A Nevada bill that would exempt businesses from paying minimum wage to independent contractors earned praise Monday from business owners who say they want the flexibility to hire people on contract.
However, critics said the bill would encourage employers to skimp on wages and benefits.
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Members of the Senate Commerce and Labor Committee held a hearing for SB224, which aims to create a standard definition of independent contractor throughout Nevada law.
The measure also would bar some people from recovering unpaid wages under the minimum wage law.
Committee members acknowledged that bill language indemnifying employers from wage lawsuits was too broad and needed to be amended to cover only independent contractors.
The committee did not vote on the bill.
Proponents say the Nevada Supreme Court found conflicting definitions for independent contractors in state law last year, meaning most workers in Nevada are considered regular employees.
That makes them subject to certain wage rules and would require their employers to pay into workers compensation, disability and other funds.
Bill supporters say Nevada law should allow more latitude for independent contractors, including real estate agents, hairstylists, exotic dancers and truck drivers, who work on their own schedules, sometimes temporarily and sometimes for more than one company.
Salon owners and the Nevada Association of Realtors say they need the bill to protect them from lawsuits over wages and benefits that they didn't intend to offer in the first place.
Opponents say the bill language is vague and would prevent large groups of workers, including regular employees, from recouping unpaid wages under minimum wage law,
The measure would "give a free pass to employers who have been found to have not respected the minimum wage" and give unscrupulous businesses a competitive advantage over ones that abide by the wage rules, said Leon Greenberg of the Nevada Trial Lawyers Association.
Opponents also said that businesses might abuse the law and designate people as independent contractors to avoid paying benefits and fair wages.
Low-wage workers might not understand that they've been classified as an independent contractor. As a result, they would not pay into disability, workers compensation or unemployment funds on their own, and would find out later that they are not covered by those safety nets and must rely on support from the state.
"They're going to be on state payrolls," said Nathan Ring, a lobbyist for labor unions. "They can't feed themselves or their families."