Employee classification is currently a major issue in Nevada. Although the advent of ride-sharing spurs more interest in the distinction between the two, there has always been a deep interest in the defining differences between independent contractors and employees. The primary concern with the distinction is its use by employers to avoid typical employee expenses. These can be anything ranging from minimum wages to workers’ compensation funds benefits.
Nevada Supreme Court Adopted New Test
In 2014 the issue was very salient to Nevada citizens when the case of Terry v. Sapphire Gentlemen’s Club reached the state’s highest court. In the case, performer’s challenged Sapphire Gentlemen’s Club’s practice of not paying wages to its dancers. The lower court ruled the performers were not employees, but the Nevada Supreme Court overruled the decision. The Court adopted the economic realities test and held Sapphire Gentlemen’s Club constituted an employer, and its performers were employees.
Prior to the cases ruling, Nevada’s Department of Business and Industry wrote about the importance of the distinction between contractors and employees in its summer 2014 newsletter. The article focused on the penalties employers could face for misclassification of their employees. Misclassification of employees to avoid paying minimum wage or workers’ compensation benefits can lead to significant fines.
Nevada Legislature Makes Distinction for Employment Classification
According to HR.BLR.com the state is likely concerned about classification insomuch as the misclassification of employees may take away potential workers’ compensation funds. However, the Nevada Legislature has determined the economic realities test is not the ideal way to classify workers. To circumvent the Court’s decision, the Nevada Legislature passed Senate Bill 224. The bill creates a presumption that workers are independent contractors if certain conditions are met. The first two conditions are:
- The worker is in the U.S. lawfully and possesses or has applied for an employer I.D. or a SSN or filed an income tax return for a business or self-employment with the IRS the previous year.
- The worker maintains a state or local business or occupational license, insurance, or bonding to perform work.
Then the worker must satisfy three other elements out of another set of criteria, which mainly focus on whether or not the worker has control over the work she performs and how she performs it. The Las Vegas Business Insider reports, although the bill is meant to clarify the distinction between employee and contractor, the law isn’t absolutely clear. The law is intended to create a presumption of an independent contractor relationship if the necessary criteria are met, but the presumption is for Nevada law. The presumption has nothing to do with with the Federal Fair Labor Standards Act, which employers must also comply with. Simply comporting with the new law alone may not eliminate all liability.
You May Have Access to Workers’ Compensation Benefits
If you are a not sure whether you are an employee or an independent contractor you should contact a licensed workers’ compensation attorney to help you. Even if your employer considers you to be an independent contractor, you might still be an employee in the eyes of the law. This is critical if you have been injured during the course of your employment. If you are injured on the job you should consult a Nevada workers’ compensation attorney as soon as possible to discuss your claim.