A Breakdown for Employers
Nevada businesses take note! Effective July 1, 2024, there will be significant changes to Nevada’s minimum wage and employee classification laws, as outlined and summarized below.
Minimum Wage Increase
- Goodbye Two-Tier System: Nevada has eliminated the dual minimum wage system. Previously, employers who offered qualifying health benefits paid a lower minimum wage. Now, there’s a single minimum wage of $12.00 per hour for all employees, regardless of health benefits offered.
- Increased Overtime Threshold: With the minimum wage increase, the threshold for qualifying for overtime pay has also gone up. Employees who earn less than $18.00 per hour are eligible for overtime pay at one and one-half times their regular rate for over 8 hours worked in a workday or over 40 hours worked in a workweek. For employees earning $18.00 per hour or more, the standard overtime rules apply (time and a half for exceeding 40 hours in a workweek).
Changes to Employee Classification
Nevada has adopted the updated federal Department of Labor (DOL) regulations that define who qualifies as an “exempt” employee. Previously, exempt employees were not entitled to overtime pay. Here’s a simplified explanation of the new standards:
- Salary Threshold Increase: The minimum salary level required for an employee to be classified as exempt has significantly increased. Previously, the threshold was $684 per week ($35,568 annually). Now, the minimum salary for the exemption to apply is $844 per week (approximately $43,888 annually) on July 1, 2024, and will further increase to $1,128 per week (approximately $58,656 annually) on January 1, 2025.
- Duties Test Still Applies: In addition to meeting the salary threshold, employees must also perform specific job duties to qualify for an exemption. These duties typically involve managerial, executive, or professional functions with a high degree of discretion and independent judgment.
Impact on Employers
- Increased Labor Costs: The minimum wage increase will likely lead to higher labor costs for Nevada businesses. Employers should review their payroll structures and adjust them accordingly.
- Potential Reclassification of Employees: With the higher salary threshold, some employees previously classified as exempt might no longer meet the criteria. Employers should carefully review their exempt classifications to ensure compliance with the new regulations. Misclassifying employees as exempt can lead to significant penalties for unpaid overtime wages.
Recommendations
- Review Payroll and Classifications: Nevada businesses should conduct a thorough review of their payroll structures and employee classifications to ensure compliance with the new minimum wage and exempt employee standards.
- Consult with HR Professionals: Consulting with Human Resources professionals or employment lawyers can help navigate the complexities of these changes and ensure your business operates within the new legal framework.
Staying Informed
For the latest details and official regulations, employers are encouraged to visit the websites of the Nevada Department of Labor (https://www.business.nv.gov/) and the U.S. Department of Labor (https://www.dol.gov/).
