Nevada Minimum Wage Increase: What it Means for Employers with Nonexempt Employees
Understanding the Two-Tier Nevada Minimum Wage System
The Nevada minimum wage increase took place on July 1, 2022, and will increase on July 1 of each year until 2024. As each year these changes will impact daily overtime requirements and eligibility, Nevada employers should review their payroll and time-keeping practices to ensure compliance with current wage and hour law.
Under Nevada’s two-tier minimum wage system, an employer who provides qualifying health benefits may pay its employees a lower minimum wage than if no such health benefits are provided. Prior to the new rates effective July 1, 2022, the minimum wage was $8.75 per hour for employers who offered qualifying health benefits and $9.75 for employers who did not. Effective July 1, 2022, these rates increased to $9.50 and $10.50, respectively, pursuant to NRS 608.250(1)(d). Thereafter, the minimum wage will increase by 75 cents on July 1 of each year until 2024, when the minimum wage reaches $11.00 and $12.00. Each time the minimum wage increases, so too will the threshold rates for purposes of determining daily overtime eligibility.
How the New Overtime Threshold Affects Nonexempt Employees’ Eligibility
Under NRS 608.018, nonexempt employees are generally entitled to overtime pay for all hours worked over 40 in a workweek, whereas only those nonexempt employees whose hourly rates are less than 1.5 times the applicable minimum wage are entitled to overtime pay for all hours worked over 8 in a workday. For the last year, this has meant that nonexempt employees have been eligible to receive daily overtime pay only if their hourly rates were less than $13.13 or $14.63, depending on whether the employer provided qualifying health benefits.
When the Nevada minimum wage increase was implemented on July 1, 2022, these threshold rates for daily overtime increased to $14.25 (with benefits) and $15.75 (without benefits). This means that some previously ineligible employees may now be entitled to receive overtime compensation for all hours worked over 8 in a workday.
As a result, employers offering health benefits will now be required to pay daily overtime to nonexempt employees with hourly rates between $13.13 and $14.25, and employers who do not offer health benefits will be required to pay daily overtime to nonexempt employees whose hourly rates of pay are between $14.63 and $15.75. Accordingly, in addition to increasing the hourly rate for all minimum-wage workers and paying daily overtime to currently eligible employees, Nevada employers should determine whether previously ineligible employees are now eligible to receive daily overtime.
Employers are also required to inform employees of the Nevada minimum wage increase and maintain records of wages and hours worked. Please click here to read an explanation of the recent Nevada Supreme Court decision in A Cab, LLC v. Murray which answered the following two key questions for employers:
- How to properly inform employees of the annual Nevada minimum wage increase adjustments.
- How to maintain records of wages and hours worked by employees.
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