Nevada law creates independent contractor presumption

Nevada Governor Brian Sandoval has approved legislation that establishes a conclusive presumption that a person is an independent contractor, rather than an employee, when certain conditions are met.

The new law also exempts the principal-independent contractor relationship from the state’s minimum wage requirement. The bill, S.B. 224, is effective June 2, when the governor signed it. Its provisions apply to actions to recover unpaid wages under the minimum wage requirement that have not reached final decision before, on, or after June 2.

Conclusive presumption. Senate Bill 224 amends Chapter 608 of the Nevada Revised Statutes to add a new section which provides that a person is conclusively presumed to be an independent contractor when the person:

• Possesses or has applied for an employer identification number or social security number or has filed an income tax return for a business or earnings from self-employment with the IRS in the previous year (unless the person is a foreign national who is legally present in the United States);

• Is required by the contract with the principal to hold any necessary state or local business license and to maintain any necessary occupational license, insurance or bonding; and

• Satisfies at least three of the following criteria: (1) Notwithstanding the exercise of any control necessary to comply with any statutory, regulatory or contractual obligations, the person 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, is the primary element bargained for by the principal in the contract. (2) The person has control over the time 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; (3) The person is not required to work exclusively for one principal unless a law, regulation, or ordinance prohibits him or her from providing services to more than one principal, or he or she has entered into a written contract to provide services to only one principal for a limited period. (4) Is free to hire employees to assist with the work. (5) Contributes a substantial investment of capital in the business of the person, including, without limitation, the purchase or lease of ordinary tools, material, and equipment regardless of source; the obtaining of a license or other permission from the principal to access any work space of the principal to perform the work for which the person was engaged; and the lease of any work space from the principal required to perform the work for which the person was engaged.

The person’s failure to be conclusively presumed an independent contractor because at least three of these criteria are not met does not automatically create a presumption that the person is an employee.

Minimum wage exemption. S.B. 224 in addition provides that for purposes of Chapter 608 and any other statutory or constitutional provision governing the minimum wage, the relationship between a principal and an independent contractor does not constitute an employment relationship and is thus not subject to those provisions.

Amendatory provisions applied. The amendments made by S.B. 224 apply to an action or proceeding to recover unpaid wages in which a final decision has not been rendered before, on, or after June 2, the effective date of the bill.

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