NV State Updates - 2015 Jan 16 No.01

On June 2, 2015, Gov. Sandoval signed SB 224 into law, amending Chapter 608. As background, recent Nevada court decisions have noted an absence of legislation creating a test or standards to define who is an independent contractor, which this law clarifies.

Section One establishes a conclusive presumption that a person is an independent contractor, rather than an employee, for purposes of Chapter 608 if the following conditions are met:

a. The person is not a foreign national who is legally present in the U.S.;b. The person is required by contract with the principal to hold any necessary state or local business license and to maintain any necessary occupational license, insurance or bonding; andc. The person meets three or more of the following criteria:The primary element bargained for in the contract is that the principal has control and discretion over the means and manner of the performance of any work and the result of the work, rather than the means or manner by which the work is performed.Except for an agreement with the principal relating to the completion schedule, range of work hours or, if the work contracted for is entertainment, the time such entertainment is to be presented, the person has control over the time the work is performed.The person, with limited exceptions, is not required to work exclusively for the principal.The person is free to hire employees to assist with the work.The person contributes a substantial investment of capital in the business of the person. The determination of whether an investment of capital is substantial for the purpose of this subparagraph must be made on the basis of the amount of income the person receives, the equipment commonly used and the expenses commonly incurred in the trade or profession in which the person engages.

A person who is not conclusively presumed to be an independent contractor because of a failure to satisfy three or more of the criteria above will not automatically be presumed to be an employee.

Section Five of this law excludes the relationship between a principal and an independent contractor from those relationships that constitute employment relationships for the purpose of requiring the payment of minimum wage.

Importantly, employers should still take into account federal IRS guidance when determining whether an individual is an employee or an independent contractor. This determination becomes relevant when complying with many other federal laws, including the employer mandate. Ultimately, employers should work with legal counsel when making this determination.

This law became effective June 2, 2015 and applies to any current or proceeding action (in which there is not a final decision) relating to whether there is a conclusive presumption that a person is an independent contractor, rather than an employee owed minimum wage under Nevada law.

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