Late last month, the Nevada Supreme Court offered a two-for-one ruling on provisions from the state’s 2006 Minimum Wage Amendment (MWA) which have been highly debated for a decade.
For Nevada employees who are offered qualified health insurance, the minimum wage rate is $7.25 per hour; for all other employees the rate is $8.25 per hour. Since the adoption of the MWA, there has been controversy as to whether language like “offer” and “provide” within the constitutional amendment indicates that employers could consider an employee eligible for the lower wage rate if a qualified health plan was merely offered to them, or if the employee is required to make use of the offered insurance for the rate to apply.
In the case of MDC Restaurants LLC v. Eighth Judicial District Court, the Nevada Supreme Court concluded that “the language is plain,” pointing out that the contested terms are defined within the amendment itself: “Offering health benefits within the meaning of this section shall consist of making health insurance available to the employee and the employee’s dependents at a total cost to the employee for premiums of not more than 10 percent of the employee’s gross taxable income from the employer.”
As such, the law only requires employers to offer qualified health benefits for the lower wage rate to apply, and employees who are offered but do not accept enrollment in a qualified health plan can still be paid the lower-tiered wage. In its unanimous opinion, the court argued that by making health insurance available, an employer has fulfilled their responsibility to either pay a higher rate or offer health benefits as compensation for paying a lower rate. The onus is then on the employee to take advantage of the benefits offered. (However, employers are still required to keep records of which employees decline coverage.)
Although the consolidated employees represented in the case may have been disappointed with the court’s response on that count, the same decision also granted them a victory. The unanimous opinion also referred to the “plain language” of the same passage quoted above to explain the court’s ruling that employee tips do not count towards the employee’s gross taxable income when calculating the 10-percent cap on premiums, as tips from customers do not come “from the employer.” The amendment also specifies that tips received by the employee cannot be credited as part of wages which are required to be paid by the employer, meaning that “tips received by the employee” and “income from the employer” are definitively separate.
Both decisions are considered retroactively applicable. Bradley Schrager, the lawyer who brought suit against the companies represented in the case, says that the workers he represents will be returning to court to argue that health plans offered by the companies did not meet constitutional requirements of “qualified” plans.