State and federal minimum wage rates overlap, confuse
June 25, 2007
Changes in state and federal minimum wage laws starting next month will force employers to track both increases to be sure they are paying workers the higher of the two rates, as required by law.
On Sunday, the state minimum wage for most workers who are insured by their employers will go up from $5.15 an hour to $5.30 an hour. A constitutional amendment that requires the increase passed last year.
Following the state increase, the federal minimum rate will rise on July 24 from $5.15 to $5.85 – the first of three increases that will raise it to $7.25 by July 2009.
Employers will have to pay either the state or federal rate, whichever is higher at the time.
To determine where to set the rate, Nevada will adjust its minimum wage each July to meet the federal minimum wage or to partially compensate for the increase in the cost of living.
The minimum wage for workers not insured by employers will go up to $6.33 on July 1.
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“The idea in the long run is that we’ll be higher than the feds,” said Mike Tanchek, state labor commissioner, “but because of the timing and the adjustments and those sorts of things, it’s going to be a little uneven for a while – and that unevenness is going to cause a lot of confusion.”
When the state minimum-wage law went into effect in November, it set the minimum wage rates at $5.15 and $6.15. However, it exempted people under the age of 18, people in training who have worked fewer than 90 days, and those who work for a nonprofit group after school or during the summer.
Federal law exempts more groups of workers, such as certain seasonal, commissioned and farm employees.
According to Tanchek, about 10 percent of workers in Nevada earn the minimum wage, with the majority of those earning the higher of the two minimum wages. He said the state doesn’t keep exact records of who is insured by employees, so it’s difficult to say who will be affected and by how much.
Each April, the state will announce what the new minimum wage will be starting the July of that year.
To determine which minimum wage to pay employees, “it’s kind of just scratching your head and figuring out which (rate) is higher at any point in time,” Tanchek said.
Most of the employers that will be affected by the rate increase, said state economist Jim Shabi, are service businesses, such as casinos.
Small increases in the minimum wage won’t have much of an effect, he said, but the increases start to add up for businesses that don’t have much to spend.
“In the short run, a business has to make a decision,” said Shabi, who works for the Nevada Department of Employment, Training and Rehabilitation. “Maybe they have to pay their workers more and can’t afford to hire an additional worker they were thinking about hiring.”
Shabi also said the state doesn’t have a way of telling exactly how many people are making minimum wage, but “if you’re making $5.15 an hour, $6.15 an hour, every little bit helps.”
Since the state doesn’t track the number of workers making the lower of the two minimum wages, it’s difficult to predict how many businesses in Carson City might be hurt by the increases and how many workers will benefit. For instance, Casino Fandango, the largest service-industry employer in the city, has a “very small number” of employees who make $6.15 an hour or less, so it won’t have to deal with the issue, said Brenda Sanchez, chief operating officer of the casino.
• Contact reporter Dave Frank at email@example.com or 881-1212.
Minimum wage rates
Rate: $5.15 and $6.15
Increase: $5.30 and $6.33 on July 1.
How: Rates are re-evaluated and increased each July
Law: Article 15, section 16 of the state constitution
Increase: $5.85 on July 24; $6.55 on July 24, 2008; and $7.25 on July 24, 2009
How: New provision signed into law in May
Law: The Fair Labor Standards Act
If you go:
WHAT: New minimum wage seminar; Mike Tanchek, state labor commissioner, giving speech on the topic
WHEN: 8:30 a.m. Thursday
WHERE: Brewery Arts Center, 449 W. King St.
COST: $5 for Chamber of Commerce members, $10 for non-members