Lawsuit alleges state conspired with employers to subvert intent of minimum wage constitutional amendment

Against the backdrop of a national debate on the minimum wage, a Las Vegas lawyer has sued the state alleging that employers, aided by the state’s labor commissioner, have systematically evaded a requirement of a 2006 constitutional amendment to provide low-income workers with health care.

The suit, which is posted here, could unmask a symbiosis between regulators and employers, whose lobbyists, as so often has occurred in Nevada, use the administrative process to undo legislative or voter intent. That is, once a law or a voter initiative passes, lobbyists work their necromancy with regulators to soften, change or even subvert the intent. If the allegations in this lawsuit are borne out, they also could help explain why Nevada has such a large uninsured population.

The gist of the suit filed by Bradley Schrager on behalf of two plaintiffs (and there must be many more in waiting), is this:

The 2006 constitutional amendment provided that employers could pay one dollar less than the minimum wage indexed for inflation if they provided health care coverage to their workers. The suit alleges that the state has promulgated regulations that allow employers to “offer” (maybe once and not ongoing)  but not mandatorily “provide,” as the amendment stated, health insurance. So his clients – and surely many others – are without health insurance mandated in the Constitution.

For others, the suit argues, the commissioner allowed employers to perversely interpret another section of the constitutional amendment mandating “not more than 10 percent of the employee’s gross taxable income from the employer.” The commissioner also apparently offered a six-month grace period, nowhere in the constitutional amendment, that allowed employers to pay the lower minimum wage without providing health insurance.

Among the other allegations in what could be a far-reaching lawsuit are a series of startling ones that indicate the labor department keeps no database to track employers and which ones are and are not providing health insurance. Thus, there is no enforcement mechanism, either.

Talk about a Pandora’s Box that could be stuffed with millions of dollars in back pay. If the suit is successful, the next step would be for employees to sue employers for back pay. Going back seven years, imagine how much money that could be.

One irony here: An attorney general's opinion (fourth one down) that could be helpful to the plaintiffs and filed in 2005 was prepared by a fellow named Brian Sandoval.

A spokeswoman for the department of Business and Industry said the state has yet to be served and would offer no comment.

(Full disclosure: My wife has been represented by Schrager.)