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Wynn Las Vegas Prevails Before Nevada Labor Commissioner In Tip Pooling Case

Volume 9, Issue 6
July 13, 2010

After a district court lawsuit and an appeal to the Nevada Supreme Court, the Nevada Labor Commissioner has finally had the opportunity to weigh in on whether Wynn Las Vegas violated Nevada wage and hour laws when it changed its tip pooling policy for its table games department in 2006. On July 12, 2010, the Labor Commissioner soundly rejected the dealers' claims, reaffirming a Nevada employer's right to unilaterally establish and change a mandatory tip pooling policy for at-will employees.

The case involves the highly-publicized change in the tip pooling procedure at Wynn Las Vegas to include the positions of Casino Service Team Lead and Box Person in the tip pool. The Casino Service Team Lead position was created following the elimination of the floor supervisor and pit manager positions. The casino dealers filed a lawsuit in Nevada District Court claiming the policy violated Nevada's tip pooling statute, NRS 608.160, as well as NRS 608.100 and NRS 613.120. The district court found that the Nevada Labor Commissioner is charged with enforcing the statutes at issue, and ruled that the dealers must follow the administrative process before the Labor Commissioner before seeking relief in the district court. The dealers appealed the decision to the Nevada Supreme Court which agreed with the district court. This ruling, which provides a strong reaffirmation of Nevada's at-will law, was addressed by KZA in Volume 7, Issue 10 of the Dispatch: http://www.kzalaw.com/reports.php?vol=7&iss=10&art=2.

Following the Supreme Court's ruling, the Nevada Labor Commissioner conducted hearing sessions from July to October of 2009 to collect evidence and hear testimony from both sides. Yesterday, the Labor Commissioner dismissed the dealers' claims. Focusing his attention on whether the Wynn violated NRS 608.160 - Nevada's tip pooling statute - the Labor Commissioner made three clear findings of law:

· "The Wynn can unilaterally establish and change the tip pooling agreement";

· "The Wynn is not prohibited from including boxmen and [Casino Service Team Leads] in the tip pooling agreement"; and

· "The Wynn received no direct benefit from the change in the tip pool."

First the Labor Commissioner followed the Supreme Court's finding in Baldonado that a tip pooling agreement is a term and condition of at-will employment which an employer can change unilaterally. Addressing, next, whether the terms of the tip pooling agreement are permissible, the Labor Commissioner found that the Wynn properly followed Nevada law by giving the dealers at least 7 days advance written notice of the likely decrease in their compensation which would follow enactment of the revised tip pool procedure.

The Labor Commissioner then rejected the dealers' argument that Wynn's decision to include Boxmen and Casino Service Team Leads in the tip pool was improper.The Labor Commissioner pointed out that expanding the tip pool was not unusual at the Wynn or at other casinos where changes were made to include all table game employees working in a 24-hour period, to include employees working low and high limit tables, or to include boxmen and floorpersons. The Labor Commissioner pointed out that Nevada courts have approved all such tip pool expansions under the theory of "line of service." The line of service theory approves the practice of including in a tip pool workers who contribute to the customer's experience but who may not customarily receive tips, such as chefs, busboys, boxpersons, etc.

While the Labor Commissioner recognized the line of service theory and its limitation, that "there needs to be some sort of a nexus between the services provided to the customer and the employee providing that service," he ultimately did not rely upon it. Instead, the Labor Commissioner relied on the plain language of the statute - NRS 608.160 - which speaks only in terms of "employee" and "employer." The Commissioner held that because the statute only prohibits "employers" from participating in or taking from a tip pool, all other "employees" could participate. Applying the definition of "employer" from Nevada Administrative Code Section 608.150, the Commissioner determined that because Wynn's Casino Service Team Leads did not have "the power to hire and fire other employees, do not have the power to determine or control other employees' method or rate of payment, do not maintain employment records, do not have control over the conditions of employment of other employees, nor do they have control of the business," they are not employers prohibited from participating in the tip pool. The Labor Commissioner explained that until and unless the Nevada Legislature changes the statute to exempt certain employees from tip pooling agreements, he would not engage in "ad hoc rulemaking" by creating such an exemption for the Wynn's dealers.

The Labor Commissioner's decision represents Wynn's third victory over the dealers' challenge to the revised tip pool procedure. Through a steadfast defense of its legal position, the Wynn has enabled the courts and the administrative agencies in Nevada to establish important precedent for all Nevada employers to rely upon in relation to tip pooling arrangements and the at-will employment relationship in general. KZA is proud to have represented Wynn Las Vegas in this matter, and we congratulate our client on this important victory.

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.