An employee misclassification law passed by Nevada lawmakers has been in legal limbo since 2021. Why?
By April Corbin Girnus
What should have been a win for skilled trades unions has instead turned into a yearslong wait with no resolution in sight.
Assembly Bill 227 from the Nevada Legislature’s 2021 session was designed to curb the use of under-the-table workers, gig workers, and other temporary labor on construction sites, which unions have long argued are exploited by companies in the name of profit. It would be, proponents believed, progress toward addressing rampant employee misclassification within the construction industry.
As it made its way through the Legislature, AB227 was hotly debated by groups with stakes in the outcome, but it did not garner much widespread attention. It was signed into law in May 2021.
Then, in August of that year, the American Staffing Association, which had vehemently lobbied against the bill, filed a lawsuit in Nevada’s 2nd Judicial District Court challenging the new state law and requesting a temporary injunction barring it from going into effect. Judge Lynne K. Jones granted the injunction. Like the original bill, the lawsuit appears to have received little attention.
The following year, in May 2022, a hearing before the judge was held and testimony was provided — four days worth, recalls an attorney with the American Staffing Association.
And since then, nothing.
Litigation extending years beyond their original filing isn’t by itself unusual, but outside observers believe AB227 is intentionally being left on the legal backburner by a state regulatory agency that has no interest in defending the law as passed.
“(Nevada State Contractors Board investigators) are spending a whole lot of time enforcing guys who are scamming on driveway repairs, but not on stuff like this that’s costing the state multi-millions in tax revenue,” said Matt Driscoll, a consultant and lobbyist working with Carpenters Local 1977.
AB227 clarified in statute that any work requiring a contractor’s license must be performed by a licensed contractor or by an employee of a licensed contractor. It removed ambiguous phrasing that had left a gray area for the use of temporary employees paid through IRS 1099-forms and “leased employees” provided by personnel employment agencies.
“We have always interpreted (statute as meaning) W2-W4 employees,” the contractor board told lawmakers at the time.
Since 2021, the problems lawmakers sought to address with AB227 have only increased, representatives from the carpenter’s union claim, with high profile construction projects like the Super Bowl and Formula 1 using temp employees instead of full-time employees.
“It’s the fox watching the hen house.”
“With the growth of the city, with the world-class events and all the big projects, Las Vegas has become a target for these bad actors,” said Driscoll, the carpenters union consultant. “They know they can make a lot of money here. If there’s disinterest in keeping them out or enforcing laws that are on the books, it’s going to reverse 20 or 30 years of work. It certainly won’t be good for the community.”
‘Business as usual’
Ed Lenz, the attorney for American Staffing Association, acknowledged in an interview with the Current that they have no reason to be concerned about the ongoing legal limbo of AB227: “It is, from our perspective, business as usual.”
“At some point the proceedings will end,” he added. “Courts have different schedules. They have different workloads. They have different issues. At some point there will be a final ruling, but I cannot predict when.”
The Nevada State Contractors Board — the sole defendant in the case — declined the Current’s request to provide a board member or staffer for an interview and did not respond to emailed questions, including one asking why the board has not pushed for a final ruling.
“They can’t comment on ongoing legal matters,” the board’s public relations firm said via email.
The Southern Nevada Building Trades Unions, which supported AB277 when it was in the Legislature and joined the lawsuit as an intervenor, as well as its attorney, Nathan Ring, did not respond to the Current’s requests for an interview about the case. SNBTU did not respond to questions submitted via email.
Carlton speculated that defending the law may have fallen off the priority list at SNBTU after a change in leadership at the organization. Bill Stanley, the executive treasurer who worked with Carlton on the bill and presented it to lawmakers during the 2021 session, has retired. He left the organization around the time the lawsuit was heard by the court.
As for the contractors board, the carpenters union suspects it is simply not interested in defending the state law — and for more than one reason.
“The contractors board is all non-union,” said Michael Hawk of Local 1977. “They participate in all these activities. … It’s the fox watching the hen house.”
Then, there is the fact the regulatory board is part of the executive branch.
AB227 passed the Legislature on party lines, with all Democrats supporting and all Republicans opposing. It was signed into law in 2021 by then-Gov. Steve Sisolak, a Democrat. Sisolak lost his re-election campaign the following year to Republican Joe Lombardo, who, given the position of his party colleagues, likely would not support such legislation.
Lombardo’s office ignored the Current’s emailed questions on whether the governor is aware or concerned about a state law going unenforced since 2021.
Among the questions the contractors board declined to answer was whether its official position had changed since the new administration.
The Current also reached out to Democratic Attorney General Aaron Ford to ask why his office, which was originally named as a co-defendant in the lawsuit, sought to be dismissed from the case and whether he is concerned about the lack of action.
Ford’s office did not respond.
‘It should be the law’
Carlton says as an elected official she always followed the legislation she sponsored as it went through the regulatory process but has never gotten involved with litigation out of respect for the separation between the legislative and judicial branches of government.
“Once it gets to court, my philosophy is, unless the judge, unless the court calls me, I’ve done my part,” she said. “They enforce it. They know who to ask if they need. But I don’t get involved.”
Carlton served in the Nevada State Legislature for the maximum amount allowable by law — 24 years. The 2021 session was her final one. She now sits on the Nevada State Board of Education.
The carpenters union is hopeful another lawmaker might be willing to sponsor legislation related to employee misclassification, but they are worried that the lack of final ruling on AB226 will complicate any efforts.
AB227 was presented to lawmakers in 2021 as a bill to clarify the existing position of the Nevada State Contractors Board on temp employees after an unfavorable ruling years earlier that year. A future bill could further clarify gray areas, but not if those gray areas are never identified, said Matthew Driscoll, a consultant and lobbyist who is working with the carpenters union.
“If this has to be fixed, we need to know about it.” he said.
The 2025 Legislative Session is scheduled to begin in early February but the process of proposing and drafting bills is already well underway.
Lenz of the American Staffing Association said the personal employment agencies they represent remain adamant AB227 was “a misplaced effort.” He said the association has previously proposed working with the contractors board to address concerns around personal employment agencies through regulation — “rather than going back to the Legislature and redoing all of this.”
One idea might be for personal employment agencies to fall under the jurisdiction of the contractors board.
“We’re certainly interested in being good citizens,” said Lenz. “We will work with their constituents. We’re always open to constructive conversations. But (AB227) wasn’t the right law.”
Carlton said she doesn’t know what exactly the next steps should be but believes something needs to be done.
“It passed,” she said. “We signed it. It should be the law. That’s just the way it works.”
She continued, “Somebody needs to hold the court system accountable if they haven’t done anything. Somebody’s lawyers need to talk to somebody.”
