Pursuant to Article 15, Section 16(A) of the Nevada State Constitution, an employer who provides certain health benefits to an employee is permitted to pay that employee a minimum wage of only $7.25, while an employer who does not provide sufficient health benefits to an employee must pay that employee a higher minimum wage of $8.25**. However, employers may have previously found it difficult to determine whether their health plans were sufficient in order to qualify for the lower minimum wage rate. The Nevada Supreme Court previously tried to tackle this issue with its decision in MDC Restaurants, LLC v. The Eighth Judicial Dist. Court, 134 Nev. Op. 41 (May 31, 2018), wherein it described a satisfactory health plan as one that was provided “at a cost to the employer of the equivalent of at least an additional dollar per hour in wages…” However, even with this additional guidance, many employers remained confused about whether or not their specific plans were satisfactory.
On May 21, 2019, Governor Sisolak signed SB 192 into law which will take effect on January 1, 2020. Section 1 of SB 192 seeks to further clarify the requirements for an employee health plan that will entitle an employer to pay an employee the lower minimum wage.
Specifically, Subsection 1 of the statute states that in order to qualify, the employer must provide its employees and their dependents either:
(a) a health benefit plan that satisfies 11 specific areas of coverage ((i) ambulatory patient services, (ii) emergency services, (iii) hospitalization, (iv) maternity and newborn care, (v) mental health and substance use disorder services including behavioral health treatment, (vi) prescription drugs, (vii) rehabilitative and habilitative services and devices, (viii) laboratory services, (ix) preventative and wellness services and chronic disease management, (x) pediatric services, and (xi) any other health care service or coverage legal required to be included in an individual or group health benefit plan pursuant to title 57 of the NRS) and which also provides an overall level of coverage designed to provide benefits that are actuarially equivalent to at least 60 percent of the full actuarial value of the benefits provided under the plan; or
(b) health benefits pursuant to a Taft-Hartley trust which is formed pursuant to 29 U.S.C. § 186(c)(5) and qualifies as an employee welfare benefits plan under ERISA or the Internal Revenue Code.
In addition, Subsection 2 of the statute provides that an employer will not qualify for the lower minimum wage rate if it makes available to the employee and the employee’s dependents a hospital indemnity insurance plan or fixed indemnity insurance plan, unless the employer separately makes available to the employee and the employee’s dependents at least one health benefit plan that complies with the requirements of Subsection 1.
**Note that on July 1, 2020, AB 456 will increase the minimum wage in Nevada to $8 an hour with qualifying health benefits and $9 without qualifying health benefits. The minimum wage will continue to rise by $0.75 annually until it hits $11/$12 respectively on July 1, 2024.
Despite the additional guidance provided by SB 192, employers may still have questions concerning the health plans they offer to employees and whether they are permitted to pay a lower minimum wage rate. If you are a Nevada employer who has questions regarding Nevada minimum wage and overtime laws, feel free to contact Jordan Wolff at Saltzman Mugan Dushoff to discuss. This blog post does not constitute legal advice, and reading or interacting with this website does not create an attorney-client relationship.
