the case with the MWA.

Overall, Ballot Question 2 certainly represents a dramatic departure from the minimum wage system that has been in use in Nevada since 2006. As a result of this revision, any Nevada employer with non-exempt employees should familiarize themselves with the details of Ballot Question 2 prior to the effective date to ensure compliance with the changes described herein. Littler will continue to monitor these recent Nevada minimum wage developments, including the implementation of Poll #2, and will report on any other significant changes.

footnotes

1 See NRS 608.250; No. 608,258.

2 See Nov. Const., item no. 15, § 16.

3 See NRS 608.250.

4 The provisions of AJR 10 mirror those of Poll Question 2.

The content of this article is intended to provide a general guide to the topic. In relation to your specific circumstances, you should seek advice from a specialist.

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