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Annual Increases To Nevada And Federal Minimum Wage

Volume 7, Issue 5
April 18, 2008

On April 1, 2008, the Nevada Labor Commissioner issued a Minimum Wage Annual Bulletin and a Daily Overtime Bulletin to notify employers of the annual increase in Nevada's minimum wage. The increase takes effect on July 1, 2008. Given the July 24, 2008 increase in the federal minimum wage, however, the bottom line for most Nevada employers is the impact of the federal increase on Nevada's new rates.

What is the change to Nevada's minimum wage tiers?

As of July 1, 2008, Nevada's minimum wage changes as follows:

Lower tier: $5.85 per hour for employees who are offered qualified health benefits

Upper tier: $6.85 per hour for all other employees

How does this impact Nevada's daily overtime rates?

Under Nevada law, an employee who earns less than 1 ½ times the minimum wage is entitled to daily overtime for all hours worked over eight (8) in any workday.

Given the annual increase in the minimum wage, as of July 1, 2008, Nevada's daily overtime rates increase as follows:

Lower tier: Employees making less than $8.775 per hour

Upper tier: Employees making less than $10.275 per hour

What about the increase to the federal minimum wage?

On July 24, 2008, the federal minimum wage increases to $6.55 an hour. See http://www.kzalaw.com/reports.php?vol=6&iss=5&art=1. As such, absent an exemption from the requirements of the federal minimum wage, most Nevada employers should use the following figures for minimum wage as of July 24, 2008:

Lower tier: $6.55 an hour

Upper tier: $6.85 an hour

For daily overtime calculations, however, employers should use the new Nevada daily overtime rates set forth above.

Do I have to provide notice of these increases to my employees?

Yes. Nevada law requires that employers provide written notification of the rate adjustments to each employee.

What does the future hold?

The constitutional amendment which changed Nevada's minimum wage in 2006 provides that the Nevada minimum wage rates "shall be adjusted by the amount of increases in the federal minimum wage over $5.15 per hour, or, if greater, by the cumulative increase in the cost of living." While many questions remain about how Nevada will apply this and other aspects of the new law, a few issues are becoming a little clearer.

In a March 23, 2007 Opinion Letter, the Nevada Attorney General opined that "if either tier of the current Nevada minimum wage is less than the increased federal wage, that tier of the Nevada minimum wage must be raised to the federal level on the effective date established by federal law." 2007 Nev. Op. Atty. Gen. No. 01, 2007 WL 951760 (Nev. A.G., Mar. 23, 2007). The Labor Commissioner has seemingly interpreted this advice to require only consideration of the federal rate in place in April of each year when it is required to establish the new Nevada rates. As such, the Labor Commissioner is not looking forward to what the federal rate will become on July 24, but instead is focused on the increase, if any, which occurred the prior year and established the rate effective on April 1.

On July 24, 2007, the federal rate was increased from $5.15 to $5.85 an hour -- a 70 cent ($.70) increase. In establishing the new rates for Nevada on April 1, 2008, the Labor Commissioner simply added 70 cents to Nevada's higher tier rate of $6.15 to reach a new rate for Nevada of $6.85. Assuming that the cost of living computation does not exceed the increase to the federal minimum wage, next April we can expect Nevada's minimum wage to at least increase by another 70 cents - the increase which takes place in the federal rate this July 24.

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.