KZA Attorneys Obtain NV Supreme Court Victory Establishing The Non-Existence Of Private Causes Of Action For Certain Labor Laws And Reaffirming The Vitality Of Nevada's At-Will Doctrine

Volume 7, Issue 10
October 30, 2008

On October 9, 2008, the Nevada Supreme Court in Baldonado, et al. v. Wynn Las Vegas, LLC, 124 Nev. Adv. Op. 81 (Oct. 9, 2008), found that employees may not file a lawsuit to enforce NRS 608.160, Nevada's tip-pooling statute, as well as other Nevada labor laws, until they first bring a claim before the Nevada Labor Commissioner. Kamer Zucker Abbott attorneys Gregory J. Kamer and Bryan J. Cohen successfully argued to the Nevada Supreme Court that the Nevada Labor Commissioner has original jurisdiction to hear such claims. The employees in this case sought to expand Nevada's wage and hour statutes by attempting to establish private causes of action to enforce violations of NRS 608.160 (unlawful for employers to take employee tips), NRS 608.100 (unlawful for employers to require employees to rebate compensation earned and paid), and NRS 613.120 (unlawful for managers and shift bosses to receive gratuities from employees as a condition of the employees' employment). These attempts were thwarted as the Supreme Court found that private causes of action exist only for those wage and hour statutes that expressly provide for such an action, such as NRS 608.140 and NRS 608.150.

The case involves the highly-publicized change in the tip-pooling procedure at Wynn Las Vegas. In September 2006, Wynn Las Vegas revised its tip-pooling procedure to include the position of Casino Service Team Lead in the tip pool. The Casino Service Team Lead position was created following the elimination of the floor supervisor and pit manager positions. These changes were part of an expansive restructuring of the table games department at Wynn Las Vegas to enhance its focus on its award-winning, high level of customer service. 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.

In agreeing with the district court, the Nevada Supreme Court first noted that NRS 608.160 does not expressly provide employees with the right to file a lawsuit to enforce its terms. Thus, the Court had to determine whether such a right was implied by the legislature in enacting the statute. The Court found that the legislature expressly provided for the Labor Commissioner to enforce NRS 608.005 through 608.195 and provided that violation of those statutes constitutes a misdemeanor. The Court concluded that "in light of the statutory scheme requiring the Labor Commissioner to enforce the labor statutes and the availability of an adequate administrative remedy for those statutes' violations, the Legislature did not intend to create a parallel private remedy for NRS 608.160 violations." The Court further noted that, "when an administrative official is expressly charged with enforcing a section of laws, a private cause of action generally cannot be implied." Accordingly, employees with claims under NRS 608.005 through 608.195, statutes which cover overtime, breaks and meal periods, and other important labor laws, must now first file a claim with the Labor Commissioner before bringing a lawsuit.

Importantly, the Court also concluded that the dealers did not have a claim for breach of contract. The dealers claimed that the original tip pooling policy in place at the opening of the casino constituted an enforceable written contract that could not be modified without their consent. This argument was based on the fact that the original policy contained a provision which stated that the policy was subject to modification by majority dealer vote. The Court rejected this argument and found that because the dealers were at-will employees, Wynn Las Vegas could unilaterally modify the terms of their employment. The Court found, even with the policy language requiring employee approval of any changes, that the terms of the original tip pooling policy were terms of employment that Wynn Las Vegas could prospectively modify, and that the employees' continued employment constituted "sufficient consideration for the modification." The Court further noted that Wynn Las Vegas' employee handbook expressly stated that any policy was subject to unilateral modification. By making this finding, the Court reiterated its previous holdings that a properly worded disclaimer can prevent any inference that an employment handbook is part of a written employment contract.

This is a significant victory for Nevada employers as it reaffirms the strength of Nevada's at-will doctrine. The ruling further demonstrates the need for employers to include disclaimers in their handbooks that confirm the at-will employment relationship and allow employers to unilaterally modify any of the policies contained therein. The decision is also important because it requires employees to exhaust administrative remedies and thus take an additional step before bringing a lawsuit for violations of many of Nevada's labor laws. This additional step allows employers to analyze whether a claim is meritorious and subject to early resolution before incurring significant litigation costs.

The issue as to whether Wynn Las Vegas' tip-pooling procedure is a violation of Nevada law now returns to the Nevada Labor Commissioner for a determination.

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.