By Roger L. Grandgenett II, Esq. and Neil C. Baker, Esq.
Although laws requiring paid leave for sickness, safety, or family reasons are familiar among state and local jurisdictions in the United States, mandatory paid time off remains mostly uncharted territory. But on June 12, 2019, Nevada joined Maine to become one of only two states in the nation to enact a law requiring employers to make paid leave available to employees for any reason. Senate Bill No. 312 became effective on January 1, 2020, and is codified at Chapter 608 of the Nevada Revised Statutes.
Under SB 312, private employers with 50 or more employees in Nevada must provide each employee with at least 0.01923 hours of paid leave for each hour of work performed during a “benefit year,” which the law defines as any “365-day period used by an employer when calculating the accrual of paid leave.” An employee who works 40 hours in every week of the year will accrue approximately 40 hours of leave each year under this formula. Employers should note, however, that employees who work fewer hours—or more—are entitled to accrue leave at the same rate. Only “temporary, seasonal, or on-call employees” are excluded.
The law provides that employees who use their leave entitlements may do so without providing a reason for the use. It further provides that employers may not deny employees the right to use paid leave in accordance with the provisions of SB 312, require employees to find a replacement worker as a condition for using the leave, or retaliate against them for exercising their rights under the new law. On the other hand, the law requires employees to provide notice of their use of paid leave as soon as practicable. It also permits employers to establish a minimum usage increment, although the increment may not be larger than four hours.
Conferral Methods and Permissible Caps
The new law gives employers the option of conferring the entitlements by one of two methods. Under the accrual method, employers may confer employees’ paid leave entitlements on a gradual basis “over the course of the benefit year.” Alternatively, under the frontloading method, employers may confer all the paid leave their employees are entitled to accrue throughout the benefit year on the first day of that year. Regardless of which method the employer chooses, it may restrict new employees from using accrued leave until the 90th calendar day of employment.
While the law does not expressly allow employers to place a cap on the amount of leave that employees can accrue, it does allow them to cap employees’ use of paid leave at 40 hours in a benefit year. The law further provides that employers who elect the accrual method may limit the amount of accrued leave an employee may carry over from year to year to a maximum of 40 hours per benefit year.
Rate of Compensation
The law requires employers to compensate employees for the paid leave they use at the same rate and on the same day as the hours would have been paid if the employee had worked them. For hourly employees, SB 312 provides that the proper rate of compensation is the employee’s hourly rate. For employees paid by a method other than an hourly rate, such as salary, commission, or piece-rate employees, the law requires that compensation be based on an artificial hourly rate, which should be derived by dividing the employee’s “total wages” earned during the preceding 90 days by the number of hours worked during that period. The nonhourly compensation rate must “include any bonuses agreed upon and earned by the employee,” but it need not include overtime pay, hazardous duty pay, holiday pay, tips, or “any bonuses awarded at the sole discretion of the employer.”
Reporting, Posting, and Recordkeeping Requirements
Included among employer’s new obligations under SB 312 are certain reporting requirements. First, employers must “maintain a record of the receipt or accrual and use of paid leave” for a period of at least one year, which they must make available for the Labor Commissioner’s inspection on request. Second, on each payday, employers must provide an accounting to each employee of the paid leave available to that employee. Employers may provide the accounting using their existing payroll systems.
In addition, SB 312 directs the Commissioner to prepare a bulletin informing employees of their rights and obligations under the new law. The law further directs the Commissioner to require that employers place the bulletin in a conspicuous location in each workplace that they maintain.
Under certain circumstances, employers may be exempt from the requirements of SB 312. To begin with, the law excludes from its scope any entity that does not have “50 or more employees in private employment in this State.” The law also provides that employers need not comply during their “first 2 years of operation.” Finally, SB 312 expressly states that its provisions do not apply if, “pursuant to a contract, policy, collective bargaining agreement or other agreement,” the employer “provides employees with a policy for paid leave or a policy for paid time off to all scheduled employees at a rate of at least 0.01923 hours of paid leave per hour of work performed.”
The law directs the Commissioner to enforce the provisions of SB 312 and grants the office authority to impose administrative penalties of up to $5,000 for each violation. The law further provides that any person who violates the provisions of the law, “or any regulation adopted pursuant thereto,” is guilty of a misdemeanor.
As the law does not contain an express private right of action, at present the Office of the Labor Commissioner is the only clear enforcement mechanism for SB 312. Clearly, then, employers and their counsel should accord significant weight to any guidance provided by that office. To date, the Commissioner has issued two advisory opinions addressing a broad range of questions posed by employers following the law’s enactment. See AO 2019-02 Paid Leave. Among the most notable of the positions taken by the Commissioner in those opinions are the following:
- “The intent and explicit, plain, and unambiguous language” of SB 312 “clearly provides that employers already providing leave that matches or exceeds the 0.01923 hours of paid leave per hour of work performed pursuant to a contract, policy, collective bargaining agreement or other agreement are explicitly exempt from the other requirements” of the law;
- An employer is not covered by the law unless it “employs 50 or more employees in Nevada in 20 or more consecutive or nonconsecutive workweeks in the current or preceding calendar year”;
- The Commissioner will review claims of unlawful denials of the right to use paid leave on a case-by-case basis. A notice period of three to five days or longer might be acceptable where the employee “is going on vacation” or “taking a voluntary day off” and where the employer’s notice requirements appear in a writing “provided to and signed for by the employee.”
- Finally, the Commissioner provides definitions for the terms “temporary, seasonal, and on-call employees,” which terms are otherwise left undefined in SB 312.
Nevada is one of the first states in the nation to enact a mandatory paid time of law. But it is unlikely to be the last. As Nevada attorneys, we are among the first to address issues that may soon confront the nation.
About the authors:
Roger L. Grandgenett advises and represents employers in all aspects of labor and employment matters before the Equal Employment Opportunity Commission, the Nevada Equal Rights Commission and the National Labor Review Board, as well as the Department of Labor and the Nevada Labor Commissioner.
Neil C. Baker advises and represents Nevada and Utah employers in a broad range of employment matters and appears on their behalf before both federal and state courts, as well as before administrative agencies.
This article was originally published in the “Labor & Employment Law” issue (February 2020) of Communiqué, the official publication of the Clark County Bar Association.
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