In 2006, Nevada’s Constitution was amended to establish a two-tier minimum wage system dependent upon whether an employer provides “health benefits” to its employees.  This amendment, Section 16 of Article 15, is often referred to as the Minimum Wage Amendment (MWA).  Under the MWA, employers may pay the lower tier (equal to the $7.25/hour federal minimum wage) if qualifying health benefits are offered but must pay the higher tier minimum wage (one dollar per hour more than the lower tier), if such benefits are not offered.  Under the MWA, increases in Nevada’s minimum wage tiers are tied to the greater of the federal minimum wage or the cumulative increase in the cost of living as measured by the Consumer Price Index (All Urban Consumers, U.S. City Average) (CPI).  The MWA specifically limits any CPI adjustment to the minimum wage for any 1-year period to 3%.  There have been multiple efforts recently to increase the Nevada minimum wage. 

Legislative Action in the 2017 Session

During Nevada’s 2017 legislative session, the Nevada Legislature passed a resolution to amend the Constitution to increase the minimum wage over time.  The measure would have increased the hourly minimum wage to $9.40 on January 1, 2021, $10.55 on January 1, 2022, $11.70 on January 1, 2023, $12.85 on January 1, 2024 and $14.00 on January 1, 2025.  To be enacted, the measure was required to be passed by both chambers of the 2019 Legislature and subsequently be approved by the voters in Nevada’s general election on November 3, 2020.  However, neither chamber of the Legislature voted on the measure in 2019.

Current Legislative Developments

In Nevada’s 2019 legislative sessions, two separate measures designed to raise the Nevada minimum wage were passed.  

First, Assembly Joint Resolution 10 (“AJR 10”), a new resolution to amend the Constitution and increase the minimum wage was passed.  AJR 10 would amend the MWA to raise the minimum wage to $12/hour but would abolish the current two-tiered rate.  To be enacted, AJR 10 must pass both chambers during the next legislative session in 2021 and be approved by the voters in 2022.  It would then become effective on July 1, 2024. 

Second, Assembly Bill No. 456 (“AB 456”) was passed.  AB 456 similarly increases the minimum wage but retains the two-tiered system.  Specifically, AB 456 increases the lower tier minimum wage tier to $8.00/hour on July 1, 2020, to $8.75/hour on July 1, 2021, to $9.50/hour on July 1, 2022, to $10.25/hour on July 1, 2023, and to $11.00/hour on July 1, 2024.  The lower minimum wage tier is available to employers that offer health benefits to employees in the manner described in the MWA.  The higher minimum wage remains $1.00/hour higher. 

Additionally, AB 456, which was signed by Governor Sisolak on June 12, 2019, amends Nevada Revised Statutes Section 608.260 to import the same types of remedies currently available for violation of the MWA.  Like the MWA, this amendment allows an employee who prevails in a civil action seeking payment of the minimum wage to receive an award of back pay, damages, reinstatement or injunctive relief.  The statute is further amended to require the court to award reasonable attorney’s fees and costs to a prevailing employee.

Because Nevada’s Minimum Wage Amendment was passed through the amendment of the Constitution (requiring passage by both chambers of the Legislature in two separate sessions and approval by the majority of voters) rather than by legislative action alone, the portion of AB 456 increasing the minimum wage may be subject to challenges as to its constitutionality.  However, AJR 10, while not yet law, may continue to receive support and be passed in the next legislative session in 2021 and eventually be presented to Nevada voters.  Given the significant activity in this area of the law, employers should keep informed of updates through knowledgeable labor and employment counsel.