Nevada Supreme Court Rejects Employer's Challenge To Nevada's Minimum Wage Amendment

Volume 16, Issue 5
March 24, 2017

Last week, the Nevada Supreme Court issued a decision in Western Cab Co. v. The Eighth Judicial District Court, rejecting an employer's contention that Nevada's Minimum Wage Amendment ("MWA") is unconstitutional and preempted by federal laws.

The MWA requires a Nevada employer to pay one of two minimum wage rates to its employees, depending on whether the employer offers qualifying health benefits to those employees. In the case of Western Cab, former cab drivers filed a lawsuit arguing that they were not paid the proper minimum wage under the MWA. As an initial defense to this lawsuit, the employer attacked the MWA, arguing that it is unconstitutionally vague. The employer also argued that two federal laws, the National Labor Relations Act ("NLRA") and the Employee Retirement Income Security Act ("ERISA"), "preempt" the MWA; in essence, the employer argued that the federal government already "occupied the field" covered by the MWA and that the State of Nevada was, therefore, precluded from enacting the MWA.

The Nevada Supreme Court rejected each of these challenges. The Court disagreed with the employer's position that the MWA's use of the term "health benefits" is so vague that a person of ordinary intelligence cannot understand what is prohibited. The Court found that "health benefits" is defined by the MWA and that the MWA's use of the term "health insurance" is defined by the Labor Commissioner's regulations interpreting the law. As such, the Court ruled that the MWA is not unconstitutionally vague. With regard to the employer's preemption arguments, the Court determined that minimum wage laws are "an authorized use of a state's police power." Moreover, the MWA "does not enter a field occupied by the NLRA," and instead "explicitly allows the NLRA priority" because it allows employers and employees to collectively bargain around the minimum wage requirements. Finally, the Court determined that the MWA was not invalidated by ERISA just because it mentions insurance. Aside from holding that the regulation of wages is not per se within ERISA's coverage, the Court ruled that the MWA has no effect on ERISA plans and does not impermissibly connect with ERISA plans; as such, it is not preempted by ERISA.

In rejecting the employer's arguments, the Nevada Supreme Court sent this case back to the trial court so that the drivers' lawsuit could continue. The Western Cab case has answered some of the questions that have been pending about the MWA since its 2007 enactment. Other cases remain pending in the state district courts and the Nevada Supreme Court to fill in various other questions about the MWA. As always, we will keep you posted on developments related to this law.

KZA 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.