Nevada Supreme Court Issues Important Independent Contractor Ruling

The Nevada Supreme Court recently issued an important decision regarding independent contractors in the case of Doe Dancers v. La Fuente, Inc., determining that dancers at Cheetahs Lounge were employees entitled to minimum wage under Nevada’s minimum wage amendment (MWA).

The Court explained that Nevada’s MWA is a constitutional provision that broadly defines “employee” as “any person who is employed by an employer.” The MWA permits “only the narrowest of exceptions” to this definition. While the MWA uses the “economic realities test” from federal law to determine if a person is an independent contractor instead of an employee, the Court found that under this test the dancers were clearly employees. For example, the Court determined that Cheetahs exercised extensive control over dancers’ appearances, performances and on-shift conduct and established prices and controlled nuances that impacted dancers’ ability to earn a profit.

Cheetahs argued that the dancers were presumed to be independent contractors under Nevada Revised Statute 608.0155’s expanded definition of independent contractor, but the Court determined that the statute could not trump the constitution. Because the dancers contended they were entitled to minimum wage under the MWA, a constitutional provision, its broad definition of employee could not be altered by NRS 608.0155. Instead, that statute could apply to a claim for wages under Nevada Revised Statutes 608. Indeed, the Court determined that the Nevada Legislature “cannot by later-enacted statute abridge a right that the constitution guarantees.”

This decision has far reaching implications for all employers using independent contractors. Any Nevada employer wishing to prove an independent contractor relationship must now analyze the employment relationship at issue under the harder-to-meet economic realities test instead of the expanded test created by the Legislature in NRS 608.0155. Inappropriately classifying an employee as an independent contractor can lead to extensive liability; as such, we recommend reassessing your independent contractors to determine whether changes need to be made to their status or the working relationship. As always, KZA attorneys are available to assist you in this endeavor.

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.