Broad Ballot Initiative Mainly Concerning Tip-Pooling Could Impact All Employers

Volume 7, Issue 2
March 12, 2008

On January 4, 2008, the International Union of Gaming Employees ("IUGE"), which formed the Committee to Prevent Employers from Seizing Tips ("PEST"), filed with the Nevada Secretary of State an initiative petition primarily seeking to limit a Nevada employer's ability to require tip pooling. The initiative also seeks to give employees the right to privately sue Nevada employers for state wage and hour violations and to collect punitive damages. As such, all Nevada employers should be aware of this initiative petition. Nevada Revised Statutes 608.160 and existing case law currently allow for tip pooling agreements and prohibit anyone from taking gratuities bestowed upon employees. The initiative petition seeks to limit those who can share in tips to "those who are the actual and direct recipient of the tips or gratuities." It also would prohibit employers from having any input as to which employees are eligible or included in the tip pool and how the tips are distributed. What should most alarm Nevada employers are subsections 4 and 5 of the initiative petition. Subsection 4 would give employees the right to file private lawsuits to enforce Nevada's wage and hour laws. Currently, a private right of action exists only for minimum wage violations. Claims for improper break or lunch periods, overtime, failure to pay wages upon termination/resignation, and other violations of Nevada wage and hour laws are instead adjudicated by the Labor Commissioner. Moreover, subsection 5 of the initiative petition seeks to expand the remedies available for violations of wage and hour laws to include punitive damages, as well as attorney's fees for prevailing employees. This PEST ballot initiative follows several other attempts to eliminate or severely restrict tip pooling in Nevada, including efforts by Assemblyman Bob Beers. If the PEST committee is successful in obtaining the signatures it needs, the current petition will be forwarded to the Legislature. If the Legislature declines to act, the petition will be placed on the election ballot in 2010 for voter consideration. If voters approve the initiative, it becomes new law which cannot be changed by the Legislature for at least three years. The expansive nature of the petition has important implications for all employers, not just those who have tip-pooling agreements. Kamer Zucker Abbott will continue to follow the progress of the petition.

KZA 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.