Nevada’s Two-Tier Minimum Wage Law Survives Challenge

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By Kevin McGowan

A Nevada law that alters the state minimum wage depending on whether an employer offers health insurance benefits isn’t preempted by federal law, the Nevada Supreme Court ruled ( Western Cab Co. v. Eighth Judicial Dist. of Nev. , 2017 BL 83468, Nev., No. 69408, 3/16/17 ).

The court’s “conclusive” March 16 ruling that federal law doesn’t bar the Nevada Minimum Wage Amendment helps not only the group of drivers for Western Cab Co. who sued, but also other workers whose employers have challenged the state law, Leon Greenberg, a Las Vegas attorney who represented the taxi drivers, told Bloomberg BNA March 17.

State and local wage laws that include incentives for employers to provide health care benefits are “actually fairly common,” attorney Mark Thierman, whose firm filed an amicus brief for the National Employment Lawyers Association supporting the Nevada law, told Bloomberg BNA March 17.

The leading case holding that federal law doesn’t preempt such state or local laws is a 2016 U.S. Court of Appeals for the Ninth Circuit decision that upheld a Los Angeles wage ordinance giving breaks to employers that signed a union contract or provided certain minimum benefits, Thierman said.

The supreme court should have held that the National Labor Relations Act preempts the Nevada law, said Malani L. Kotchka of Hejmanowski & McCrae LLC in Las Vegas, who represented Western Cab.

The AFL-CIO drafted the 2006 minimum wage amendment to the Nevada constitution and said its purpose was to “level the playing field” between unionized and non-unionized employers, Kotchka told Bloomberg BNA March 17.

Employers with union contracts under the law can pay workers less than the state-mandated minimum if the lower wage resulted from collective bargaining. Western Cab argued federal labor law preempts that state provision, but the supreme court saw it differently, Kotchka said.

The law’s enactment was less a case of the state exercising its “police power” over wages than labor organizations seeking to force employers to recognize unions and bargain over pay, Kotchka said.

A state district court now will decide if Western Cab’s policy that drivers must pay their own fuel costs is valid under the minimum wage law.

Two-Tiered System Upheld

The Minimum Wage Amendment sets minimum pay at $7.25 an hour if an employer provides health benefits and at $8.25 an hour if the employer doesn’t offer benefits. The law also allows employers to pay lower wages under a valid collective bargaining agreement.

The Employee Retirement Income Security Act doesn’t preempt the Nevada law, which doesn’t affect the types of benefits an employer must offer or force employers to offer benefits at all, the state’s top court said in a 6-0 opinion.

ERISA might preempt a state wage law if the state law “refers to” or “has a connection with” employee welfare benefit plans.

The Nevada law lacks any such reference or connection to an ERISA plan, the court said. It cited a federal court ruling that found no ERISA preemption of a Los Angeles two-tiered living wage ordinance “strikingly similar” to the Nevada law.

The NLRA doesn’t preempt the wage law because it doesn’t raise claims Congress intended the National Labor Relations Board exclusively to decide or to let the free market resolve, Chief Justice Michael A. Cherry wrote for the Nevada Supreme Court.

Minimum wage laws “do not compel or preclude” negotiations between an employer and a union representing its workers, the court said. Such laws “merely provide a backdrop” for negotiations to occur, it said.

The Nevada law doesn’t intrude upon collective bargaining or interfere with areas “intentionally left unregulated” by the NLRA, the court said.

Who Pays for Gas?

The state supreme court didn’t decide if Western Cab can make drivers pay their own fuel costs, an expense the drivers said reduces their pay below the state-mandated minimum.

Instead, that “fuel-calculation issue” must be decided by a lower court after more facts are developed, the supreme court said.

It’s “clear” from the supreme court’s analysis, however, that an employer can’t charge workers for such expenses absent a CBA or other valid waiver, Greenberg said .

The drivers aren’t union-represented, the gas fuel issue isn’t part of a union contract and Western Cab can’t push those costs onto its employees, Greenberg said.

The fuel-cost issue theoretically also could affect drivers for ride-sharing companies, but only if they were found to be employees covered by the Nevada law rather than independent contractors, Thierman said.

The Western drivers are pursuing a class action that, if certified by the court, could cover hundreds of cab drivers in Clark County, which includes Las Vegas, Greenberg said.

Leon Greenberg PC represented the drivers. Hejmanowski & McCrea LLC represented Western Cab Co. Thierman Buck LLP represented the National Employment Lawyers Association as an amicus.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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