Dueling motions for summary judgment have been filed in Carson City District Court to end the lawsuit over whether Nevada is letting businesses violate the minimum wage law.
Both motions were filed June 12 in the lawsuit on behalf of two workers in Southern Nevada. The workers argue the Labor Commission is unconstitutionally allowing employers to add tip income to calculate how much workers can be required to pay for a health plan. They argued adding tip income dramatically inflates a worker’s pay.
Nevada voters adopted a constitutional amendment in 2006 indexing the state minimum wage to inflation. It’s now at $8.25 an hour.
But the amendment allows a business to pay a dollar less — $7.25 an hour — if they offer employees health insurance coverage at a cost of no more than 10 percent of the worker’s earnings.
The lawsuit argues adding tip income to the employee pay, “rendered employers offering more expensive plans than the constitutional amendment contemplated eligible to pay workers at the reduced minimum wage rate.”
But the Labor Commissioner ruled if the worker declined health insurance coverage for any reason, the business could pay the worker the lower wage.
“Nevada law does not permit a tip credit against minimum wage levels,” lawyers for Cody Hancock and Kwok Yen Moy of Las Vegas argued.
Their lawyers asked the Labor Commissioner to review and rewrite the regulations, saying the existing regulation allows employers to pay the lower hourly rate simply by offering an insurance plan they know is far more expensive than the worker can afford.
The commissioner rejected the argument saying the regulation fits within the requirements of the constitutional amendment.
“Nothing in the amendment says tips are not part of pay,” deputy attorney general Scott Davis wrote in his motion to dismiss the case.
But Don Springmeyer and Bradley Schrager, lawyers for Hancock, argued the amendment speaks to the gross taxable income of the employer, not to tips, which are gifts from customers. In their motion to dismiss the case, they argued tip income is taxable according to IRS but that it’s not income from the employer.
The difference, they said, “is significant as it can double or triple what employers may charge workers for insurance.”
Many workers in the leisure and hospitality industry make 75 percent of their money or more from tips and gratuities.
The offending regulation, they say, simply ignores the source of the income in violation of the clear language of the amendment.
No hearing is currently scheduled on the motions.