As the COVID-19 pandemic continues to disrupt employers and the way that they traditionally do business, many companies are making changes to their workforce and compensation structure in order to manage their expenses. Nevada employers who are considering a decrease in employee compensation should make sure that they do so in compliance with relevant state laws. Of particular import is NRS 608.100, which provides the following:
NRS 608.100 Unlawful decrease in compensation by employer; unlawful requirement to rebate compensation; prerequisites to lawfully decreasing compensation.
- It is unlawful for any employer to: (a) Pay a lower wage, salary or compensation to an employee than the amount agreed upon through a collective bargaining agreement, if any; (b) Pay a lower wage, salary or compensation to an employee than the amount that the employer is required to pay to the employee by virtue of any statute or regulation or by contract between the employer and the employee; or (c) Pay a lower wage, salary or compensation to an employee than the amount earned by the employee when the work was performed.
- It is unlawful for any employer to require an employee to rebate, refund or return any part of the wage, salary or compensation earned by and paid to the employee.
- It is unlawful for any employer who has the legal authority to decrease the wage, salary or compensation of an employee to implement such a decrease unless: (a) Not less than 7 days before the employee performs any work at the decreased wage, salary or compensation, the employer provides the employee with written notice of the decrease; or (b) The employer complies with the requirements relating to the decrease that are imposed on the employer pursuant to the provisions of any collective bargaining agreement or any contract between the employer and the employee.
As an initial matter, employers should make sure that there is no contractual agreement between the company and any affected employees which would prohibit a compensation decrease. While Nevada is an at-will employment state, employers who violate a collective bargaining agreement or an employment contract could face civil liability and will also run afoul of NRS 608.100(1). In the event that such an agreement allows for a decrease in compensation, it must be done in accordance with any relevant provisions (e.g. notice requirement, limitation on amount of decrease in compensation).
Assuming that no agreement exists, an employer must still give its employees at least 7 days written notice prior to the effective date of any decrease in compensation pursuant to NRS 608.100(3). Notably, the effective date is the date upon which the employee first performs work that will be compensated at the lower rate – not the date they first receive a paycheck reflecting the lower rate.
Finally, compensation may include other forms of consideration in addition to a salary and/or hourly wage, such as a non-discretionary performance bonus. Therefore, employers should always ensure they keep employees fully apprised of any upcoming compensation decrease of any kind in compliance with NRS 608.100.
If you are an employer who needs assistance with drafting a notice of salary decrease or otherwise complying with NRS 608, 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.
