Wynn tip policy said to violate state law

Steve Wynn’s 5-year-old tip-pooling program, which forces card dealers to share gratuities with their supervisors, violates Nevada law, a state District Court judge has ruled.

Clark County District Court Judge Kenneth Cory ruled that Michael Tanchek, Nevada’s former Labor Commissioner, erred in July 2010 when he determined the Wynn Resorts Ltd. policy passed legal muster.

Under Nevada law, employers can’t stop employees from dividing tips or gratuities among themselves or force workers to share tips with supervisors or employees in other kinds of jobs, Cory found.

A Wynn Resorts spokeswoman on Thursday said the company will appeal.

"Wynn respectfully disagrees … and intends to appeal the District Court’s rulings to uphold the more appropriate rulings and reasoning of the Labor commissioner," said Gregory Kamer, a Las Vegas attorney who represents Wynn Resorts.

Cory, who issued the ruling late Tuesday, ordered the case sent back to the Labor Commissioner’s office for further review. An appeal would send the case to the Nevada Supreme Court. It was unclear Thursday whether the Nevada Labor Commission would review the decision before it is heard by the high court.

Tanchek last year said the program was legal because Wynn Resorts did not retain the tips for its own use, nor did the casino operator gain a direct benefit because of the increased compensation earned by supervisors.

An attorney for the dealers on Thursday said he expected the state Supreme Court to confirm Cory’s ruling.

Las Vegas attorney Leon Greenberg said Cory also reinstated the lawsuit’s class action status.

"That’s a very important ruling," Greenberg said. "Any payment would not go to a limited group of dealers, but Wynn would have to pay all the dealers. The class action is very important to remedy the situation."

Attorneys for the dealers have argued that some $5 million per year is being diverted from dealers to supervisors. The program has been going on for five years, "so you can do the math," Greenberg said.

Kamer had argued that a minority of dealers pushed the lawsuit, and the majority of the company’s dealers were not involved in the dispute.

While tip sharing between employees and their supervisors has been implemented by other companies, introduction at Wynn Las Vegas and Encore was a first for hotel-casinos on the Strip. Wynn Las Vegas and Encore employ more than 1,000 full- and part-time dealers.

David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, said other casino operators in Las Vegas may have considered similar tip-pooling, but backed off for unknown reasons.

Wynn is not the only American company dealing with lawsuits over tip sharing, however.

In September, a U.S. District Court in Minnesota approved a $1.25 million settlement between OSI Restaurant Partners LLC, the Tampa, Fla.-based parent of the Outback Steakhouse chain, and about 1,200 Outback Steakhouse servers in Minnesota.

In a lawsuit, the servers alleged that Outback unlawfully required them to share tips with bus staff and hosts. The class action lawsuit alleged tip-sharing violated a Minnesota Fair Labor Standards Act prohibition on employer-run and mandated tip pools.

Seattle-based Starbucks Corp. is also defending its policy against lawsuits in Massachusetts and Texas.

When the tip-sharing program was implemented at Wynn Las Vegas and Encore, Wynn said he wanted to equalize the incomes of dealers and their supervisors. Dealers on the Strip tend to earn more than their supervisors because of tips.

In protest of the tip policy, dealers at Wynn voted to unionize through the New York-based Transport Workers Union of America in 2008. Last November, Wynn dealers overwhelmingly approved the resorts’ first-ever labor contract, which includes tip sharing.

The legal fight over tip-sharing policies has been "going on for some time," said Ruben Garcia, a law professor at UNLV’s William S. Boyd School of Law. "Companies have suffered negative rulings in California, where judges have ruled tip sharing violates state labor laws."

Garcia pointed out that the Nevada Supreme Court has never allowed a mandatory tip-pooling policy that extends beyond the dealer-only pool.

"It’s going to be up to the state Supreme Court to resolve the issue," he said.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.