Nevada Supreme Court Determines Definition Of Health Insurance For Nevada's Minimum Wage Laws

On May 31, 2018, the Nevada Supreme Court issued a unanimous decision in MDC Restaurants, LLC v. The Eighth Judicial Dist. Court, 134 Nev. Op. 41 (May 31, 2018), addressing arguably the most hotly contested issue of law regarding the Nevada Constitution's Minimum Wage Amendment, Nev. Cost. art. XV § 16 ("MWA" or the "Amendment"). Specifically, the court was asked to clarify what constitutes "health benefits" for purposes of paying Nevada's lower-tier minimum wage. The court answered that question by determining, based on "common sense," that "the MWA requires an employer who pays one dollar per hour less in wages to provide a benefit in the form of health insurance at least equivalent to the one dollar per hour in wages that the employee would otherwise receive."

Background

The MWA establishes a two-tier minimum wage in Nevada. The lower tier is equal to the applicable federal minimum wage rate (currently $7.25 per hour) and applies if qualifying health benefits are offered. The higher tier is a dollar more per hour (i.e., $8.25) and applies if such benefits are not offered. The Amendment further defines "health benefits" as benefits that are "available to the employee for 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." Further, the Nevada Labor Commissioner in enacting the Nevada Administrative Code section 608.102(1) (Minimum wage: Qualification to pay lower rate to employee offered health insurance), defined "health insurance" pursuant to the MWA as plans that cover "those categories of health care expenses that are generally deductible by an employee on his individual federal income tax return pursuant to 26 U.S.C. § 213" or benefits offered pursuant to federal labor laws (i.e., union benefit plans under Taft-Hartley).

What are "Health Benefits"?

This issue of what constitutes "health benefits" for Nevada's lower-tier minimum wage reached the Nevada Supreme Court based on a district court decision that held the MWA incorporated certain sections of Nevada law (Nevada Revised Statutes (NRS) chapters 608, 689A and 689B) to create substantive requirements for health insurance. On appeal, the petitioner argued the issue was prematurely before the court because it should have been presented first to the Nevada Labor Commissioner. The petitioner also argued that the term "insurance" under the MWA is not defined by the...