CARSON CITY – Members of the Nevada chapter of a small business organization say the state’s minimum wage and construction defects laws are hampering job growth in the state.
The state’s prevailing wage law was also cited as a drag on economic development in the survey of its members by the Nevada chapter of the National Federation of Independent Business.
Randi Thompson, Nevada state director of NFIB, said about 50 of the 1,800 members statewide responded to the survey, which was conducted in December and delivered to Steve Hill, executive director of the Governor’s Office of Economic Development.
Hill had asked what laws and regulations needed to be changed to spur job growth in Nevada.
“We were delighted at the invitation and jumped at the chance to contribute our members’ ideas on how to get our state’s economy moving again,” Thompson said. “When coupled with the results from our regular annual balloting of NFIB members, the results of which will be out soon, we believe the state will have a much firmer grasp on where it needs to go once it has the opinions of the Nevada’s leading job-generators.”
Thompson said Gov. Brian Sandoval has made it clear that he wants to make the state an even more business friendly state with his call earlier this month to eliminate or revamp more than 1,700 state regulations following a one-year review.
“Small businesses account for nearly two thirds of all new hires on average, making them a critical component to lead Nevada out of this recession,” she said.
Sandoval said today he believes all three issues will come up for discussion in the 2013 legislative session based on what he has heard from some lawmakers.
Sandoval said he supported changes to the construction defect legislation in 2011 and will do so again next year.
“Particularly with regard to mandatory attorneys’ fees in those cases,” he said. “I’d like to see some reform with regard to that. I’ve had several conversations with the contractors on that issue.”
Thompson said repealing Nevada’s minimum wage law will not be a top priority in 2013 just because of the time it takes to change the state constitution.
“I think the one we can take a bite-sized chunk out of is the construction defects,” she said. “My folks pretty much just want to revoke it. They want to pull out the whole chapter. They don’t want to sit down and negotiate it. It is so driven towards lawyers and not toward protecting consumers that that law needs dramatic change.”
Changes to the prevailing wage law would give taxpayers more public construction projects for their money, Thompson said.
“You still will make a good living wage, but prevailing wage is not a market-based wage,” she said. “And the way we do prevailing wage in this state is probably something else that our Labor Commissioner needs to look at.”
Respondents to the NFIB survey said they wanted to entirely revoke the construction defects law contained in Nevada Revised Statutes Chapter 40, which Thompson said opens the door to class action lawsuits against any contractor or subcontractor involved in building homes, apartments, or condominiums – regardless of responsibility for the defect.
Ray Pezonella, owner of Pezonella Associates, an engineering firm in Reno, said that construction-defects legal fees costs him anywhere from $50,000 to $100,000 each year, whether his work was connected to the defect or not. Because that amount is below his insurance deductible, he has to pay for it directly.
“The lawyers just sit down and tell you it will cost you ‘X’ to settle the suit, or we’ll go to court,” Pezonella said. “Even if we did nothing wrong on the job, we write them a check. Where is the justice in that?”
The concern with the minimum wage provision in the state constitution is that it has the effect of setting the Nevada rate at $1 over the federal minimum wage rate.
Thompson said there is interest in the small business community for removing such “tax and wage” issues from the state’s constitution, or in the alternative, seeking an exemption for tipped employees.
Tax policy should not be set in the constitution, she said.
Voters put the minimum wage rate in the state constitution, however, and repealing it would require the state Legislature to approve a change in two sessions, which would then have to be approved by voters.
State Sen. Joe Hardy, R-Boulder City, introduced legislation in the 2011 session to begin the process of removing the minimum wage requirement from the state constitution, but the measure did not survive.
Voters overwhelmingly approved the minimum wage proposal, which continues to be strongly defended by the Nevada state AFL-CIO, which qualified the measure for the ballot.
Thompson said the third issue, which is the practice of paying prevailing wage on government funded construction projects such as schools and roads, is a concern because it adds to the costs that must be paid by taxpayers.
Some states have implemented changes to their prevailing wage laws, and some Nevada lawmakers are considering changes as well, she said.
Gov. Brian Sandoval says all three issues are expected to be debated in the 2013 legislative session:
Sandoval says he supports changes to the construction defect law:
Randi Thompson, Nevada state director of NFIB, says changes to the construction defect law are possible in 2013:
Thompson says reforming the prevailing wage law would save taxpayer money: