Minimum Wage is Going Up… Again… and Probably the Overtime Exemption Threshold Too
By Rebecca Bruch, Esq.
Minimum Wage: Just like clockwork, on March 13 we sprung our clocks forward (maybe for the last time), and just like clockwork, on July 1, 2022, the Nevada two-tier minimum wage will go up (definitely not for the last time). Nevada has one of the few two-tier minimum wage rules in the country. That provision in our Constitution has set out a system by which employers who offer “qualified” insurance to their employees are subject to a lower minimum wage than those employers who do not offer that benefit. The whole idea, of course, is to encourage employers to make insurance benefits available to employees and their dependents. Several years ago, our legislature proposed a system that would slowly move the minimum wage toward a goal of reaching $12.00 per hour. The Nevada voters passed the amendment to the Constitution, and it was implemented. On July 1, 2022, the next phase will go into effect, raising minimum wage to $9.50 per hour for employers who offer qualified insurance, and $10.50 per hour for those employers who do not offer that benefit. By July 1, 2024, we will have reached the Constitutional maximum of $11.00 per hour for employers who offer insurance, and $12.00 per hour for employers who do not.
In 2019, the Nevada legislature passed a resolution that would change that process again. The resolution proposes to again amend the Nevada constitution to establish a $12:00 per hour minimum wage. The proposal will go on the 2022 ballot. If passed, these changes will become law:
- Nevada’s two-tier system will be abolished.
- Minimum wage will be $12 per hour effective July 1, 2024.
- Nevada’s minimum wage cannot be lower than federal minimum wage. So if federal minimum wage goes to $15 an hour, Nevada’s minimum wage must follow.
- All future increases in minimum wage will be controlled by the legislature rather than a constitutional amendment.
Every time a law such as this is passed, the only thing that is guaranteed is that the courthouse gates will be flooded with lawsuits. Litigation on the last amendment continues to this day, and there is no reason to think this change will be any different. Nevertheless, it is highly likely that the abolition of our two-tier system tied to insurance should be a win-win for employees and employers alike. At least it should simplify things. That would be a welcome change.
And In Other News: The overtime exemption salary basis will undoubtedly go up, probably this year. That means that the threshold for qualifying for an exemption from overtime will go up, thus making more employees eligible for overtime pay. Looking back to the last time this happened, we all remember sitting on the edge of our seats during the Obama administration, to see how much the salary basis would be increased. The Obama administration was pushing for a significant increase since the last increase in 2004. They proposed an increase from $455 a week to $913 a week. The efforts got stalled in politics until the Trump administration, when the Department of Labor proposed and got passed an exemption to $684 a week, which is where it sits now.
President Biden is committed to increasing that exemption threshold to the levels proposed by President Obama, likely in the neighborhood of at least $913 a week, which is $47,476 annualized. Publication of the new proposed overtime rule is anticipated as early as the first week in April. Once that proposal is issued, public hearings will be held. An increase is inevitable; only the amount is unknown. Like last time, given that there are mid-term elections this year, it is anyone’s guess when this will get finalized. In the meantime, you should be thinking about what you will do when the increase comes along. If there is a significant increase in the salary-basis level, you will need to carefully analyze what to do. For some employers, it may make more financial sense to raise certain employees up to the new level if the employee is likely to incur significant overtime. Otherwise, it may be less costly to pay overtime to certain employees if they do not work a significant amount of overtime.
While there is no indication the duties provisions will be adjusted, there is robust discussion of implementing regularly-scheduled increases in the salary-basis level. It is argued that with regularly-scheduled increases, the fiscal impact can be anticipated, and workers do not have to go so long in between changes. It is highly likely that automatic increases will be a hot topic for discussion. Watch for developments.
If you have any questions, or need help with developing policies, you are invited to contact any of the employment lawyers at Lemons, Grundy & Eisenberg.