Business and Labor
Research Division, Legislative Counsel Bureau
Policy and Program Report, April 2016
2
In most states, including Nevada, an employer may not fire an employee if the firing would violate the
state’s public policies (against discrimination, for example) or a state or federal statute. Also, an
employee with an implied contract may not be fired without liability on the part of the employer.
Eleven states, again including Nevada, also recognize a breach of an implied covenant of good faith
and fair dealing as an exception to at-will employment.
In 1989, in the case of Vancheri v. GNLV Corporation (105 Nev. 417, 777 P.2d 366 [1989]), the
Supreme Court of Nevada considered at-will employment, saying, “Employment ‘at-will’ is a
contractual relationship and thus governed by contract law. An employer can dismiss an at-will
employee with or without cause, so long as the dismissal does not offend a public policy of this state.”
Similarly, in the 1990 case of American Bank Stationery v. Farmer (106 Nev. 698, 799 P.2d 1100
[1990]), the Court said, “All employees in Nevada are presumed to be at-will employees.
An employee may rebut this presumption by proving by a preponderance of the evidence that there
was an expressed or implied contract between his employer and himself that his employer would fire
him only for cause.”
EMPLOYEE MISCLASSIFICATION
Employee misclassification involves purposefully treating individuals providing services to businesses
as nonemployees to avoid paying certain taxes and employee-related expenses and benefits. The most
common method of employee misclassification is to treat individuals as independent contractors when,
in fact, they are employees. In Nevada, one factor that had made it easier for employers to
misclassify employees was that State law, relative to compensation, wages, and hours, did not contain
a clear definition for “independent contractor.” This led to varying interpretations as to what
constitutes an independent contractor versus an employee.
In 2014, in the case of Terry v. Sapphire Gentlemen’s Club (130 Nev. Adv. Op. No. 87, 336 P.3d
951 [2014]), the Supreme Court of Nevada concluded the existing State law regarding employee
classification was unclear. The Court determined employee status with regard to Nevada’s minimum
wage laws required analysis under the federal Fair Labor Standards Act’s “economic realities” test.
That test considers the degree of control a business has over the labor or work performed by a person,
as well as the degree to which that person is economically dependent on the business. The test is one
of many methods of determining a person’s status as an independent contractor, and because of
differences in federal and State law, it is possible that a person could be classified as an employee
under one law and an independent contractor under another.
In order to more clearly define Nevada law relative to compensation, wages, and hours, and the
separation of an independent contractor from an employee, the 2015 Legislature enacted
Senate Bill 224 (Chapter 325, Statutes of Nevada). The measure established a conclusive presumption
that a person is an independent contractor, rather than an employee, if he or she meets one or more of
the following criteria:
First, 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 federal Internal Revenue Service in the previous year, unless the person is a foreign national;