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The Indy Explains: Can the Nevada Legislature raise the minimum wage?

The Neva

As Nevada lawmakers debate raising the state’s minimum wage, one question is continually dredged up: Does raising the wage through legislative action violate the state Constitution?

It’s a question asked by the Nevada Restaurant Association, which raised similar complaints over the legality of raising the wage during the 2015 session and is now reviving those arguments as Democrats try to push for a raise in the wage floor.

Nevada legislators, relying on the legal advice of the Legislative Counsel Bureau, generally believe that they can raise the wage without violating the state Constitution.

But because this constitutional can of worms seems to open up at just about every minimum wage hearing, we decided to take a closer look at the legal arguments on both sides.

How did we get here?

Nevada voters approved a constitutional amendment in the 2006 election mandating that the state’s minimum wage be tied to the federal minimum wage or by a cumulative cost of living increase, based on raises in the Consumer Price Index.

The initial wage level was set at a tiered $5.15 and $6.15 dollar system, with the lower tier offered to employers who offer their employees health insurance. The wage tiers increased to the current $7.25 and $8.25 levels in 2009 to match an increase in the federal wage, and both have remained static since.

Somewhat unusually, the Nevada Constitution sets in place a system for a state agency (currently the office of the State Labor Commissioner) to publish a yearly bulletin every April announcing any minimum wage increase to take effect the following July.

Nevada is one of 12 states with a wage floor between $7.50 to $8.74, but it’s unique in not having raised its wage since 2009, unlike neighboring states California, Arizona and Oregon.

About 44,000 workers currently make between $7.25 and $8.25 an hour, and nearly a third of Nevada workers make less than $15 an hour.

Constitution vs. NRS

In a letter sent to lawmakers in 2015, attorney and restaurant association vice-president Brett Sutton argued that legislators were smudging the constitutional line by attempting to raise the wage outside of the ways outlined in the constitution.

“Since the Constitution addresses how and when the state minimum wage may be raised,
any other method of increase would be constitutionally impermissible,” he wrote.

Sutton bases his argument mostly through the state Supreme Court’s decision in Thomas v. Nevada Yellow Cab Corp, a 2014 case where the court found that the 2006 minimum wage constitutional amendment outweighed existing state law exempting taxi drivers from receiving minimum wage.

In an interview, Sutton said he interpreted the court ruling as clearly showing that constitutional provisions outweighed acts of the Legislature, and that attempts to circumvent the expressed constitutional ways of raising the wage violated the law.

“The Nevada Constitution gave you two ways, and only two ways to raise the wage,” he said. “It did not give the Legislature the power to do that.”

Other attorneys, such as UNLV law professor Ruben Garcia, say that analysis is too broad and ignores an important line in the Thomas case regarding when state laws over stretched and violated the state constitution.

“The Amendment’s broad definition of employee and very specific exemptions necessarily and directly conflict with the legislative exception for taxicab drivers established by NRS 608.250(2)(e),” the ruling says. “Therefore, the two are ‘irreconcilably repugnant.’”

Essentially, the competing state law and constitutional provision need to be so in conflict that the law runs afoul of what the Constitution specifically says. In the Thomas case, state law exempting taxi drivers from being paid the minimum wage went against the language of the amendment that only laid out three exemptions (workers under 18, nonprofit after-school or summer employment or a trainee employed less than 90 days.)

“Since there’s nothing in the language that says, ‘This is the exclusive means of raising the wage,’ that’s very telling,” Garcia said.

The Legislative Counsel Bureau has taken a similar tack toward questions the legality of raising the wage. During a committee hearing on Monday, LCB lawyer Bryan Fernley told legislators that the bill was written in such a way as to not step on the toes of the constitutional provisions.

“In the Thomas v. Nevada Yellow Cab case, the Nevada Supreme Court held that there was an actual conflict between the constitutional amendment because the statute exempted certain employees from the minimum wage requirement, but the constitutional amendment did not to contain such an exemption,” he said. “In this case, with this bill, the constitutional amendment clearly states that employers must pay a wage of, ‘at least the amounts set forth in the language of the constitutional amendment.’”

Republican Sen. James Settelmeyer, who backed similar legislation during the 2015 session that also modified how overtime is calculated, said he was more concerned about whether or not a minimum wage hike would hurt businesses rather than any legal challenge, in part due to LCB assurances.

“Anybody can sue anybody,” he said.

Democratic Senate Leader Aaron Ford largely echoed those comments, saying the counsel’s testimony was solid.

“We have it on good authority from our legal counsel that what we’re doing is perfectly constitutional,” he said. “We can raise the wage, we just can’t go below the floor set in the constitution.”

Still, an LCB opinion isn’t binding law, and the differing legal opinions means that a final, enforceable answer to the quandary might only be solved in a court case. Sutton said while he couldn’t speak to what the restaurant association plans to do if a minimum wage increase is passed this session, he said it’s likely that some sort of lawsuit challenging it on constitutional grounds would probably be brought forward.

“I think that a legal challenge from somebody is probably going to happen if this passess as a statute,” he said.

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