New Restrictions On Public Employers’ Compensation Practices Effective December 1

In 2021, the Nevada Legislature passed Assembly Bill 385 which restricts what a public body can pay an employee or officer hired via an employment contract as well as certain severance practices. These changes go into effect on December 1, 2022.

Assembly Bill 385 modifies Chapter 281 of the Nevada Revised Statutes to prohibit a public body from entering into an employment contract that entitles an officer or employee to receive a bonus, unless the bonus is based on merit and awarded at a public meeting. A public body is also prohibited from entering into an employment contract that entitles an employee or officer to receive any fringe benefit that has not been authorized for all persons employed in a similar position.

Additionally, if an officer or employee is terminated for cause or resigns while an investigation relating to his or her employment is pending, the public body is prohibited from making certain types of payments to that employee. For example, a public body cannot pay the employee a severance or any bonus.

A ”public body” is defined by NRS 241.015(4). AB 385’s restrictions do not apply to any contract negotiated pursuant to a collective bargaining agreement or to officers and employees of the Nevada System of Higher Education.

If AB 385 applies to your agency, we encourage you to carefully review NRS 281.122 and contact a KZA attorney with any questions.

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.