By Milan Chatterjee | Founding Attorney, Milan Legal |
The most common legal mistakes Nevada businesses and individuals make are not errors of judgment. They are deadlines that were already running and thresholds that had already been crossed.
Each of the eight common legal mistakes Nevada residents and business owners encounter below has a specific statute behind it, a number attached, and a point past which the option disappears. Every one links to the full treatment elsewhere on this site, so this page is the map rather than the territory.
1. Waiting Until the Problem Looks Urgent
The clock does not start when you decide the matter is serious. It starts when the thing happens.
Nevada allows six years to sue on a contract, obligation or liability founded upon an instrument in writing, under NRS 11.190(1)(b). Where the obligation is not founded on a writing, four years, under NRS 11.190(2)(c). An action to recover damages for injuries to a person caused by the wrongful act or neglect of another gets two, under NRS 11.190(4)(e).
Two years is not long. For an injury that took months to settle down medically, a claimant who waits for the medical picture to clarify before speaking to anyone can arrive with a fraction of the period left. The deadline does not care that the delay was reasonable.
Full treatment: the legal process in Nevada.
2. Assuming the Internet Knows Nevada Law
This one is worth a worked example, because the usual version of this advice is too vague to act on.
NRS 597.995 says that an agreement which includes a provision requiring arbitration of disputes between the parties must include specific authorization for that provision, indicating that the person has affirmatively agreed to it. Where an agreement has the arbitration provision but not the specific authorization, the statute says the provision is void and unenforceable. There are two stated exceptions, for collective bargaining agreements and for arbitration provisions in a will or trust instrument enforceable under NRS 164.930.
Read that and you would conclude that a Nevada arbitration clause buried in the body of an agreement is unenforceable. A great deal of material online says exactly that, because it quotes the statute.
In MMAWC, LLC v. Zion Wood Obi Wan Trust, decided in 2019, the Nevada Supreme Court held that the Federal Arbitration Act preempts NRS 597.995, on the basis that the statute singles out and disfavors arbitration by imposing a requirement that does not apply to other contract provisions. The statute is still in the code. It reads as though it is good law. Where the Federal Arbitration Act applies, it is not.
That is the whole problem with the online answer in one example. The text was accurate and the conclusion was wrong, and nothing on the face of the statute tells you so.
Full treatment: Nevada contract requirements.
3. Reading the Money Terms and Skipping the Rest
The financial terms are the ones everybody checks. The ones that decide what happens when the relationship fails are usually three pages later.
Restrictive covenants are the clearest case, because the same clause has opposite effects either side of the state line. Nevada enforces noncompetition covenants subject to NRS 613.195, and where a covenant is overbroad a Nevada court shall revise it to the extent necessary and enforce it as revised. California’s Business and Professions Code 16600 voids them, 16600.5 makes a void contract unenforceable regardless of where and when it was signed, and provides that an employer who enters into or attempts to enforce one commits a civil violation.
So a Nevada employer whose standard agreement travels to a California hire does not simply have a clause that will not work. Asking for the signature is itself actionable.
Full treatment: Nevada and California contract law.
4. Treating Legal Planning as Something You Finish
Nevada’s execution requirements for a will are specific enough that a document which looks finished can fail on a formality.
Under NRS 133.040, a will is valid only if it is in writing and signed by the testator, or by an attending person at the testator’s express direction, and attested by at least two competent witnesses who subscribe their names to the will in the presence of the testator. Two witnesses, competent, subscribing in the testator’s presence. Nevada also recognises electronic wills under NRS 133.085, which carry their own authentication requirements.
A will executed correctly in 2012 is still correctly executed. Whether it still says what you want is a separate question, and the answer changes with marriages, births, property purchases and business interests, none of which notify the document.
Full treatment: Nevada will requirements.
Where These Decisions Actually Get Made
Each of the common legal mistakes Nevada businesses and individuals meet is settled at the point the document is signed or the clock starts, and argued about afterwards.
5. Relying on an Agreement Nobody Wrote Down
An undocumented arrangement is not merely harder to prove. In defined categories it does not stand at all.
Nevada’s statute of frauds at NRS 111.220 covers an agreement that by its terms is not to be performed within one year of its making, a special promise to answer for the debt, default or miscarriage of another, a promise made upon consideration of marriage other than mutual promises to marry, and promises relating to loans of $100,000 or more and to paying $1,000 or more for obtaining a loan or credit. Real property sits in a different section: NRS 111.210 requires a writing for a lease longer than one year or a sale of land. For goods, NRS 104.2201 requires a record where the price is $500 or more.
Four years is the limitation period for an obligation not founded on a writing, against six for one that is. So the undocumented version of the same deal gives you two fewer years to enforce it, assuming it is enforceable at all.
Full treatment: Nevada contract requirements.
6. Signing Something While Still Angry
The law builds in a cooling-off period for exactly this, and most people sign before it expires.
Where a severance or separation agreement asks an employee aged 40 or over to waive an age discrimination claim, the waiver is not knowing and voluntary unless the statutory conditions are met. Under 29 U.S.C. 626(f)(1)(F)(i) the individual must be given a period of at least 21 days to consider the agreement. Where the waiver is requested in connection with an exit incentive or termination programme offered to a group or class of employees, subparagraph (F)(ii) extends that to at least 45 days. And under subparagraph (G) the agreement must provide at least 7 days after signing during which the individual may revoke, and the agreement cannot take effect until that period expires.
Twenty-one days exists because nobody makes a good decision about a release in the first forty-eight hours. The seven-day revocation window exists because some people sign anyway. Both are rights, and both are routinely waived by people who did not know they had them.
Full treatment: Nevada at-will employment exceptions.
7. Assuming Obligations Stay Where They Were at Formation
Several of the most significant employment obligations switch on at a headcount, on the day it is crossed, without any notice being sent.
Nevada’s anti-discrimination statute reaches an employer with 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year, under NRS 613.310. Nevada’s paid leave statute, NRS 608.0197, applies to a private employer with 50 or more employees in the state, and exempts an employer during its first two years of operation. In California, Government Code 12950.1 requires harassment prevention training at five or more employees.
A business that hires its fifteenth person in Nevada, or its fifth in California, has changed its legal position that week. Nothing about the hire looks different from the fourteenth or the fourth.
Full treatment: workplace rights and responsibilities.
8. Assuming the Agreement’s Chosen Law Is the Law That Applies
Writing “governed by Nevada law” settles the question in most commercial agreements between businesses. In employment it often does not.
California Labor Code 925 provides that an employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision requiring the employee to adjudicate outside California a claim arising in California, or depriving the employee of the substantive protection of California law. Adjudication includes litigation and arbitration. A provision that does either is voidable by the employee, and if voided the matter proceeds in California under California law. The section reaches any contract entered into, modified or extended on or after January 1, 2017. The one exception is narrow: an employee in fact individually represented by legal counsel in negotiating those specific venue, forum or choice of law terms.
So the clause can be in the document, correctly drafted, and simply not hold.
Full treatment: Nevada and California contract law.
What the Common Legal Mistakes Nevada Guide Comes Down To
Read together, these are not failures of care. Seven of the eight are consequences of a number nobody was told about, and the numbers are worth holding in one place.
Six years, four years and two years, under NRS 11.190, depending on whether the obligation was written, unwritten or an injury to a person. Two competent witnesses subscribing in the testator’s presence, under NRS 133.040. One year, $1,000 and $100,000 across the statute of frauds at NRS 111.220, with land handled separately at NRS 111.210, and $500 for a sale of goods at NRS 104.2201. Twenty-one days to consider a waiver, forty-five where it is offered to a group, and seven to revoke after signing, under 29 U.S.C. 626(f). Fifteen employees before Nevada’s anti-discrimination statute applies and fifty before its paid leave statute does, against five in California for harassment training.
The eighth is different and worse, because it is the one where doing the reading produces the wrong answer. NRS 597.995 is still in the code and still reads as good law. A statute that has been held preempted looks identical on the page to one that has not, and that gap does not close by being careful.
The Milan Legal Perspective
Most writing on common legal mistakes Nevada readers will find recommends getting advice early without saying what the advice would catch, which makes it difficult to act on and easy to postpone.
Milan Chatterjee is licensed in Nevada and California, a UCLA School of Law graduate and former Associate Compliance Counsel at a Fortune 500 company. In-house compliance work is where this list stops being abstract: the obligations above are the ones that attach on a particular day for a particular reason, and the useful question is never whether a business is being careful but which of the numbers above has already passed.
Frequently Asked Questions
The recurring ones have numbers attached rather than being matters of judgment: missing a limitation period under NRS 11.190, which is six years on a written contract, four on an unwritten one and two for injuries to a person; relying on an agreement that falls inside the statute of frauds at NRS 111.220 and was never written down; carrying a restrictive covenant drafted for Nevada under NRS 613.195 into California, where Business and Professions Code 16600.5 makes attempting to enforce one a civil violation; and crossing an employment threshold at 15 or 50 employees in Nevada or five in California without noticing.
It depends on the claim. NRS 11.190(1)(b) allows six years for an action on a contract, obligation or liability founded upon an instrument in writing. NRS 11.190(2)(c) allows four where it is not founded on a writing. NRS 11.190(4)(e) allows two for an action to recover damages for injuries to a person, or for death, caused by the wrongful act or neglect of another. The period runs from the event, not from the point the matter became urgent.
Because a statute can be accurately quoted and no longer operative. NRS 597.995 still provides that an arbitration provision without specific authorization is void and unenforceable, and material online says so. In MMAWC, LLC v. Zion Wood Obi Wan Trust (2019) the Nevada Supreme Court held that the Federal Arbitration Act preempts that section because it singles out and disfavors arbitration. The text of the statute does not disclose this.
Under NRS 133.040 a will must be in writing and signed by the testator, or by an attending person at the testator’s express direction, and attested by at least two competent witnesses who subscribe their names in the testator’s presence. Nevada separately recognises electronic wills under NRS 133.085, with their own authentication requirements. A document that reads correctly can still fail on the execution formalities.
NRS 111.220 covers an agreement not to be performed within one year of its making, a special promise to answer for another’s debt, default or miscarriage, a promise made upon consideration of marriage other than mutual promises to marry, a lending commitment of $100,000 or more, and a promise to pay $1,000 or more for obtaining a loan or credit. NRS 111.210 separately requires a writing for a lease longer than one year or a sale of land, and NRS 104.2201 requires a record for a sale of goods at $500 or more.
Where an employee aged 40 or over is asked to waive an age discrimination claim, 29 U.S.C. 626(f)(1)(F)(i) requires at least 21 days to consider the agreement, and (F)(ii) requires at least 45 days where the waiver is sought in connection with an exit incentive or termination programme offered to a group or class of employees. Subparagraph (G) requires at least 7 days after signing in which the employee may revoke, and the agreement cannot take effect until that period expires.
Yes, and at specific headcounts. Nevada’s anti-discrimination statute applies at 15 or more employees for each working day in each of 20 or more calendar weeks under NRS 613.310. Nevada’s paid leave statute applies at 50 or more employees under NRS 608.0197, with an exemption during the employer’s first two years. California requires harassment prevention training at five or more employees under Government Code 12950.1. Each attaches on the day the number is crossed.
Not in employment. California Labor Code 925 makes voidable, at the employee’s election, any provision requiring an employee who primarily resides and works in California to adjudicate a California claim outside California or to give up the substantive protection of California law. Adjudication includes arbitration. It applies to contracts entered into, modified or extended on or after January 1, 2017, with a narrow exception where the employee was in fact individually represented by counsel in negotiating those specific terms.
Conclusion
What makes the common legal mistakes Nevada businesses and individuals make so consistent is that none of them announces itself. A limitation period runs whether or not anyone is counting. A statute of frauds category decides enforceability whether or not the parties knew the category existed. A headcount threshold attaches on the day it is crossed. A revocation window closes on the eighth day whether or not the person signing knew they had seven.
So being conscientious does not prevent any of them, and being well read prevents only seven. Each one is knowable in advance, which is the only part of this that is within anyone’s control, and knowing which of them is already running is a shorter conversation than most people expect.
Find Out Which Numbers Apply to You
If any of the eight above looks close to your situation, the question worth settling early is which period has already started running.
