The Wynn Tips Controversy: Timeline

The Federal Appeals Court ruled that businesses cannot collect tips given to waiters, casino dealers or other service employees to share with support staff such as dishwashers even if the tipped employees are receiving minimum wage.

The 9th Circuit said the rule was "reasonable" and consistent with Congress's goal of ensuring tips stay with employees who receive them.

The court overturned district courts in Nevada and Oregon. The 9th Circuit ruling would largely apply to states that require workers to get the state minimum wage on top of any tips. Seven states fall into that category, according to the labor department's Wage and Hour Division: Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington.

"The premise is the tip is never the employer's," said Reuel Schiller, a labor law professor at the University of California, Hastings in San Francisco. "The employer doesn't have the power to take that from the waiter and give it to a dishwasher because it's not the employer's money." (Sun)

The judge dismissed the suit based on a move by the Bartenders Union Local 165 representing some of the nightclub workers to resolve the dispute through arbitration rather than the court system. The union and casino management are expected to meet with an independent arbitrator in the coming weeks in an attempt to settle the dispute. Attorneys for nightclub workers filed a motion stating that several issues remain unresolved — including the problem of workers who are not represented by the union that requested arbitration. (Vegas Inc)

The lawsuit that the dealers are waging on Steve Wynn is still going. The issue was taken to court again and the new judge is Kenneth Cory. Whatever the decision is, one party is expected to appeal and take this to the Supreme Court. (Sun)

The Wynn dealers finally voted and passed their first union contract. The vote of 258 to 65 approved the union contract only for one casino, the Wynn. Transport Workers Union Local 721 said the contract containded 52 pages and lasts for 10 years. One of the things that was in the contract include at-will terminations. (Sun) So if an employee was laid-off the company will hire them back when the economy is better.

Another thing that is in the contract is, now the casinos can't fire full-time dealers (40 hours a week with benefits) and replace them with part-time dealers (40 hours a week but with no benefits). But, because the union wasn't able to change the tip sharing policy, dealers at the Wynn have filed a decertification petition with the National Labor Relations Board to remove the TWU as their bargaining representative. (Sun)

Wynn announces, "We are very happy with the contract." (Sun)

Wynn casino dealers have appealed to overturn Nevada Labor Commissioner Michael Tanchek’s July ruling declaring that Steve Wynn can't legally force dealers to share tips with supervisors. (Sun)

Here's a pdf of the Court papers.

When the Nevada Labor Commissioner ruled this month that Steve Wynn’s policy of distributing casino dealer tips to supervisors was legal The ruling doesn’t apply to restaurants, let alone any workplace outside of the one involving dealers working at the Wynn Las Vegas and Encore casinos. (Sun)

Courts have found that employers have the right to mandate that workers pool tips and redistribute them. In Nevada, several cases have authorized casinos to force tip-pooling among dealers so that dealers working different shifts get an equal share of the bounty. While some dealers initially resisted the move, the policy is widely accepted today. ( Sun)

In the Wynn case, the labor commissioner reasoned that the dealers’ supervisors — who were also underlings in the sense that they did not have the power to hire and fire dealers — had enough involvement with customers to receive a share of tips. (Sun)

The attorney representing [Wynn] dealers [is] Jay Litman. Supervisors who receive tips from players could compromise the integrity of the games they oversee, potentially bending the rules for a player’s benefit, Litman argued last year before the Nevada Labor Commissioner. It’s not only a bad policy for Wynn, he said; it’s bad for the casino industry, which depends on the public’s confidence. To bolster his point, Litman presented testimony from a former Wynn Las Vegas dealer who said he witnessed that very problem in his former job as a dealer on cruise ship.

The dealer said he saw a colleague fail to pick up a losing craps bet from the table, instead letting it ride untilthe bet, placed by the gambler for the dealer, won. The supervisor overseeing the game let it happen as he wasreceiving a share of the tip pool, thus personally benefiting from the winning bet, the dealer said. Indeed, theft and fraud are major concerns in Nevada casinos and beyond, which is why many casinos prohibit dealers’ immediate supervisors from accepting gifts worth more than $100. And yet, this argument failed before the labor commissioner,who ruled last week that the tip-pooling policy at Wynn Las Vegas and Encore is legal. (Dealers said they will appeal to state court.)

The appropriate arbiter of gambling integrity, the Gaming Control Board, hasn’t found reason to oppose the tipping policy, either. Notified in writing last year about conflict-of-interest concerns at Wynn, regulators alerted their auditing staff to potential fraud or theft related to the tip procedure, Control Board Chairman Dennis Neilander says.

The Control Board’s Audit Department says it conducts in-depth checks of gambling control procedures at individual casinos at least once every 2 1/2 years, including how table games are supervised and whether certain game functions such as refilling chips and issuing credit to gamblers are handled correctly. Limited audits occur more frequently, Neilander says. The Control Board audits found no evidence to support the dealers’ claim, and major casinos generally adopt procedural controls that are over and above the minimum standards required, Neilander says.

(Sun)

Steve Wynn’s controversial policy of splitting casino dealers’ tips with their immediate supervisors doesn’t violate state law, according to a ruling issued today by Nevada Labor Commissioner Michael Tanchek.

Monday's 18-page decision, which comes after months of deliberation and weeks of public hearings last year, delivers a significant blow to dealers at Wynn Las Vegas who have been fighting the tip policy for the past four years. The ruling also applies to dealers at Encore, who are bound by the same tip policy.

The battle isn’t over yet, though. Dealers expect to appeal the Labor Commissioner’s ruling to Nevada District Court on up to the Nevada Supreme Court. The state court system would then determine whether Tanchek’s reasoning was correct. “We know this will be a long battle. It’s only Round One of Round Three,” said Meghan Smith, the former Wynn Las Vegas dealer who brought the original complaint to the Labor Commissioner in 2007. Tanchek’s decision isn’t surprising in that it relies heavily on previous court rulings that have allowed employers to dictate how tips are pooled among employees. It follows a 1999 decision by then-Labor Commissioner Gail Maxwell, who determined that a small Summerlin casino could force dealers to share tips with supervisors. “Based upon substantial evidence in the record, the plain language of the statutes, and prior case law, the Wynn may unilaterally establish and change a tip pooling agreement that is a term and condition of an underlying at-will employment agreement,” Tanchek wrote.

The issue wasn't clear-cut, however. The state’s tip law lets workers decide with whom to split tips and doesn’t grant such authority to management, though the statute is subject to multiple interpretations. The Gaming Control Board, which received a separate complaint about the tip policy last year, has not intervened in the case. While the regulatory agency investigates allegations of cheating or fraud in casinos, it doesn’t typically get involved in civil disputes. That includes tip-pooling policies, which the Board has said are best left up to companies and courts to decide.

Tanchek's ruling references a Nevada Supreme Court decision in 1975 stating that casinos should be entitled to split tips with other types of workers besides dealers, including supervisors. Floormen, boxmen and cashiers “contribute to the service rendered to the player” the way busboys and waitresses work together to provide customer service to diners, the decision read. State law, they said, prohibits forced tip-sharing by stating that employers may not “take all or part of any tips or gratuities” given to employees.

(Sun)

Wynn dealers are asking Nevada Labor Commissioner Michael Tanchek to find that the hotel-casino's tip policy violates state labor laws. They are asking him to award about 500 dealers $35 million in back pay and penalties. Attorneys for Wynn have maintained that the tip policy complies with state laws and is comparable to a restaurant sharing tips between busboys, bartenders and waiters. (LVRJ)

A lawsuit was filed at that time in state court, but the Nevada Supreme Court sent the case to the Nevada labor commissioner after ruling he was the proper person to consider the case. (LVRJ)

Wynn Las Vegas dealers are asking state Labor Commissioner Michael Tanchek to find the resort's tip pooling policy illegal under state law and award $35 million in back pay and penalties to nearly 500 dealers. The high court's decision upheld a lower court ruling in favor of Wynn Las Vegas. Clark County District Judge Douglas Herndon dismissed the lawsuit in late 2006. That decision was appealed and the Supreme Court heard oral arguments in the matter in April. (LVRJ)

After waiting for the Supreme Court’s decision, Tanchek began hearing testimony on the Smith complaint. (Sun)

A state court judge dismissed the previous lawsuit in 2006, saying dealers didn’t have the right to sue over tips and that the matter must be decided by the Labor Commissioner. The Nevada Supreme Court upheld that decision in October 2008. (Sun)

A state court judge dismissed the previous lawsuit in 2006, saying dealers didn’t have the right to sue over tips and that the matter must be decided by the Labor Commissioner. (Sun)

Washington D.C., the Internal Revenue Service will no longer audit Nevada casino workers for tip income and will reimburse workers who should not have paid taxes on tips, lawmakers and gambling lobbyists say. In Washington, IRS Commissioner Mark Everson agreed to halt the audits after meeting Wednesday with Sens. John Ensign, R-Nev., and Harry Reid, D-Nev., in Reid's office. The senators requested the meeting after workers and labor officials complained the IRS was reneging on a 2003 agreement that expires this year. Under the agreement, casino employees report their tip income to casinos, which then relay the information to the IRS. In return, the IRS agrees not to audit tax returns of about 200,000 workers in 185 casinos.

Despite the agreement, the IRS insisted it still had legal authority to conduct audits of some casino workers. But Everson told Ensign and Reid the audits would stop, the senators said. " (Everson) also agreed that people who paid ... wrongly ... would get their money back forthwith," Reid said. Theresa Branscome, an IRS spokeswoman in Washington, declined to comment. Ensign said: "It turned out the IRS made a technical mistake in the way the agreement was being implemented. We held up (Everson's confirmation as IRS commissioner by the Senate) three years ago to get this agreement, and he remembered it very well." Ensign said he did not know how much money casino workers had paid the IRS after being audited. (LVRJ) If Everson had not agreed to end the audits and return money that should not have been paid, Ensign said, negotiations for a new tip tax reporting agreement by the end of this year might have become difficult. "Having been raised in Las Vegas and coming from a family of tip earners, I've never been a great fan of the IRS and I wasn't surprised they interpreted the agreement in a way that was very anti-Nevada and anti-worker," said Rep. Shelley Berkley, D-Nev. "But what could have been a very bad situation turned out to be a home run for us," Berkley said. The American Gaming Association, which represents at least 80 percent of Nevada's casino industry, will help negotiate a new tip tax reporting agreement with the IRS.

(LVRJ)

Two dealers -- Joseph Cesarz and Daniel Baldonado -- havefiled a lawsuit in Nevada state court seeking class-actionstatusin an attempt to recoup wages lost to the new arrangement."When I walked out of that meeting, my heart just brokebecause he was taking money from us to pay hismanagers," said Mr. Cesarz, a 36-year-old craps dealerat the casino,referring to Mr. Wynn. "The company needs to startpaying the right salaries to the managers and if it has tobe morethan the dealers are making, so be it," he said,adding, "We're paying for Wynn'smistakes." (Post-Gazette.com)The suit claims Wynn Resorts violated state laws thatdictate how employers can modify tip-pooling arrangements."Theseare laws designed to prevent tip sharing by people whoweren't in the chain of service," says MarkThierman, a Reno,Nev., attorney representing dealers in the suit."It's almost a conflict of interest to be tippingyour own boss,the person who is supposed to catch you making mistakes andreprimand you." (Post-Gazette.com)

" (Wynn Las Vegas) breached ... contracts ofemployment by unilaterally, illegally, and without cause,withholdingcertain portions of the ... casino dealers' tip pool andpaying such portions to other persons who were not casinodealersand were not entitled to such payments," the lawsuitsaid. (LVRJ)The dealers' lawsuit was filed Sept. 13, the same dayNevada Labor Commissioner Michael Tanchek rejected thecomplaints ofmore than 100 dealers about the tip pooling program. Tancheksaid he didn't believe the casino was violating statelaw. (LVRJ)Tanchek said the state's Department of Business andIndustry will continue to look at Wynn Las Vegas' newpolicy andinvestigate any new complaints. (LVRJ)

Pit bosses and floor supervisors will be known as "casino service team leaders." Their responsibilities will cover the operations of specific table games, including game protection and customer service. The new plan will be phased in over several weeks. (LVRJ)

[By] now, the task of gathering and countingthe daily toke is in the hands of management. Thecasino's security staff collects the daily tips andcounts the money behind closed doors, according to a revisedcopy of the Handbook issued last month. The company said itwill make available DVDs, taken off casino securitycameras, for any dealers who want to review the daily count. (Post-Gazette.com)

More than 100 dealers filed anonymous complaints with the Labor Commissioner, whose office issued a press release stating that the policy appeared to be legal but failed to make a formal ruling because the complaints were anonymous. (Sun)

Steve Wynn, the CEO of Wynn Resorts Ltd., decreed that, inthe case of dealers, the coveted tip pool will now beexpanded toinclude about 220 of their supervisors. The move, thecompany says, is meant to correct a strange inequity in thecasinoworkplace: Thanks to tips, dealers make thousands of dollars more than some of their bosses do.

According to people who attended Mr. Wynn's recentmeetings with dealers, he angrily accused the employees of"mugging"his players and pointedly referred to the June tippingbinge. A Wynn Resorts spokeswoman said in a statement thatMr. Wynn wassimply reinforcing the idea that employees have "aresponsibility to service the guests without beingsolicitous."

The company maintains that, with tips included, its dealers average close to $100,000 per year in wages. (Dealers say it's closer to $88,000.) Their supervisors typically make far less -- between $50,000 and $60,000 annually, according to Wynn Resorts.

(Post-Gazette.com)

Wynn Resorts Ltd. Chairman Steve Wynn and other executives told table game employees of the pending changes Monday night.

Wynn had been in China working on preparations for next month's opening of the $1 billion Wynn Macau. But he thought the issue was important enough to make a 15-hour flight to Las Vegas to tell his workers personally, Wynn Las Vegas President Andrew Pascal said.

(LVRJ)