Minimum enforcement

A lawsuit has been filed accusing the Sandoval administration of failing to enforce the voter-approved state minimum wage.

At issue is Ballot Question 6 in the 2006 general election, which set the Nevada minimum wage a dollar higher than the national minimum. The measure, which was placed on the ballot by initiative petition, was approved by Nevadans in a landslide vote—of the 660,742 votes cast, the question was approved 68.71 to 31.29 percent. In Washoe County, the margin was less, but still required no recount: 66.21 to 33.78 percent.

The new law—an amendment to the Nevada Constitution—also said employers could pay at the lower federal minimum wage level “if the employer provides health benefits as described herein.”

The lawsuit was filed on April 30 by attorneys Don Springmeyer and Bradley Schrager on behalf of workers Cody Hancock and Kowk Yen Moy. It has been followed by two more suits. One, filed on May 19 by Las Vegas resident Erin Hanks, accuses Briad Restaurant Group LLC, which operates Nevada TGI Fridays, of improperly claiming the reduced minimum wage rate without providing the required type of health insurance coverage. (The Reno TGI Fridays shut down on Feb. 9, 2009.) The other was filed on May 20 by nine workers against an Ohio corporation, Cedar Enterprises, which operates Wendy’s Restaurants in Las Vegas.

Washoe County businesses could be next. Springmeyer said he is looking to deal with this problem wherever it exists, including Washoe County.

“Everywhere,” he said. “Anywhere somebody’s getting paid less than $8.25 an hour, I think they’re getting screwed. … We’ll go to Ely or Elko or Reno, anywhere that someone’s getting screwed on this.”

The first lawsuit, alleging failure to enforce the law, makes several charges. Some of them date back to the Gibbons administration, when Gov. Jim Gibbons’ labor commissioner—Michael Tanchek—drafted the regulations covering the new minimum wage law, which are needed to implement the law. Those regulations took effect in October that year. They have not been altered under Gov. Brian Sandoval. Current labor commissioner Thoran Towler, appointed by Gov. Sandoval, did not return a call seeking comment.

The lawsuit alleges that the regulations created these problems:

The regulations provide that if a worker declines health coverage, the employer can pay a lower minimum wage. The plaintiff argue that this permits employers to arrange to offer health insurance that involves a very high worker premium, thus qualifying the employer for the lower minimum wage when the worker cannot afford the premium and declines coverage.

Under the regulations, tipped workers can be paid a dollar less per hour if health insurance premiums amount to 10 percent of the gross taxable income of the worker attributable to the employer under IRS code, even though the tip portion of the worker’s income does not come from the employer. The effect is to increase what a minimum wage worker could be made to pay for health insurance coverage. Nevada has a long standing statute that reads, “It is unlawful for any person to … apply as a credit toward the payment of the statutory minimum hourly wage established by any law of this State any tips or gratuities bestowed upon the employees of that person.” In addition, the minimum wage portion of the Nevada Constitution itself reads in part, “Tips or gratuities received by employees shall not be credited as being any part of or offset against the wage rates required by this section.”

The regulations also allows employers six months after the worker starts work before the state minimum wage must be paid. There is no provision in the law for such a grace period. It does allow some leeway for summer workers and trainees, but the plaintiff lawyers argue the labor commissioner went beyond what the law allows.

Finally, the suit argues that the labor commissioner has never set up a system for enforcing the law. It charges: “The Nevada labor commissioner maintains no database or list of employers who claim eligibility to pay employees at the reduced minimum … maintains no database and collects no data on health insurance plans or benefit contracts … maintains no database or list of employees who have been or are currently paid at the reduced minimum wage.

“The Nevada labor commissioner, over the more than seven years the constitutional amendment has been effective, has never issued an opinion regarding whether any specific health plan or contract qualifies an employer to pay employees at the reduced rate … has never undertaken an enforcement action against an employer for paying [workers] at the reduced minimum wage … never enacted regulations requriing ongoing access to comprehensive health insurance plans as a condition to employer eligibility to pay employees at the reduced minimum … never enacted regulations requiring recalculation of permissible health insurance premium levels for employees whose income from the employer changes over time due to fluctuations in hours worked. … [E]ffectively there is no enforcement or regulatory regime functioning in any manner to ensure that employers who are paying workers at the reduced minimum are doing so lawfully.”

The lawsuit has now been supplemented by a petition drive by the Progressive Leadership Alliance of Nevada. The group included petitions addressed to Gov. Brian Sandoval in its latest membership appeal.“That was precipitated by a lawsuit filed by Bradley Schraager and Don Springmeyer against several fast food chains. … We did it because it’s yet another example of how workers in Nevada are getting hosed by corporations and their lobbyists, and were also completely astonished that this story was being ignored by the media,” PLAN director Bob Fulkerson said.

The petition reads in part, “As you know, a recent lawsuit filed on behalf of minimum wage workers states that your administration has neither enforced nor monitored this law. As a result, Nevada’s wealthiest corporations have stolen millions of dollars of wages from our lowest paid workers. We ask you to please use the full force of your office to remedy this situation immediately.”

Nevada Democratic Party chair Roberta Lange also issued an attack on Sandoval, calling the situation “state-sanctioned wage theft by large corporations from Nevada working families,” but since the Democrats don’t have a major candidate opposing the governor’s reelection, it’s difficult for them to make it much of an issue.