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Employment relationship

State-specific laws What state-specific laws govern the employment relationship? Title 53 of the Nevada Revised Statutes on Labor and Industrial Relations contains the majority of the laws governing employer-employee relationships. Chapter 608 addresses compensation, wages, and hours. Chapter 609 addresses employment of minors. Chapter 613 contains the state’s anti-discrimination and fair employment practices laws. Chapter 612 deals with unemployment compensation, and Chapter 616 addresses industrial insurance (workers’ compensation). 

Nevada’s Administrative Code includes rules governing employment-related matters. The chapter numbers for the code generally correspond to the related chapter of the Nevada Revised Statutes (e.g., Chapter 608 of the code contains compensation, wages, and hours rules to correspond with Chapter 608 of the statutes on those same topics).

Who do these cover, including categories of workers? Depending on the specific provision, these laws generally cover employees. Some provisions, including fair employment practices laws, also apply to applicants for employment. Chapter 608 of the Nevada Revised Statutes does not apply to public employers.

Misclassification Are there state-specific rules regarding employee/contractor misclassification? Nevada sets forth different tests for independent contractor status under various employment laws.

For wage and hour purposes, a person is conclusively presumed to be an independent contractor if certain criteria are met (See S.B. 224, effective June 2 2015, amending Nev. Rev. Stat. Ch. 608).

For workers’ compensation purposes under Nevada’s Industrial Insurance Act, an “independent contractor” is defined as:

“any person who renders service for a specified recompense for a specified result, under the control of the person’s principal as to the result of the person’s work only and not as to the means by which such result is accomplished.” (Nev. Rev. Stat. § 616A.255).

The contractor must operate as an independent enterprise, which is not in the “same trade, business, profession or occupation” as the company. An “independent enterprise” is:

“a person who holds himself or herself out as being engaged in a separate business and: (a) [h]olds a business ... license in his own name; or (b) [o]wns, rents or leases property used in furtherance of his business.” (Hays Home Delivery, Inc. v. Employers Ins. Co. of Nevada, 31 P.3d 367, 370 (2001)).

A different test applies in construction cases.

For unemployment compensation purposes, Nevada uses an “ABC” test, pursuant to which “employment” excludes work performed as follows:

  • the person has been and will continue to be free from control or direction over the performance of the services, both by contract and in fact;
  • the service is either outside the usual course of the business for which the service is performed or that service is performed outside of all the places of business of the enterprises for which the service is performed; and
  • the service is performed in the course of an independently established trade, occupation, profession or business in which the person is customarily engaged, of the same nature as that involved in the contract of service (Nev. Rev. Stat. § 612.085).

Contracts Must an employment contract be in writing? No, an express contract for employment may be made either orally or in writing (Am. Bank Stationery v. Farmer, 799 P.2d 1100 (Nev. 1990); see also Ringle v. Bruton, 86 P.3d 1032 (Nev. 2004)).

An employer’s written materials, including employee handbooks and personnel policies, as well as oral representation made by the hiring authority or management may constitute an implied employment contract (Am. Bank Stationery v. Farmer, 799 P.2d 1100 (Nev. 1990)). However, an employer may avoid the inference of an implied contract by including an express disclaimer stating that the handbook and policies do not create an express or implied contract (D’Angelo v. Gardner, 819 P.2d 206 (Nev. 1991)).

Are any terms implied into employment contracts? Under Nevada law, each contract contains an implied covenant of good faith and fair dealing. An employer breaches that implied covenant when, acting in bad faith, it discharges an employee who has established contractual rights of continued employment and who has developed a relationship of trust, reliance and dependency with the employer (D’Angelo v. Gardner, 819 P.2d 206 (Nev. 1991)). Liability is typically limited to the rare cases where the party in the superior or entrusted position has engaged in “grievous and perfidious misconduct” (K Mart Corp. v. Ponsock, 732 P.2d 1364 (Nev. 1987), abrogated on other grounds by Ingersoll–Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)).

Are mandatory arbitration agreements enforceable? Pursuant to Nevada’s Uniform Arbitration Act, an agreement to submit to arbitration any existing or subsequent controversy arising between the parties is valid, enforceable and irrevocable, except on certain grounds, such as where the agreement fails to include specific affirmative authorization to arbitrate, or on grounds to revoke the contract under established contractual principles (Nev. Rev. Stat. §38.219). As a matter of public policy, Nevada courts favor arbitration and liberally construe arbitration clauses in favor of granting arbitration (Tallman v. Eighth Jud. Dist. Ct., 359 P.3d 113 (Nev. 2015); Kindred v. Second Jud. Dist. Ct., 996 P.2d 903 (Nev. 2000)).

How can employers make changes to existing employment agreements? Oral modifications of an existing contractual agreement are permissible (Silver Dollar Club v. Cosgriff Neon Co., Inc., 389 P.2d 923 (Nev. 1964)). However, best practice would be to record any contractual changes in writing, signed by both parties.