Sunday, June 15, 2014 | 2 a.m.
A class-action lawsuit filed this year alleges that Nevada businesses and government officials undercut the state’s voter-approved minimum wage law. It is being joined by several lawsuits targeting specific companies. If the allegations are proven, there could be serious consequences for Nevada.
In 2004 and 2006, Nevada voters passed a constitutional amendment on the minimum wage, allowing employers to pay $1 per hour less if they “provide” health care to employees. Under the administration of former Gov. Jim Gibbons, the state labor commissioner later approved regulations to outline how to carry out the law.
The lawsuit alleges that the regulations undercut the law, giving employers approval to pay the lower minimum wage if they “offered” insurance but didn’t provide it. The regulations also appear to give employers other loopholes that go against the letter and spirit of the constitutional amendment. To make matters worse, the lawsuit says the state hasn’t set up a system to track whether employers comply with the law.
Why this matters
The situation gives Nevada a black eye and threatens to cost taxpayers, businesses and state government plenty.
The cost to business: The state’s regulations looked good for business owners — paying a lower minimum wage saves a business about $2,100 a year per employee in full-time wages. If they don’t provide health insurance as well, that saves even more. However, if the lawsuit is successful, those businesses could be on the hook for thousands of dollars in back wages over the past eight years. For small businesses, that could be a fatal blow.
The cost to workers: If the lawsuit is correct, minimum-wage workers have lost out on money they should have lawfully received. And there’s an implication that many workers have gone without health insurance and thus medical care. The lawsuit says the state’s regulations unlawfully included tip-earners, and that means thousands of Nevadans would be affected.
The cost to the public: People without health insurance it could have been getting treatment at a public hospital, thus their care was subsidized by taxpayers. That’s an added expense to state and local governments that could result either in higher taxes or cuts to government services to pay for the costs.
The cost to the economy: Businesses say a higher minimum wage harms them, adding costs to their operations. But the lower wage also hurts the economy. If employees are making less, they have fewer dollars to spend at local businesses. A lack of health insurance also depresses spending in the medical industry. All told, the lower spending means less job creation, and that could harm the state’s economy, which has suffered since the Great Recession.
The cost to government: Nevada’s state government could be liable for costs associated with the lawsuit, but more than money, state officials should be worried about how the public will see this. If the lawsuit is successful — and a basic reading of state regulations gives support to the allegations — this will undercut the public’s trust in the government.
The bottom line
Gov. Brian Sandoval should fully investigate the claims of this lawsuit, and he should make it a priority. This case goes to the heart of the public’s trust in government, and the governor must fully address it now. He can’t wait for it to play out in the courts, nor should he allow the state to play legal games. If the lawsuit is correct, the government subverted a vote of the people and denied workers their lawful wages, and no Nevadan should stand for that.