In 2004 and 2006, Nevada voters passed an amendment to the Nevada Constitution, adding the Minimum Wage Amendment (“MWA”), which requires employers to pay their employees one of two minimum wage rates, dependent on whether the employer offers “qualifying health benefits.” Currently, if an employer offers health benefits, it may pay its employees a lower minimum wage of $7.25 an hour; however, if the employer does not offer health benefits, it must pay its employees a higher minimum wage of $8.25 an hour.
This case arose out of a dispute between a taxi cab company and several of its former taxi cab drivers. In 2012, Western Cab Co. began requiring its drivers to pay for fuel used while on the job. As a result, the drivers filed a Complaint against the company, alleging that their wages fell below the MWA-mandated minimum. In response, Western filed a Motion to Dismiss, arguing that the MWA: (1) is preempted by the National Labor Relations Act (“NLRA”), (2) is preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”), and, (3) is unconstitutionally vague. The District Court denied Western’s Motion.
On appeal, the Supreme Court of Nevada held that the MWA is not preempted by the NLRA or ERISA, and that the MWA is not unconstitutionally vague.
(1) The MWA is not preempted by the NLRA: The Court held that the NLRA does not preempt the MWA because the MWA does not raise claims on which Congress intended the National Labor Relations Board to decide, nor does the MWA preclude negotiations between an employer and a union.
(2) The MWA is not preempted by ERISA: The Court held that ERISA does not preempt the MWA because the MWA does not affect the types of benefits an employer can offer, nor does it force employers to offer benefits.
(3) The MWA is not unconstitutionally vague: The Court held that the MWA is not unconstitutionally vague because the MWA and the Nevada Administrative Code (“NAC”) clearly define what constitutes a qualifying health benefit. The MWA defines “health benefits” as “making health insurance available to the employee for the employee and the employee’s dependents at a total cost to the employee for premiums of not more than 10 percent of the employee’s gross taxable income from the employer.” Nev. Const. Art. 15, Section 16(A). While the MWA does not explicitly define “health insurance,” the NAC does. To qualify for the lower minimum wage, the health insurance offered must either: (1) “[c]over those categories of health care expenses that are generally deductible by an employee of his individual federal income tax return” or (2) “provide health benefits pursuant to the Taft-Hartley trust.” NAC 608.102(1). The Court stated, “with the combined guidance of the MWA and NAC 608.102(1), any employer of ordinary intelligence should have adequate notice of what health benefits qualify it to pay the lower minimum wage.” Western Cab Co., at 15.
After determining the constitutionality of the MWA, the Supreme Court of Nevada remanded the case back to district court to address the fact-specific fuel-calculation issue.
This case is formally titled Western Cab Co. v. Eighth Judicial District Court, 133 Nev. Adv. Op. 10, 2017 WL 1024577 (March 16, 2017).
Information for Employers:
Last year, the Nevada Supreme Court issued two opinions concerning the MWA. First, the Court established a two-year limitations period for an employee to recover the difference between the correct minimum wage and the incorrect amount paid. Perry v. Terrible Herbst, Inc., 383 P.3d 257 (Nev. 2016). Second, the Court held that employers need only offer health benefits to pay the lower minimum wage, and that employee tips do not count toward determining the 10% wage cap for health insurance premiums. MDC Restaurants, LLC v. The Eighth Judicial District Court, 383 P.3d 262 (Nev. 2016).
Currently before the Nevada Supreme Court is a petition for writ concerning what type of “health insurance” must be offered under the MWA. Employee advocates are attempting to dissuade the Court from adopting the definition of health insurance contained in the NAC, while urging the Court to adopt a more extensive definition that would incorporate provisions of the Nevada Revised Statutes regarding group health insurance requirements. While the Court has yet to specifically determine which definition of health insurance it will adopt in evaluating employer compliance with the MWA, the Western Cab Co. decision may signal that the Court is inclined to follow the definition contained in the NAC, which is generally considered to be a definition that is more favorable to employers.
We will continue to monitor the situation, and will provide further updates as the Nevada Supreme Court issues additional decisions pertaining to the MWA.