Some assorted notes on the Nevada economy:
June’s report of economic indicators from Nevada Business magazine contains mostly positive news for the Nevada economy.
Southern Nevada’s retail market is on the rebound, according to the Las Vegas Review Journal.
The “fun tax” proposed by Assembly Speaker Marilyn Kirkpatrick will be scaled back but still faces and uncertain future.
The Las Vegas Sun’s Downtown reporter, Joe Schoenmann, had a Q-and-A with a representative from the Downtown Project.
The 2013 Nevada Legislature began on February 4th. What has happened in the nearly three months since then that may affect Nevada businesses? The short answer? So far, not much.
An initiative to double the tax on mining to fund education has been proposed by a group of Republican senators, but they face some resistance within their own party, including Governor Sandoval.
Among several bills that the Las Vegas Sun’s excellent political reporters note have advanced in the legislative process is one that would increase the sales tax in Clark County by 0.15 percent to fund local police departments. Five of Clark County’s seven commissioners voted to support the bill, so it appears poised to become law sooner than later.
Several bills that could have impacted Nevada businesses and corporations, have died. SB 422, which would have barred non-competition agreements for certain media-related businesses, failed to advance. So did AB 134, which would have eliminated a minimum age requirement for those serving on boards of directors or trustees of nonprofit corporation.
On April 1, 2013, the Nevada Labor Commissioner, Thoran Towler, made his annual announcement regarding Nevada’s minimum wage. The minimum wage will remain the same for 2013: $7.25 per hour for employees who receive qualifying health benefits and $8.25 per hour for employees who do not receive qualifying health benefits. Contact Rachel Silverstein to determine whether the health benefits you provide qualify for this reduction.
This announcement also means that the requirements for paying daily overtime will not change this year. In Nevada, employees who earn less than one-and-a-half times the minimum wage are entitled to overtime for more than eight hours worked in a day (unless they have an agreement to work four ten-hour shifts per week). Thus, the daily overtime requirement applies when an employee earns less than $10.88 per hour with qualifying health benefits or $12.38 without qualifying health benefits. Of course, both Nevada and Federal law outline several classes of employees who are exempt from both daily and weekly overtime requirements.
If you have wage and hour compliance questions, contact Rachel Silverstein at (702) 699-5923 or RSilverstein@Foxrothschild.com.
As the Nevada legislature continues its 2013 session, competing tax proposals are bubbling to the surface, and Nevada businesses are confronted with the question of their tax burden will be rising soon. Will Nevada’s vaunted position as one of the most favorable states for taxation be threatened?
Nevada’s voters will decide in 2014 whether to enact a 2% margins tax on businesses with more than $1 million in revenues. The bill is backed by the Education Initiative PAC, a Nevada political action committee with backing by teachers unions. The bill, introduced before the legislature as IP 1, did not make it out of committee within the 40 day window for the legislature to act on it. In January 2013, the Nevada Supreme Court rejected a procedural challenge to the initiative. Expect business to rally against the margins tax in the run up to the 2014 election.
Six of Nevada’s ten Senate Republicans have proposed a tax on the mining industry as an alternative to the margins tax. Senate Joint Resolution 15 would repeal the constitutional 5% cap on taxes to mining operations. The Nevada Mining Association insists the industry already pays more than its fair share. Proponents suggest that taxing the mining industry could raise hundreds of millions of dollars a year.
Nevada’s voters are notoriously anti-taxation. Still, the mining tax seems to have a better chance than the margins tax given the perceived unfairness of the latter to business. SJR 15, the mining tax, would also require voter approval in 2014 if it passes the legislature this year. Someone’s taxes may rise in Nevada — but we may not know who will be taxed until returns arrive on November 4, 2014.
This post was authored by Alka Bahal, Partner in Fox Rothschild’s Roseland, NJ office. It originally appeared on Fox Rothschild’s Immigration View blog.
On March 8, 2013, U.S. Citizenship and Immigration Services (USCIS) published a revised Employment Eligibility Verification Form I-9 for immediate use. The Department of Homeland Security (“DHS”) published a Notice in the Federal Register informing employers of the new Form I-9. This form replaces all other forms and should be used from today forward for all new hires and reverifications. The previous editions of the Form (with an OMB control number expiration date of August 31, 2012) are valid for 60 days. Thereafter, only the new edition of the form is acceptable.
Improvements to Form I-9 include new data fields, a revised format that expands the form to two pages, and clearer instructions to both employees and employers.
All U.S. employers are required to complete a Form I-9 for every employee hired in order to verify that the individual is authorized for employment in the United States under the Immigration Reform and Control Act of 1986 (IRCA). Beginning May 7, 2013, employers must use the new version of the Form for all new hires and for re-verifying current employees with expiring employment authorization documentation. [Employers should not complete new Forms for existing employees who do not require re-verification.] A best practice would be for employers to begin using the new edition of the form immediately.
The new Form I-9 and List of Acceptable Documents is available on USCIS’ website in English and in Spanish. (Note, however, that the Spanish version of the Form may only be executed by employer’s in Puerto Rico; Employers in the 50 states, Washington, D.C., and other U.S. territories may use the Spanish version of the Form as a translation guide, only, but must complete the English version of the Form.)
Business litigants in Nevada have the opportunity to file their cases in specialized business court departments, which were established as part of Nevada’s efforts to be a business-friendly state. Since 2001, business courts have existed as part of the Silver State’s effort to become the “Delaware of the West,” in terms of being an optimal state in which to incorporate a business entity.
Both the Second and Eighth Judicial District Courts of Nevada (Washoe County and Clark County) have designated business court judges. In Clark County, cases designated as business matters are randomly assigned to one of three business court judges: Elizabeth G. Gonzalez, Mark R. Denton, or Susan W. Scann.
Business courts provide enhanced case management and allow businesses to efficiently resolve their disputes. Business court judges, who are selected based on having experience with business matters as a judge and/or as a practitioner prior to taking the bench, assist in streamlining litigation by setting expedited discovery deadlines, hearing motions on shortened time, and using evidentiary hearings to narrow the scope of the case. The judges’ experience in business-specific matters allows them to recognize which procedural tools might be most effective in a particular case. Business court judges take a very active role in business court-designated matters and hear all discovery disputes rather than requiring the parties to go before discovery commissioners who hear such disputes in regular civil matters.
Early on in a business case, the business court judges conduct mandatory business court conferences (also known as Rule 16 or NRCP 16 conferences) wherein they address the nature and timing of discovery, inquire as to any needed special case management procedures and the status of the early case conference, and attempt to simplify issues and streamline discovery. In addition, business court judges may determine whether a special master or receiver is necessary or if early settlement conferences will be productive, and if so, assist in scheduling settlement conferences with one of the other business court judges. All of these things make a business case more streamlined for litigants in an effort to assist them in resolving their disputes more quickly and efficiently, so that they can get out of the court room and back to conducting their business.
In order for a case to be filed as a business court matter in Clark County, it must meet the definition of a business matter under local rule EDCR 1.61. This rule says that a business matter involves claims relating to NRS Chapters 78-92A, the Uniform Commercial Code, business torts, business franchise transactions and relationships, and the purchase or sale of: the stock of a business, all or substantially all of the assets of a business, or commercial real estate. A matter may also be deemed appropriate for business court if it involves complex issues that would benefit from enhanced case management.
Filing fees for business court are significantly higher than for regular civil cases, in part to ensure that only truly complex cases that require special business court attention get filed in business court. The filing cost is $1,530 to initiate a business matter and $1,483 to respond to a business court complaint. To designate a case as a business matter, a party simply checks the appropriate box on the civil cover sheet and indicates the request for business court in the caption of the initial pleading. If a party requests a business court designation after the original pleading is filed the case is randomly assigned to one of the business court judges for determination as to whether the case should be handled as a business matter. When a business court judge is peremptorily challenged the case is assigned to another business court judge. Additionally, any party can challenge the designation of a business matter by seeking review by the assigned business court judge, who determines whether or not a case is appropriate for business court. The judge’s decision to accept or reject a matter as a business court case is final and not subject to appeal.
Fox Rothschild’s Las Vegas litigation team is currently handling several matters in business court, and one of its associate attorneys formerly worked as a law clerk to one of the business court judges. Based on their experience and familiarity with business court in Nevada, Fox Rothschild is always eager to take on complex business litigation matters and assist its clients in obtaining efficient results through Nevada’s business court program.
For many employers, a pregnant employee presents unique challenges, particularly when it comes to granting leave for pregnancy-related issues.
“Pregnancy discrimination” is addressed in both state and federal statutes[1]. Under the federal law, commonly known as the “Pregnancy Discrimination Act” (“PDA”), discrimination based on sex explicitly includes discrimination on the basis of pregnancy. Nevada law differs slightly in that pregnant women are a separately defined protected class under Nevada Revised Statute 613.335. The PDA has been interpreted to offer more protections than the Nevada statute.
Nevada employers are required to extend the same benefits to a pregnant employee as it would another employee with a short-term disability or medical condition. For example, if an employer offers leave with pay for sickness or disability, it must offer leave with pay for pregnant employees. If an employer offers leave without pay for sickness or disability, it must offer leave without pay for pregnant employees. If an employer offers leave without loss seniority for sickness or disability, it must offer the same for pregnant employees. Additionally, the pregnant employee must be allowed to use such leave before and after childbirth, miscarriage, or other natural resolution to the pregnancy.
Likewise, some federal courts have held that the Pregnancy Discrimination Act requires employers to transfer pregnant employees or modify their work assignments if it would afford the same transfer or modification to an injured or disabled employee.
The Nevada Supreme Court has ruled that the leave of absence policies at play under this statute are only for sickness, disability or medical condition[2]. For example, if an employer offers a one-week leave of absence for bereavement when a relative has passed away, the same leave need not be provided to a pregnant employee.
Additionally, fringe benefits must continue to accrue for pregnant employees in the same manner fringe benefits continue to accrue for other disabled employees.
Employers are also cautioned not to make derogatory or stereotypical remarks regarding pregnancy, as this can also form the basis for a discrimination lawsuit. Comments such as, “She is too fat to work,” “Oh my, she’s pregnant again!” and “You’re not coming back after this baby,” have all been held to constitute evidence of pregnancy discrimination. Similarly, expressing disapproval over an unmarried woman’s pregnancy can be considered discrimination.
A great rule of thumb is to simply treat pregnant employees the way you would treat a temporarily-disabled employee. As always, engage your employee in the process and reduce as much as possible to writing.
For additional information on this topic, please contact Rachel Silverstein at (702) 262-6899 or RSilverstein@FoxRothschild.com.
As anyone who follows legal matters in Nevada can attest, the fate of the partially completed Fontainebleau project is one of the most visible symbols of the economic downturn across the nation and Nevada’s construction “boom” gone “bust.” Built at a cost of $2.8 billion, the Fontainebleau employed hundreds of contractors, subcontractors and materialmen and the building was (approximately) 70% complete before funds ran dry and the project was shuttered.
In June 2009, the Fontainebleau filed for bankruptcy protection and a struggle among the property’s various creditors ensued, which continues to this day. In late 2009, financier Carl Icahn (through his entity, Icahn Nevada Gaming Acquisition, LLC) purchased the property out of bankruptcy with a successful bid of $156 million. With the Icahn purchase, the bankruptcy estate (i.e., the debtor) realized approximately $100 million for disbursement to the project’s creditors.
Thus began a struggle between the bank that had provided financing for (and held a deed of trust against) the project and the contractors, subcontractors and materialmen who built the project and later recorded mechanic’s liens against it when they were not paid as agreed.
In 2007, when construction began, Bank of America (as representative of a group of committed lenders) had provided a $1.85 billion loan for the project. In 2009, Wilmington Trust FSB succeeded Bank of America as representative of the lenders and then took the position that it now occupied the identical first priority position on the title to the property that Bank of America had held, despite the fact that none of the lien claimants had approved this arrangement.
Not surprisingly, the contractors, subcontractors and materialmen took the contrary position, claiming that because their work was performed on the project in the years between Bank of America’s construction loan and Wilmington Trust’s succession, their mechanic’s liens enjoyed priority over Wilmington Trust’s later-recorded interest.
The question of priority, which would ultimately determine who was to claim the $100 million realized from the Icahn purchase, was recently submitted to the Nevada Supreme Court for decision, at the request of the United States Bankruptcy Court for the Southern District of Florida.
In In Re: Fontainebleau Las Vegas Holdings, LLC, 128 Nev. Adv. Op. 53 (10/25/12), the Nevada Supreme Court addressed the issue of whether a successor in interest to a lender in first position on a property is permitted to “step into the shoes” in title of the prior lender (i.e., place its newly recorded interest in front of the mechanic’s liens of contractors, subcontractors and materialmen who performed work at the property prior to the new interest.) This legally-sanctioned re-shuffling of title to a property is known as “equitable subordination.” Under equitable subordination, for reasons of “fairness,” one party is permitted to place the interests of other lienholders on a property behind (and in a position inferior to) its own, newer interest.
In its opinion, the Court stated that, while equitable subordination certainly applied in the context of mortgages where various lenders are “jockeying for position” as to the title of a parcel of property, mechanic’s lien claims were to be treated differently. The Court further explained that requests for relief not grounded in statute (i.e., equitable relief) cannot take precedence over statutes which address the same subject. Thus, because mechanic’s liens are creatures of statute and do not constitute equitable relief, they cannot be displaced by requests for equitable subrogation. For this reason, the Court concluded that Wilmington Trust was not permitted to supplant the interests of the lien claimants on the project as a simple matter of equitable relief. With this request for equitable subordination brushed aside, the proceeds of the Icahn sale will now be apportioned and distributed among the lien claimants.
Interestingly, however, the Court did conclude that a lien claimant’s written waiver of the subordination issue (i.e., a knowing and voluntary relinquishment of a known right) would have been given legal effect if the statutory scheme for lien waivers had been followed. Put differently, the Court found it unfair to hold lien claimants to the letter of subordination agreements that they had never signed or approved. However, the Court had no difficulty reaching the opposite conclusion where the signature and/or approval from the lien claimants had been obtained.
Nevada is business friendly, the “Delaware of the West”, right? The state promotes a business-friendly image so that outsiders will choose to incorporate their businesses in Nevada. According to an April 2012 Las Vegas Sun article, Governor Brian Sandoval commented in April 2012 that his administration is working to make Nevada “the most business-friendly state in the country.” An August 2012 decision by the Nevada Supreme Court threatens to undermine the state’s reputation.
In August 2012, the Nevada Supreme Court entered a ruling that could undermine the state’s goal of being perceived as business friendly to outsiders. In Consipio Holding, BV v. Carlberg, the Supreme Court was asked whether non-Nevada officers and directors of a Nevada corporation could be subject to personal jurisdiction within a Nevada state trial court based on the allegation that they had harmed a Nevada business entity. Long-standing United States and Nevada Constitutional law prohibits Nevada Courts from exercising jurisdiction over nonresidents unless the “minimum contacts” test is satisfied.
The Supreme Court held that Nevada courts can exercise jurisdiction over nonresident officers or directors of Nevada corporations “who directly harm a Nevada corporation.” The Court also held that the fiduciary shield doctrine – which in theory provides that mere association with a business in a state is insufficient to establish jurisdiction – did not apply. Because a party suing a corporate director or officer must make a relatively low showing of jurisdiction during early motion practice, the Supreme Court’s decision may mean that nonresident directors or officers of Nevada corporations facing derivative claims will have trouble getting cases dismissed during the initial phases of litigation.
The Supreme Court’s decision may undermine Nevada’s attempts to market itself as the most business-friendly state in the country. Whether outsiders will elect to incorporate elsewhere as a result of the Consipio Holding case remains to be seen.
