After years in legal limbo, district court rules 2021 labor law is enforceable

By April Corbin Girnus

Nevada Current

A temporary restraining order that rendered a 2021 construction labor law unenforceable was lifted last week, following an order from the Nevada Supreme Court forcing a district court judge to take action on a bill that seemed to be suspended in legal limbo for several years.

In May, the Building and Construction Trades Council of Northern Nevada successfully petitioned the Nevada Supreme Court to compel District Court Judge Lynne Jones to make a decision on a case involving Assembly Bill 227 from the 2021 Legislative Session.

The bill was designed to curb the use of under-the-table workers, gig workers, and other temporary labor on construction sites, which many argue are a pervasive problem in the industry. The bill 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 private employment agencies.

After the bill passed and was signed into law by then-Gov. Steve Sisolak, a group of private employment agencies sued. Jones issued a temporary restraining order preventing enforcement of the law in October 2021, just days after it went into effect. According to court documents, the following year, in May 2022, Jones indicated to the plaintiff and defendants that a written order regarding injunction was imminent.

But no ruling came that year, or in 2023, or in 2024.

As reported by the Nevada Current last year, labor groups, including Carpenters Local 1977, began to publicly question what was holding up the legal proceedings. A definitive ruling could be appealed by either side, they argued, but inaction left everyone in limbo and only benefitted the groups who opposed AB227.

The Building and Construction Trades Council of Northern Nevada took action in early May of this year. The Nevada State Contractors Board, which was the defendant in the district court lawsuit over the bill, joined that petition, stating in their own court filing that they twice attempted to force a resolution on the matter with no success.

On May 28 the Nevada Supreme Court sided with the trades council and contractors board, issuing their requested order compelling Jones to rule on the matter.

Jones issued her decision on July 2.

In it, she denied the request for an injunction on AB227. She wrote that, while the court “found it appropriate to initially grant the (temporary restraining order),” it “reaches a different and opposite conclusion after consideration of the additional and substantial evidence, along with time and reflection.”

In the decision, Jones acknowledged that private employment agencies would likely be negatively impacted by enforcement of the bill but concluded that they had not met their legal burden to demonstrate a likelihood of success in their case against the bill.

“The Court finds there is harm to Plaintiffs, but it is not irreparable,” the order reads. “The PEAs have the option of changing their business model and becoming contractors.”

Jones also noted that another remedy exists, also outside of the court system: Private employment agencies could petition the Legislature to amend the law they passed in 2021.

She also rejected the arguments by the plaintiffs that the bill was vaguely worded and gives preferential treatment to unions or union-affiliated contractors. Drafters of the legislation from the start argued that employee misclassification is an issue that impacts union and non-union labor.

American Staffing Association, one of the groups that sued to enjoin AB227, has said that private employment agencies provide approximately 4,000 workers to construction sites in Nevada annually.

It is not immediately clear what impact the lifting of the temporary restraining order will be.

The Nevada State Contractors Board, which is tasked with enforcing AB227, said in a statement to the Current they are “aware of the decision by Judge Jones” and “currently reviewing the court documents with counsel to determine next steps.”

The trades groups that intervened in the lawsuit also indicated they were still reviewing the court’s decision.

American Staffing Association did not respond to specific questions from the Current about what the decision means for their agencies going forward, but a spokesperson emailed a brief statement: “We’re disappointed with the decision.”

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April Corbin Girnus is an award-winning journalist and deputy editor of Nevada Current. A stickler about municipal boundary lines, April enjoys teaching people about unincorporated Clark County. She grew up in Sunrise Manor and currently resides in Paradise with her husband, three children and one mutt.