NFIB State Director Randi Thompson reports from Carson City
The 80th Legislative Session saw the first female majority legislature in the nation and also a solid Democrat majority in both houses. Democrats held a super-majority in the Assembly and were only one vote shy of a super-majority in the Senate. So, it was a Democrat-controlled agenda this session, and the two groups that were driving that agenda were labor unions and the trial attorneys.
A record was set by having five vacancies in the Legislature before the start of this session, and three more during the session. There were seven appointments to the Legislature, as Tyron Thompson’s seat remained unfilled for the last month after his death. Assemblyman John Hambrick was absent most of the session due to health issues.
Several of those appointed to committee leadership didn’t plan to run for re-election. Leadership also underwent a big change in the Senate in the first month when Kelvin Atkinson was forced to resign. All in all, it was an odd session with many new faces that likely won’t be back in 2021.
There were about 1,200 bills introduced during the 2019 session, and about 600 made it to Gov. Steve Sisolak’s desk.
One big frustration was that the Legislature really did nothing about the No. 1 issue facing Nevada employers: workforce development. There were seven bills dealing with improving Career and Technical Education and workforce development, yet none of them passed. Why? Well, to pass such bills would acknowledge that our education system is failing our students (and thus our employers) by not providing them with the skills they need to get a job out of high school … but then, we know that!
There were some good business bills:
- Senate Bill 497 passed which says if you make less than $4 million, you no longer have to file the commerce tax form. A small victory for small business.
- Senate Bill 45 exempts certain businesses from having to get a state business license. Businesses that do not have an office or base of operations in the state do not have a registered agent in Nevada and do not pay wages or other remuneration.
That’s really about it for good business bills. Yeah, it was that kind of session!
Pre-Employment Drug Testing
Assembly Bill 132 was amended significantly from its original form that initially said an employer could not use any character assessments or tests (Meyers-Briggs, etc) in the pre-employment process, and that if a prospective employee failed a drug test, you could not use that test as a reason to not hire him or her. After meetings with business lobbyists, the sponsor deleted the section about character assessments, and allowed for exemptions related to the drug test. Any job related to safety is exempt, such as firemen, truck drivers, and heavy equipment operators. The bill also allows the employer discretion for any job that “could adversely affect the safety of others” to also be exempt. This was left broad to allow for such positions that the employer feels could be adversely impacted by an employee who failed a drug test.
Minimum Wage Increase
Assembly Bill 456 passed mainly along party lines, with only GOP Sen. Keith Pickard voting for it. The pay increase does not go into effect on July 1, 2020. At that point, the minimum wage will be $9, or $8 if you “provide” health insurance, not just offer it. However, there a lot of exemptions in the bill, including the following:
- employees in collective bargaining agreements
- companies with less than $250,000 in gross revenue
- any salesperson or mechanic primarily engaged in selling or servicing automobiles, trucks or farm equipment
- drivers making local deliveries who are paid per trip
- taxicabs and limo drivers
- agricultural employees
There are some business lobbyists who said they may sue over the bill, as they don’t think the legislature has the authority to raise minimum wage since it’s in our constitution.
Assembly Joint Resolution 10 is the backup plan to amend the Nevada Constitution to raise the state’s minimum-wage rate to $12 an hour starting in July 2024. It also gives the Legislature the authority to raise wages. The only exemptions are collective bargaining agreements and workers under 18 who are employed by a nonprofit organization for after school or summer employment or as a trainee for a period not longer than 90 days. The resolution will have to pass the Legislature in 2021 and then go to the voters in 2022.
Assembly Bill 312 started out as applying to companies with 25 or more employees and was to be used only for sick or family leave. As passed:
it now applies to companies with 50 or more employees (it does not specify FTEs, which can work to an employer’s favor)
mandates that for every 40 hours worked, an employee earns about one hour of leave sets a maximum of 40 hours that can be earned or carried over in a year.
Small businesses within the first two years of operation are exempt. Seasonal and on-call workers are also exempt, but part-time employees are not. The leave can be used for family leave, vacation, illness, etc., and allows the employer some discretion on how the time is allocated, such as in four-hour blocks.
A company that currently offers 40 hours of vacation time can change their policy to paid time off and be in compliance. The bill was complicated to amend because legislators just don’t understand that workers are paid in a variety of ways, so the bill had to take into consideration various pay scenarios. NFIB expects the so-called progressives to be back next session to try to lower the threshold to 25 employees.
Senate Bill 166 started out applying to all employers, awarded attorney fees to the employee if the employer was found to be involved an unlawful employment practice, allowed the Nevada Equal Rights Commission (NERC) to issue both compensatory damages and punitive damages, and allowed for excessive civil penalty fines. But as passed, the bill as passed allows for the NERC to do a mediation first before any filing of lawsuits, took away lawyer fees and damages, and reduced the fines, which only apply to businesses with 50 or more employees.
Assembly Bill 421 was a hotly contested measure that deals with home construction defects. Prior to 2015, Nevada had one of the worst laws in the nation related to this area. Numerous small business had to close because of litigation costs related to frivolous home-defect lawsuits, and it sent the cost of insurance skyrocketing for those that worked in home construction. In 2015, that all changed with the passage of AB 125, which significantly reduced the lawsuits related to construction defects. That is why in the last session, trial lawyers worked to get a bill passed to revoke the 2015 law, but then-Gov. Brian Sandoval vetoed it. So, back the lawyers came this year for another try. Thanks in large part to Josh Hicks from McDonald Carano, who led the fight on AB 421, it was amended to maintain the current definition of “defect,” and that attorney’s fees are not damages. Fees may be awarded under qualifying offer of judgment or per the discretion of the court as in all general civil cases.
Senate Bill 435 now allows insurance companies in Nevada to disclose your insurance policy limits to claimants and/or attorneys of claimants without your consent before the start of a lawsuit. Many see this a violation of privacy rights and will allow attorneys to shop around for deep pockets before filing a lawsuit.
Affordable Housing Tax Credits
Senate Bill 448 allows for transferable tax credits for affordable housing in the state. The bill allocates $10 million a year until 2023 in transferable tax credits for affordable, low-income housing development.
Assembly Bill 240 requires that Carson City, Douglas, Lyon, Storey, and Washoe counties, in consultation with any cities within each county, to each prepare a report for submission to each legislator who represents any portion of the county at the end of each calendar year between July 1, 2019, and December 31, 2022, that identifies issues relating to and makes recommendations regarding the orderly management of growth in those counties and their cities within those counties. The bill also requires representatives of these counties and cities to meet jointly at least twice in 2020 and 2023 to identify and discuss issues relating to the orderly management of growth in the region.
Collective Bargaining for State Employees
Starting in 2021, Senate Bill 135 will give more than 20,000 state workers the right to join 11 separate bargaining units to negotiate for salary and other benefits. But it won’t be binding to wages, retirement contributions, or staffing ratios. The state did not provide any cost estimates as to what the impact this will have on the budget, which is why the bill gives the governor the ability to veto any package if it will break the budget. The Las Vegas Metro Chamber of Commerce commissioned a study that showed collective bargaining for state employees could result in about a $1.70 billion per year increase in state expenditures.
The most contentious bill, Senate Bill 551, revokes the planned payroll tax reduction that was to kick in this July. As part of the 2015 commerce tax deal, if taxes collected from the commerce tax and the payroll tax (MBT) grow by more than 4% a year, the Nevada Department of State Taxation must lower the rate that a business pays on the next year’s revenues to what would’ve been 4% growth. In his state-of-the-state speech, Gov. Steve Sisolak said he was going to revoke the decrease and maintain the existing tax rate, which would keep $100 million in his budget.
The Nevada Constitution requires a super-majority vote for any tax increase, so lawmakers sought a legal opinion stating that canceling a tax rate decrease requires only a simple majority, which allowed the bill to be passed by a simple majority. Senate Republican Leader James Settelmeyer is considering filing a lawsuit over the vote.
Assembly Bill 445 mandates that online marketplaces such as Amazon, Ebay, etc. collect and remit sales tax. This was passed to be line with the Wayfair U.S. Supreme Court case.
The Opportunity Scholarship program received $9.5 million dollars, but Senate Democrats put language in SB 551 (see above) that said no new students will be allowed in the program, even if they have siblings on the scholarship. The bill prevents what advocates feared most: That hundreds of current recipients would be kicked off the rolls. But it limits the growth of the very effective program. Democrats made this move as retaliation for the GOP not voting for the bill which contained the revocation of the MBT tax reduction.
Funding for education was changed in Senate Bill 543 to update the 50-year-old Nevada education funding plan. Now, all sources for funding are put into one account called the Nevada State Education Fund. It removes federal money from the base per-pupil funding, increases per-pupil funding, and adds funds for special education, English language learning, and disability services.
Also passed was Assembly Bill 309, which allows county commissioners to increase the sales tax in that county by 0.25% by either a 2/3rds vote of the commission or by a vote of the people. The proceeds of the tax increase may be used for teacher recruitment, reducing truancy, reducing homelessness, or affordable housing. The measure was not well received by the Clark County Commissioners, which was the intended receiver of the authority. It’s doubtful Washoe will take the legislature up on the offer either.
The big criminal justice reform bill was Assembly Bill 236. A huge issue for business was the sentencing for theft. That crime will now be considered a felony only in cases where the property stolen is valued at more than $1,200, with offenders facing longer sentences for more expensive thefts. (The bill did do away with the state’s specific prohibition against theft from a vending machine. Stealing from a soda machine would still be a crime, just not its own separate category of crime.) Much of the bill included recommendations from the state’s Advisory Commission on the Administration of Justice in response to the state’s rising prison population. The recommendations are more than 80 pages. The highlights from which include:
- reduction of penalties for drug possession, as long as you’re not selling
- increasing the use of diversion programs
- changing and breaking up the many burglary statutes
- raising the monetary threshold for theft
- simplifying Nevada’s habitual criminal law.
Capital Spending (aka: the Pork Bill)
Every session there is a “pork” bill. This session, it was Senate Bill 528 that allocates nearly $55 million to a variety of projects including:
- $20 million for an engineering building at UNLV
- $3 million for The Ruvo Center to assist in clinical operations, research and education.
- Funding will also go to centers in Las Vegas and Elko, as well as a joint agreement with the UNR School of Medicine to focus on educating medical students with Nevada roots and keeping them in the state to address the doctor shortfall
- Great Basin College in Elko will see more than $458,000 for the expansion of the college’s welding lab – funds they have been requesting for six years! Another $26 million will go toward a variety of programs aimed at improving school safety.
In the Final Analysis …
It was a tough session for business, especially for the sectors that have union involvement, but it could have been a lot worse. Although we knew we would get the trifecta of paid leave, equal pay, and a minimum wage increase, there were some exemptions and delays that hopefully will soften the blow for the smallest and most vulnerable businesses, such as restaurants and bars and locally owned small businesses.
No doubt, though, there will be job losses in the summer of 2020 when minimum wage kicks in, especially in rural areas. Those job losses will be right before the 2020 election. We will wait to see how those job losses impact the outcome of the election.