Nevada’s new law on determining whether workers should be classified as employees instead of independent contractors takes effect July 1.
For years, Nevada has maintained certain “tests” under which individuals may properly be classified as independent contractors rather than employees. Most of the tests focus on the extent to which the hiring business retains and/or exercises the right to control the manner and means by which the work is performed. But the new law, Senate Bill (SB) 493, contains four key elements related to the classification of workers:
- SB 493 creates a conclusive presumption, applicable only to building contractors, that a licensed contractor or subcontractor is properly classified as an independent contractor if (1) she is free from control over the performance of her services, (2) the services are outside the scope of activities the hiring business usually offers (or performed away from its usual locations), and (3) the individual is performing the service as part of her independently established business.
- The new law provides for penalties of up to $5,000 per employee as well as damages such as lost wages, lost benefits, and other economic damages if workers are misclassified.
- SB 493 creates a governor-appointed task force dedicated to evaluating and proposing new legislation, to ensure the penalties for misclassification remain an effective deterrent.
- SB 493 creates additional potential liability when it can be shown that an employer coerced, misrepresented, or fraudulently required individuals to be classified as independent contractors or to form a business entity to classify them as independent contractors.
For more information on Nevada’s independent contractor law and other new legislation, see the June issue of Nevada Employment Law Letter.
Shannon S. Pierce and Eric Duhon are attorneys with Fennemore Craig, P.C. in Las Vegas and Reno. They can be reached at spierce@fclaw.com or eduhon@fclaw.com.