House wins again in employee tip-pooling lawsuit

“It is unlawful for any person to take all or part of any tips or gratuities bestowed upon the employees of that person”

It all depends upon what the meaning of the word “take” is. Because in Nevada, it apparently is legal to take the tips or gratuities of your employees and put them in a pool in which other employees — including those formerly classified as managers — share.

That’s what Nevada’s Supreme Court decided Thursday, in a case filed by Wynn Las Vegas card dealers, who object to a “tip-pooling” program in which their tips are thrown into a pool and shared with “casino service team leads.” The Wynn apparently had trouble persuading dealers to take those jobs before they implemented a tip pool, because dealers could make more in salary and tips than team leads could in salary alone.

The tip-pooling policy was ratified by the state’s Labor Commissioner and one District Court judge, but a second judge found it broke the law. The Wynn appealed to the Supreme Court, which Thursday declared the practice legal.

“The district court erred in determining that the Wynn’s tip-pooling policy violated NRS 608.160 because the Wynn distributed all the tips to its employees,” the unanimous ruling reads. “NRS 608.160 prohibits an employer from taking and keeping his or her employees’ tips, but the statute does not prohibit a tip policy that splits tips among the employees.”

Although justices acknowledged that “every tip-pooling policy directly benefits the employer in some manner,” the court explicitly rejected the notion that such a benefit automatically makes a tip pool illegal. (For example, if a casino saves money by not having to pay higher wages to induce employees to accept promotion to a tipless job.) “It is possible that an employer, while not keeping the tips, could take them for use in a manner impermissible under the statute,” justices wrote. “However, nothing in either opinion suggests that a ‘direct-benefit’ test should be imposed to determine whether a tip-pooling policy violates NRS 608.160.”

The ruling sends the case back to the lower court for reconsideration, but the finding that Wynn’s policy is legal essentially ends the controversy. When Wynn announced the pool in 2006, his dealers revolted and formed a union. (Owner Steve Wynn personally apologized to dealers for the way the policy had been implemented, but he personally led negotiations with the newly formed union and insisted on keeping the pool. After four years of talks, dealers ultimately agreed, and it’s in the 10-year contract to this day.)

A bill introduced in the 2013 Legislature by Assemblyman Joe Hogan, D-Las Vegas, would have explicitly banned the pool, but it never even got a hearing in the Assembly’s Commerce and Labor Committee. (Labor groups were reportedly divided on the controversy.) If it had, Hogan could no doubt have called upon former state Sen. Don Mello, the Sparks Democrat who helped author NRS 608.160. Mello told me this summer the intent of the statute was specifically to prevent the kind of tip-pooling program Wynn implemented at his hotel.

But the dealers were fighting the weight of precedent in their anti-tip-pooling fight. A 1975 federal court case found that employers can force employees to share tips in a pool, and that dealers can be forced to share tips with other dealers, boxmen, cashiers and similar employees. A few years later, in a separate 1983 case, the Nevada Supreme Court agreed. Just to be sure, Wynn brought out the big legal guns, hiring among other lawyers Eugene Scalia, the son of U.S. Supreme Court Justice Antonin Scalia, to argue its appeal.

So when is taking not really taking? When Nevada employees take the tips of some employees and share the money with others. Happy post-Nevada Day?!

Steve Sebelius is a Review-Journal political columnist, and author of the blog SlashPolitics.com. Follow him on Twitter (@SteveSebelius) or reach him at (702) 387-5276 or ssebelius@reviewjournal.com.