Ch…Ch…Ch…Changes (or how your business must respond to the 2019 Legislature)

Every other year, Nevada’s Legislature meets and creates new challenges for business. This year is exceptional in the scope and breadth of changes. Very little of what occurred in Carson City is good for your business, although things certainly could have been worse but for persuasive and timely advocacy. My mom was fond of saying that knowledge is power. So, I am going to try to arm you with a superpower.

As you likely know, I had the great privilege of being the Chairperson of the Henderson Chamber of Commerce’s Legislative Committee. In that role, I was able to review the bills as they were presented.  Furthermore, I had the ability to comment and testify on the effects of those bills, and play a role in trying to mitigate the harm of some of them.

The following bills will have the broadest effect on those businesses with employees within the state of Nevada.  

AB 132 – MARIJUANA TESTING AS A CONDITION OF EMPLOYMENT.  For most employers, you may not disqualify a prospective employee because that individual’s drug test indicates the presence of marijuana.

AB456 – MINIMUM WAGE INCREASE.  The current minimum wage is $7.25 per hour if an employer offers health insurance and $8.25 if the employer does not. Starting July 1, 2020, that will be increased to $8.00 and $9.00, respectively. Each July 1, thereafter, the amounts will increase by 75 cents until 2024, when the minimum wage will be $11.00 and $12.00, respectively.

SB551 – MODIFIED BUSINESS TAX (aka Nevada payroll tax).  A higher rate of the MBT was scheduled to sunset, thus reducing the payroll tax many businesses pay. This law eliminated that sunset, thereby keeping the higher payroll tax in place.

SB312 – PAID SICK LEAVE.  Private employers who have at least 50 employees are required to provide at least 40 hours per year of paid time off to each employee.  

SB166 – INCREASED FINES FOR SEXUAL DISCRIMINATION.  In addition to actual damages suffered by an employee who has not been paid equally on the basis of sex, a business can be fined up to $15,000.

AB248 – PROHIBITING CERTAIN NON-DISCLOSURE AGREEMENTS.  Settlement agreements that relate to sexual misconduct cannot contain limitations on disclosure.

The following bill proposals either were either defeated or changed enough to meaningfully mitigate the adverse effect on businesses in Nevada.

AB 197 – This proposed legislation was a terrible bill that would have affected business contracts in dramatic and terrible ways.  The link to the original bill is here:  https://www.leg.state.nv.us/App/NELIS/REL/80th2019/Bill/6303/Text 

My testimony included the following:  

As a professional who has represented a multitude of parties in contractual negotiation and litigation over contracts, I want to express the challenges associated with the language within AB197.  While I wholly endorse the efforts to create a more balanced approach to consumer contracts that contain unconscionable clauses, I am troubled by the authority granted in section 3(b) that would enable a court to wholly invalidate a contract that may contain simply one questionable term.  The language within Section 3(a) gives a court discretion in determining whether a clause is unconscionable.  However, there are insufficient standards to give notice to a contracting party what would ultimately be deemed unconscionable.  Furthermore, the language contained in section 4 is punitive.  It would materially affect those businesses who contract within the State of Nevada and eliminate a sense of a fair judiciary in contract interpretation where there is no advance standard for such contractual drafting.

The bill died.

AB477 – This proposed bill was similar to AB 197.  The original text is here:  https://www.leg.state.nv.us/App/NELIS/REL/80th2019/Bill/6918/Text 

My testimony included the following:

As a professional who has represented a multitude of parties in contractual negotiation and litigation over contracts, I want to express the challenges associated with the language within AB477. While we wholly endorse efforts to protect consumers from predatory interest and overreaching contracts, in its present form AB477 will ultimately damage business opportunities in Nevada.

The prohibitions in Section 13 of the bill may affect businesses the choice to do any business within the State of Nevada.  Ultimately such limitations may adversely affect consumers’ ability to receive certain goods that are currently sold within the State of Nevada.  

Furthermore, the first sentence of Section 14 which could void the entirety of a contract rather than sever the voidable language would be detrimental to the long-standing manner in which contracts have been interpreted by the Courts within Nevada.

I was given the opportunity to work with the bill sponsor to amend the language to something far more workable.  The enrolled version is here:  https://www.leg.state.nv.us/App/NELIS/REL/80th2019/Bill/6918/Text 

AB421 – The proposed legislation was intended as a “Construction Defect Bill” that would have reversed all of the beneficial changes to the construction industry from 2015.  The original bill is here.  https://www.leg.state.nv.us/App/NELIS/REL/80th2019/Bill/6799/Text 

My testimony included the following:

Regarding this bill, we are specifically concerned about how AB421 will negatively impact both the economic and residential development within our state.   At a time when our entire state is reporting record numbers in growth in terms of business and residential needs, which includes access and affordability of housing, we oppose a measure that will both increase the cost of residential housing and dramatically impact the construction industry that diligently works to both employ and houses our residents.    In the years since the 2015 revisions to NRS Chapter 40, we have once again entered a time where construction projects (meaning jobs) has had the opportunity to thrive.  The provisions of AB421, which will only serve to create more litigation and drive construction costs up, will have a negative impact on the availability of new homes as well as jobs within the construction sector and those other industries benefiting from those jobs.

Ultimately, a severely scaled-back bill was passed.  Please see here:  https://www.leg.state.nv.us/App/NELIS/REL/80th2019/Bill/6799/Text 

It is clear that these laws will intrude further on how you hire, how you pay, and how you terminate your employees. While it’s our responsibility to follow these laws, it’s equally important we continue educating policymakers and advocating for the appropriates changes to lessen the impact on Nevada business.

Please note failure to properly implement these new laws may cost you significant amounts of money as well as place you under greater scrutiny from state agencies. You now have the superpower of knowledge. Please implement these new restrictions. If you need assistance or you have questions, Gordon Law is always here for you.