Nevada Supreme Court Upholds Wynn's Tip Pooling Practice

Volume 12, Issue 9
November 8, 2013

After seven years of litigation, involving two district court cases and a Labor Commissioner determination, the Nevada Supreme Court has concluded Wynn Las Vegas did not violate Nevada wage and hour laws when it changed its table games tip pooling policy in 2006.

The case involves Wynn's highly-publicized change in its tip pooling procedure to include the positions of Casino Service Team Lead and Box Person in the table games tip pool. The Casino Service Team Lead position was created following the elimination of 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 issued a decision in October 2008 agreeing with the district court. This first of two Nevada Supreme Court rulings in this matter provides a strong reaffirmation of Nevada's at-will law, as well as a discussion concerning the private right of action for Nevada's wage and hour laws. See Volume 7, Issue 10 of the KZA Employer Reports (October 30, 2008).

Following the Supreme Court's 2008 ruling, the case was presented to the Nevada Labor Commissioner, who conducted a hearing to collect evidence and testimony from both sides. The Labor Commissioner ultimately dismissed the dealers' claims, finding that Wynn did not violate Nevada law by including other classifications of employees in the tip pool. See Volume 9, Issue 6 of the KZA Employer Reports (July 13, 2010).

The casino dealers appealed the Labor Commissioner's determination to the district court, which reversed the decision, finding that Wynn received a "direct benefit" from its tip pooling procedure. Wynn appealed the district court decision to the Nevada Supreme Court.

On October 31, 2013, in a unanimous decision, the Nevada Supreme Court reversed the district court finding, noting that "the district court should not have disturbed the Labor Commissioner decision." The Supreme Court found that because Wynn did not keep any of the tips for itself, but rather distributed the tips among its employees, albeit employees of different rank, Nevada law was not violated. The Supreme Court specifically rejected the "direct-benefit" test that the district court followed, expressing that such a test is "unworkable because every tip-pooling policy directly benefits the employer in some manner."

The Supreme Court additionally reversed the district court's finding that the Labor Commissioner should have granted the dealers class-action status. The Supreme Court found that the Labor Commissioner's interpretation of the agency's regulations allowed him to decline class certification, and that the district court should have deferred to the Labor Commissioner's decision.

As the district court never addressed the issue of whether the Labor Commissioner erred by finding no violation of NRS 608.100 and NRS 613.120, the Supreme Court remanded the case to the district court to address that issue.

The Nevada Supreme Court's decision finally puts to rest the debate about Nevada's tip pooling law. Not only does the law permit employers to impose mandatory tip pooling, but employers may determine which employees participate in the tip pool, as long as the employer does not keep any of the tips for itself. This decision not only benefits employers in the casino industry, but also benefits other types of employers whose employees typically receive tips, such as restaurants, taverns, and hotels. Employers of such establishments can require tip pooling among its staff without concern that such tip pooling will violate Nevada law. KZA is proud to have represented Wynn Las Vegas in clarifying this significant issue of Nevada law, and we congratulate our client on this important victory.

The Nevada Supreme Court decision is entitled Wynn Las Vegas, LLC v. Baldonado, et al., 129 Nev. Ad. Op. 78, Case No. 60358 (Nev. Oct. 31, 2013).

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.