Nevada’s labor commissioner says she will appeal the ruling striking down regulations that let Nevada employers to count tips as part of employee salaries.
Judge James Wilson ruled August 12 employers can’t count tips to determine whether workers should get the $8.25 an hour minimum wage or the lower $7.25 an hour allowed for businesses that provide health insurance to employees.
Chambers said this week she wants the ruling stayed while her office files an appeal with the Nevada Supreme Court.
The amendment approved in 2006 allows businesses to pay the lower minimum wage if they offer their workers health insurance coverage for no more than 10 percent of the worker’s earnings.
Lawyers for Cody Hancock and Kwok Yen Moy of Las Vegas charge employers offer insurance policies knowing they’re either sub-par or far more expensive than employees can afford and, when workers reject the insurance, cite that as justification for paying the lower minimum wage. They argue workers shouldn’t have to give up the extra dollar per hour just because they decided not to take a bad insurance policy.
The suit was filed after Labor Commissioner Shannon Chambers rejected a request to rewrite the regulations. She said the regulations fit within the requirements of the constitutional amendment.
“Nothing in the amendment says tips are not part of pay,” argued Deputy Attorney General Scott Davis.
But Wilson agreed with lawyers Don Springmeyer and Bradley Schrager the amendment speaks to the gross taxable income of the employer, not to tips, which are gifts from customers. “The drafters of the amendment expressly excluded tips and gratuities from the calculation of the minimum hourly wage,” Wilson ruled.
He also ruled employers can’t simply offer insurance that the worker must accept it before the business can pay the lower wage.
Wilson ruled the amendment “demands that employees not be left with none of the benefits of its enactment, whether they be the higher wage rate or the promised low-cost health insurance for themselves and their families.”
Tray Abney of the Reno Sparks Chamber of Commerce said even a $1 per hour pay hike can make a difference for an employer. “Every dollar that the employer has to spend on these things is one less dollar they can spend on hiring people,” he said.
Especially for workers in the hospitality and leisure industry, tips make up the vast majority of their income.
Groups fighting for a higher minimum wage say they’re watching this case and disappointed the state is expending resources to appeal the decision.
“We just hope the courts rule in favor of the low-wage workers to have real, useful health insurance,” said Laura Martin, associate director of the Progressive Leadership Alliance of Nevada. “If not, just give them a $1 raise. Let’s just care about workers, not just corporate profit margins.”
