Court Considers Enrollment and Including Tips in Taxable Income

In a recent opinion, the Nevada Supreme Court clarified certain provisions of the state Minimum Wage Amendment (MWA) to the Nevada Constitution.

Background
The MWA guarantees a base wage to each Nevada employee. The law provides for a "lower-tier wage" if the employer "provides" health benefits, and an "upper-tier wage" if the employer does not provide health benefits. The MWA also states that the employer must provide health benefits at a total cost to the employee for premiums of not more than 10% of the employee's gross taxable income from the employer.
'''
Court Decision '''
The court first considered whether "provides" means that an employer must "enroll" an employee in a qualifying health benefit plan before the employer may pay the lower-tier wage, or if an employer need only "offer" a qualifying health plan. The court concluded that employers need only offer a qualifying health plan to pay the lower-tier minimum wage.

Additionally, the court addressed whether the MWA's requirement that health benefit premiums be capped at 10% of the employee's gross taxable income "from the employer" allows the employer to include tips in the calculation of taxable income. The court concluded that tips are not included.

Employers with questions on how to proceed regarding income calculation and payment of wages are advised to contact a knowledgeable employment law attorney.

Click here for additional information.

Preferred Partner of