Tip-Sharing Proposal Could Reignite Las Vegas Casino, Restaurant Workers’ Legal Challenges

Posted on: March 26, 2020, 06:11h. 

Last updated on: March 26, 2020, 09:56h.

Once Nevada’s current shutdown of restaurants and casinos ends, workers at bars, restaurants, and other venues will face a controversial federal proposal where employees could be forced to share tips under the direction of managers.

Nevada Attorney General Aaron Ford is among those concerned about a federal proposal that could impose sharing of tips in restaurants, bars, and other venues. (Image: Las Vegas Weekly)

It would require front of house workers, such as bartenders and wait staff, to share tips with back of house employees, such as dishwashers or cooks. Currently, Nevada employees who get tips also earn at least the minimum wage beyond the tips.

A draft of the new regulation was released last year by the Wage and Hour Division of the Department of Labor. Regulators have been collecting comments from the public before issuing a final rule.

Among those opposed to the change is the Las Vegas-based Culinary Union. The union notes how the proposal comes into conflict with Nevada law.

Due to the Culinary Union’s work to pass a living wage amendment in 2006, the Nevada Constitution forbids offsetting tips against the minimum wage in Nevada,” Geoconda Arguello-Kline, secretary-treasurer of the Culinary Union, told Casino.org.

“We are concerned about the effects of [the] Trump administration’s proposal on employees who live in states where an employer can offset tips against the minimum wage,” Arguello-Kline added. “The Culinary Union opposes this shortsighted and anti-worker proposal.”

Also, Ruben Garcia, co-director of UNLV’s Workplace Law Program, further told Casino.org the proposal “gives management more discretion” than they now have.

More Tip-Sharing Litigation Possible

If approved, there is likely to be litigation against the final rule by unions and workers, Garcia said. Previously, tip-sharing has led to litigation related to Las Vegas casinos.

Aria Resort & Casino Las Vegas is facing a lawsuit from an ex-employee who claims the casino violated federal law by pooling tips that were distributed to slots supervisors and managers, as well as staff that looked after customers on the casino floor.

There also was a long-standing legal dispute between Wynn Resorts and a group of dealers dating back to 2006. Hundreds of dealers argued Wynn Resorts owed them approximately $50 million because, they argued, the company’s tip pooling system was illegal.

The case was argued in federal courts for years. The litigation was thrown out in December 2018.

Concerns about the new proposal led Nevada Attorney General Aaron Ford to join with other officials from 19 other states to oppose the rule in correspondence sent to the Labor Department, the Las Vegas Weekly reported.

“My office always prioritizes Nevada families, and is proud to stand behind working people who rely on tips to support themselves and their families. By pushing back against the Trump administration, we are taking a stand against their attempts to favor businesses over workers,” Ford was quoted by the Weekly.

US Restaurant Sector Backs Rule Change

But the US restaurant industry generally backs the proposal. In a statement last year, the National Restaurant Association said it supports the proposed tip regulations under the Fair Labor Standards Act (FLSA).

“… The [Labor] Department should … step back from trying to micromanage restaurant work at the level of task assignment and, instead, return its focus to what the Wage and Hour Division is designed to do: ensure that employees receive the wages that FLSA guarantees,” the statement said. “… The limitations on tip pooling [should] apply only in instances where a tip pool involves at least one tipped employee, because there may be circumstances where non-tipped employees, including managers and leaders, may themselves receive tips directly from customers, or may even have tip pools just among non-tipped employees.”

But the National Restaurant Association would like to see some limited clarifications in the language used in the proposal. In its own statement, the Labor Department said the rule would lead to tips being shared by a “broader group of workers.”

It would also prohibit employers, managers, and supervisors from keeping tips received by employees, the Labor Department added. If employers illegally keep tips, that could lead to financial penalties not to exceed $1,100.