Overlapping 24-hour workdays, split-rate shifts, and what counts as wages for overtime

STATE OF NEVADA
JOE LOMBARDO DR. KRISTOPHER SANCHEZ
Governor STATE OF NEVADA Director

                                                                                                                 BRETT HARRIS
                                                                                                                Labor Commissioner




                           DEPARTMENT OF BUSINESS AND INDUSTRY
                     OFFICE OF THE LABOR COMMISSIONER
                                                   January 24, 2024

Roger L. Grandgenett II
Littler Mendelson, P.C.
3960 Howard Hughes Parkway
Suite 300
Las Vegas, Nevada 89169
[email protected]

    Re: Request for Advisory Opinions

Dear Mr. Grandgenett,

    Pursuant to Nevada Administrative Code ("NAC") Section 607.650, an Advisory Opinion

has been requested clarifying three matters under the jurisdiction of the Office of the Labor
Commissioner: (1) calculating overtime pay under Nevada Revised Statute 608.018 that is
consistent with Nevada Revised Statutes 608.0126 and 608.0123; (2) calculation of overtime when
an employee has split rates in a single shift; and (3) which forms of compensation may be included
in the calculation of compensation for employment that is less than 1 ½ times the applicable
minimum wage rate.

I. CALCULATION OF OVERTIME (NRS 608.018) IN CONJUNCTION WITH
NRS 608.0126 & 608.0123

   Your first question presented in the Request for Advisory Opinion asked for clarification

on the following statutes, and how the Office of the Labor Commissioner interprets them in
conjunction with each other.

NRS 608.018 Compensation for overtime: Requirement; exceptions.
1. An employer shall pay 1 1/2 times an employee's regular wage rate whenever an employee
who receives compensation for employment at a rate less than 1 1/2 times the minimum rate set
forth in NRS 608.250 works:
(a) More than 40 hours in any scheduled week of work; or
(b) More than 8 hours in any workday unless by mutual agreement the employee works a
scheduled 10 hours per day for 4 calendar days within any scheduled week of work.

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2. An employer shall pay 1 1/2 times an employee's regular wage rate whenever an employee

who receives compensation for employment at a rate not less than 1 1/2 times the minimum rate
set forth in NRS 608.250 works more than 40 hours in any scheduled week of work.
3. The provisions of subsections 1 and 2 do not apply to:
(a) Employees who are not covered by the minimum wage provisions of Section 16 of Article
15 of the Nevada Constitution;
(b) Outside buyers;
(c) Employees in a retail or service business if their regular rate is more than 1 1/2 times the
minimum wage, and more than half their compensation for a representative period comes from
commissions on goods or services, with the representative period being, to the extent allowed
pursuant to federal law, not less than 1 month;
(d) Employees who are employed in bona fide executive, administrative or professional
capacities;
(e) Employees covered by collective bargaining agreements which provide otherwise for
overtime;
(f) Drivers, drivers' helpers, loaders and mechanics for motor carriers subject to the Motor
Carrier Act of 1935, as amended;
(g) Employees of a railroad;
(h) Employees of a carrier by air;
(i) Drivers or drivers' helpers making local deliveries and paid on a trip-rate basis or other
delivery payment plan;
(j) Drivers of taxicabs or limousines;
(k) Agricultural employees;
(l) Employees of business enterprises having a gross sales volume of less than $250,000 per
year;
(m) Any salesperson or mechanic primarily engaged in selling or servicing automobiles,
trucks or farm equipment;
(n) A mechanic or worker for any hours to which the provisions of subsection 3 or 4 of NRS
338.020 apply;
(o) A domestic worker who resides in the household where he or she works if the domestic
worker and his or her employer agree in writing to exempt the domestic worker from the
requirements of subsections 1 and 2; and
(p) A domestic service employee who resides in the household where he or she works if the
domestic service employee and his or her employer agree in writing to exempt the domestic service
employee from the requirements of subsections 1 and 2.
4. Any regulation of the Director of the Department of Health and Human Services
concerning the payment of overtime to a home care employee adopted pursuant to NRS
608.670 prevails over the general provisions of this section.
5. As used in this section:
(a) "Domestic worker" has the meaning ascribed to it in NRS 613.620.
(b) "Home care employee" has the meaning ascribed to it in NRS 608.530.

NRS 608.0123 "Week of work" defined. "Week of work" means 7 consecutive periods of
24 hours which may begin on any day and at any hour of the day.

    The Office of the Labor Commissioner interprets NRS 608.0123 to permit employers to

set a company-wide, consistent, start of the "week of work," or calculate "week of work" per
individual employee when performing payroll, and the OLC audits records accordingly.

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NRS 608.0126 "Workday" defined. "Workday" means a period of 24 consecutive hours
which begins when the employee begins work.

    An employee's workday begins at the start of the employee's first shift in the company's

week of work. The employee's workday is individual to them, and the workday runs for a period
of 24 consecutive hours. If the employee's next shift begins within a current workday, those hours
overlapping the 24 consecutive hour period could be subject to overtime pay laws.

    The following chart shows how the Nevada Office of the Labor Commissioner calculates

overtime when an employee's daily start times cause overlapping workdays pursuant to NRS
608.0126. The following chart shows an example of an employee who is paid a rate less than 1 ½
times the minimum rate set forth in NRS 608.250, and therefore, overtime is calculated pursuant
to NRS 608.018(1)(b). It also assumes an employee with a paid meal break when applicable.

     In the above, the employee's workday begins Wednesday at 8:00 a.m. The employee's first

shift ends at 4:00 p.m., and the next shift starts at 6:00 a.m. and ends at 3:00 p.m. Assuming the
employee is paid a rate less than 1 ½ times the minimum rate set forth in NRS 608.250, the first
two (2) hours of the employee's second shift is calculated at the overtime rate before it resets to
the regular rate at the start of the next NRS 608.0126 workday. An employee paid a rate not less
than 1 ½ times the minimum rate set forth in NRS 608.250 is only paid overtime for hours worked
in excess of forty (40) in one week of work. As such, whether their individual workday overlaps
is irrelevant to the calculation of overtime pay.

    As evidenced by the chart, there can be overlapping workdays, and there can be gaps

between workdays. There cannot be more than seven (7) workdays in the "week of work". This
means an employee's shift can split a company's "week of work" in the event the company
calculates a companywide "week of work" for purposes of payroll. To avoid confusion and
unintentional noncompliance with overtime pay calculation, the Office of the Labor Commissioner
recommends employers schedule employees with consistency to the extent possible.

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II. APPLICABLE OVERTIME RATE FOR EMPLOYEE WITH SPLIT RATES IN
SINGLE SHIFT

     The Office of the Labor Commissioner does not recommend employers schedule

employees for a split rate in a single shift. However, if an employer chooses to employ an employee
in a split rate capacity in a single shift, the rate used for calculation of overtime is the one that
applied to the employees time at the time overtime pay becomes owed. For example, if the
employee works ten (10) hours during a single workday, and is not regularly scheduled per a 4/10s
agreement, and if the employee is paid a rate less than 1 ½ times the minimum rate set forth in NRS
608.250, overtime pay would be due for hours nine and ten at a rate pursuant to NRS 608.018(1)(b)
calculated based on the rate employer paid employee at the time overtime pay became owed to the
employee. If the employee is paid a rate not less than 1 ½ times the minimum rate set forth in NRS
608.250, the employee's overtime rate is calculated by the rate the employee was being paid at the
time the overtime pay became due (when the employee works in excess of forty (40) hours in a
week of work) for the rest of that employee's workday shift. If the employee has subsequent shifts
in excess of forty (40) hours, and therefore paid at an overtime rate, the rate would be calculated
by the employees planned rate or rates for that shift. Notably this considers employees paid hourly.
If the employee is paid salary or by piece rate, the employer must also consider NAC 608.125 in
their calculation of the rate. Because of the significant complications caused by split rate shifts,
the Office of the Labor Commissioner encourages employers to avoid scheduling employees at
split rates for a single shift.

III. TYPES OF INCOME INCLUDED IN COMPENSATION FOR EMPLOYMENT
WHEN CALCULATING WAGE RATE FOR OVERTIME PAY

   Your Request for Advisory Opinion asks which types of compensation should or should

not be considered when deciding an employee's wage rate for purposes of calculating overtime
pay pursuant to NRS 608.018(1)(b). The following Nevada Revised Statutes and Nevada
Administrative Codes consider types and forms of wages and compensation that are or are not
appropriate in determining an employee's rate of pay/wage. The same should be considered when
determining applicable wage rates for purposes of applying and calculating overtime pay.

NRS 608.012 "Wages" defined. "Wages" means:
1. The amount which an employer agrees to pay an employee for the time the employee has
worked, computed in proportion to time;
2. Commissions owed the employee; and
3. Amounts due to a discharged employee or to an employee who resigns or quits pursuant
to NRS 608.040, but excludes any bonus or arrangement to share profits.

NAC 608.075 "Piece rate" defined. (NRS 607.160) "Piece rate" means a wage rate based on
a unit of production. The term does not include a wage rate based on a unit of time or a wage rate
based on commission.

NAC 608.080 "Salary" defined. (NRS 607.160) "Salary" means a wage rate based on a fixed
dollar amount for a period of time other than an hour.

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NAC 608.120 Payment of commissions. (NRS 607.160, 608.250)

1. If an employer and an employee agree that the employee is to be paid by commission based
   upon a sale, the employer shall pay each commission to the employee when the commission
   becomes payable pursuant to the agreement.
2. If the agreement described in subsection 1 is not in writing, the terms and conditions of the
   agreement may be determined by the facts and circumstances related to the course of dealing
   between the employer and the employee.
3. All commissions that an employer pays to an employee during a pay period may be used
   to meet the minimum wage requirement described in subsection 3 of NAC 608.115.

NRS 608.115 Records of wages.
1. Every employer shall establish and maintain records of wages for the benefit of his or her
employees, showing for each pay period the following information for each employee:
(a) Gross wage or salary other than compensation in the form of:
(1) Services; or
(2) Food, housing or clothing.
(b) Deductions.
(c) Net cash wage or salary.
(d) Except as otherwise provided in NRS 608.215, total hours employed in the pay period by
noting the number of hours per day.
(e) Date of payment.
2. The information required by this section must be furnished to each employee within 10
days after the employee submits a request.
3. Records of wages must be maintained for a 2-year period following the entry of
information in the record.

NAC 608.125 Compensation for overtime: Miscellaneous requirements. (NRS
607.160, 608.018)
1. An employer shall not substitute compensatory time in place of a wage payment for
overtime that was worked by an employee.
2. If an employee is paid by salary, piece rate or any other wage rate except for a wage rate
based on an hour of time, the rate of compensation for the purposes of paragraph (b) of subsection
2 of NRS 608.018 is determined by dividing the amount paid to an employee in a week by the
number of hours worked by the employee during the week.
3. The Commissioner will refer to 29 C.F.R. §§ 541.1 and 541.2 to determine if an employee
is employed in a bona fide executive or administrative capacity for the purposes of paragraph (d)
of subsection 3 of NRS 608.018.

NRS 608.154 Lodging as part of wages or compensation; exception.
1. A part of wages or compensation may, if mutually agreed upon by an employee and
employer in the contract of employment, consist of lodging. In no case may the value of the lodging
be computed at more than five times the statutory minimum hourly wage for each week that
lodging is provided to the employee.
2. The monetary limitations on the value of lodging specified in subsection 1 do not apply to
agricultural employees.

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NRS 608.155 Meals as part of wages or compensation; exception.
 1. A part of wages or compensation may, if mutually agreed upon by an employee and

employer in the contract of employment, consist of meals. In no case shall the value of the meals
be computed at more than 100 percent of the statutory minimum hourly wage per day. In no case
shall the value of the meals consumed by such employee be computed or valued at more than 25
percent of the statutory minimum hourly wage for each breakfast actually consumed, 25 percent
of the statutory minimum hourly wage for each lunch actually consumed, and 50 percent of the
statutory minimum hourly wage for each dinner actually consumed.
2. The monetary limitations on the value of meals, contained in subsection 1, do not apply to
agricultural employees.

NRS 608.160 Taking or making deduction on account of tips or gratuities unlawful;
employees may divide tips or gratuities among themselves.
1. It is unlawful for any person to:
(a) Take all or part of any tips or gratuities bestowed upon the employees of that person.
(b) Apply as a credit toward the payment of the statutory minimum hourly wage established
by any law of this State any tips or gratuities bestowed upon the employees of that person.
2. Nothing contained in this section shall be construed to prevent such employees from
entering into an agreement to divide such tips or gratuities among themselves.

    Please be advised that this Advisory Opinion is limited to the specific facts and

circumstances described herein. The Office of the Labor Commissioner may revisit this issue
through the Administrative Rulemaking Process. Please be further advised that subsequent
statutory or administrative rule changes or judicial interpretation of the statutes or rules upon which
any opinion is based may require modification or abandonment of this Advisory Opinion.

    Thank you for reaching out to the Office of the Labor Commissioner with your questions.

We appreciate the opportunity to provide information and education regarding Nevada labor laws,
and their application. Should you need any additional clarification, please do not hesitate to contact
our office at (702) 486-2650.

Sincerely,

Brett K. Harris
Labor Commissioner