For nearly two decades, Nevada has utilized a unique two-tier minimum wage system that permitted employers that offered qualified health benefits to employees to pay $1.00 less per hour than employers that did not offer such benefits to their employees.¹ Nevada’s two-tier minimum wage system – which was exclusive to Nevada – was originally approved by Nevada voters in 2006 by a margin of 69% in favor.² Known as the Minimum Wage Amendment (MWA), the MWA not only set up this two-tiered system in years to come, but also established a method for automatically adjusting the state minimum wage based on federal minimum wage and cost-of-living increases.

Pursuant to the two-tiered system, from 2010 to 2019, Nevada’s minimum wage rates were set at $7.25 and $8.25 per hour. In 2019, Assembly Bill No. 456 (AB 456) was passed, providing for successive increases to Nevada’s minimum wage using a statutory schedule. This measure increased the minimum wage by 75 cents annually until it reached $11.00 per hour for employers that offered health benefits, and $12.00 per hour for employers not offering health benefits by 2024.³ By passing AB 456, the legislature preserved the two-tier system set forth in the MWA.

Nevada Voters Decide to Eliminate the Two-Tier Minimum Wage System through Ballot Question 2

On November 8, 2022, however, Nevada voters elected to alter significantly the landscape of Nevada’s minimum wage system by approving Ballot Question 2, returning Nevada to a single minimum wage regardless of whether an employer offers qualified health benefits to its employees.

Ballot Question 2 is the culmination of several years of legislative action, beginning with the Nevada Legislature’s passage of Assembly Joint Resolution 10 (AJR 10)⁴ in 2019 and subsequent approval, without amendment, in 2021. Pursuant to Nevada law, this permitted Ballot Question 2 to appear for voter ratification on the 2022 General Election ballot for Nevada. Because the Nevada Legislature already approved the language of Ballot Question 2 in two consecutive sessions, Ballot Question 2 only needed to prevail in the 2022 General Election to become law, which it did.

Ballot Question 2 amends the Nevada Constitution to require employers to pay each employee to whom the minimum wage requirements apply (i.e., nonexempt employees) a minimum wage of not less than $12.00 per hour, subject to any applicable increases above $12.00 per hour worked provided by federal law or later enacted by the Nevada Legislature.

Similar to the MWA, Ballot Question 2 also requires Nevada’s minimum wage to be increased based on applicable increases in the federal minimum wage, providing that if, at any time, the federal minimum wage is greater than $12.00 per hour, Nevada’s minimum wage shall be increased to the amount established by the federal minimum wage rate.  For example, if the federal minimum wage were to be raised to $15.00 per hour, Ballot Question 2 would require Nevada’s minimum wage to increase also to $15.00 per hour, but this would be subject to any subsequent state statute that the Nevada Legislature might pass.

Ballot Question 2 expressly affirms the Nevada Legislature’s authority to establish, by statute, a minimum wage that is greater than the federal minimum wage or greater than the minimum hourly rate required by the Nevada Constitution. While the Nevada Legislature can raise the minimum wage in the future, Ballot Question 2 makes clear that $12.00 per hour must be the minimum, and the minimum wage cannot drop below that amount. Stated differently, Ballot Question 2 makes the minimum wage rate of $12.00 per hour a constitutional minimum, meaning the Nevada Legislature would not be able to enact a new minimum wage rate below $12.00 per hour on its own in the absence of another constitutional amendment.

Because of this overhaul of Nevada’s previous minimum wage system, Ballot Question 2 removes from the Nevada Constitution the prior provisions adjusting Nevada’s minimum wage rates based on increases in the federal minimum wage except in the event the federal minimum wage exceeds $12.00 per hour as previously discussed. Moreover, Ballot Question 2 removes the cost-of-living increases that were previously included in the MWA. Ultimately, Ballot Question 2 returns to the Nevada Legislature sole authority to increase Nevada’s minimum wage rate above $12.00 per hour. This amendment will be effective July 1, 2024.

What Approval of Ballot Question 2 Means for Employers in the Silver State

The elimination of Nevada’s two-tier minimum wage system is expected to directly impact employers that are paying their nonexempt employees less than $12.00 per hour and that are paying employees varying wages based on the offering of health benefits as previously required by the soon-to-be outdated two-tier system. Prior to Ballot Question 2’s implementation on July 1, 2024, it is recommended that employers in Nevada ensure that their wage and payroll system complies with Ballot Question 2. While these minimum wage law changes may increase payroll expenses for Nevada employers, it may also reduce the amount of time and money spent by employers that were having to navigate and comply with the previous two-tier minimum wage system unique to Nevada.

Furthermore, whereas Ballot Question 2 provides sole authority to the Nevada Legislature to enact future minimum wage increases above $12.00 per hour, it does allow for additional increases to be enacted with greater frequency.  This means that the $12.00 per hour minimum wage will be the floor for future wage increases and not the ceiling as it was with the MWA.

Overall, Ballot Question 2 certainly represents a dramatic departure from the minimum wage system utilized in Nevada since 2006. Because of this overhaul, every Nevada employer with nonexempt employees should familiarize themselves with the details of Ballot Question 2 prior to its effective date to ensure compliance with the changes detailed herein. Littler will continue to monitor these recent minimum wage developments in Nevada, including implementation of Ballot Question 2, and will report on any further significant changes.