Nevada Supreme Court Provides Important Guidance on Definition of “Health Benefits” for the Purposes of the Minimum Wage Amendment to the State Constitution

The Minimum Wage Amendment (MWA) to the Nevada Constitution allows employers that provide “health benefits” to pay an hourly minimum wage of one dollar per hour less than employers who do not.  The meaning of “health benefits” has been the source of significant litigation and headache for employers.  On May 31, 2018, in a case brought by Clark Hill attorneys to obtain much needed clarification on the issue, the Nevada Supreme Court held that qualifying health benefits are those that are equivalent to one extra dollar per hour in wages to the employee, but offered in the form of health insurance as opposed to dollar wages.  Employers in Nevada that offer health benefits should ensure their insurance policies comply with this definition in order to take advantage of the discounted minimum wage rate. 

In MDC Restaurants vs. The Eighth Judicial District Court, 134 Nev., Advance Opinion 41, The Nevada Supreme Court considered how to define “health benefits” for purposes of the wage credit under the Minimum Wage Amendment (MWA) to the Nevada Constitution, explaining:

“[B]oth parties look to clarify the meaning of "those categories of health care expenses that are generally deductible" in NAC 608.102. MDC argues that a plan that provides coverage for any expenses that might be deductible on a federal income tax return qualifies as "health insurance" and therefore allows an employer to pay the lower-tier minimum wage. The employees retort that an equally reasonable interpretation of NAC 608.102 is that a plan must cover all benefits that could be deductible on federal income tax returns, but they actually assert that employers must provide comprehensive or major medical insurance policies to employees to pay the lower-tier wage.”

The court answered the question it posed, whether there is some minimum quality or substance of health insurance that an employer must provide for the employer to pay the lower-tier minimum wage under the MWA, by concluding that the cost of the insurance must equal the reduced wage by offering the coverage.  In other words, “health benefits must mean the equivalent of one extra dollar per hour in wages to the employee, but offered in the form of health insurance as opposed to dollar wages.”

The decision is a win for employers, who now have more flexibility to provide health benefits that are appropriate for their workplace. 

For more information about the court’s decision or how the ruling may impact your workplace, please contact Nicholas Wieczorek at (702) 697-7543 or NWieczorek@clarkhill.com or Deanna Forbush at (702) 697-7525 or DForbush@clarkhill.com, who are the Clark Hill attorneys that brought and litigated the case.