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Arnold M. Knightly

Tip-rules switch broke pacts, labor lawyer says

8 April 2008

LAS VEGAS, Nevada -- (PRESS RELEASE) -- A Las Vegas labor attorney told Nevada's high court justices Monday that Wynn Las Vegas illegally violated employment agreements with its dealers when it changed its tip-pooling policy in 2006.

The Supreme Court justices heard arguments Monday from attorneys for the Strip hotel-casino and two dealers who sued Wynn Las Vegas after it changed its tip-pooling policy in September 2006. The seven justices asked questions of attorneys for both sides during a 40-minute hearing Monday, but gave no indication which way they were leaning or when they might issue a decision.

In late 2006, a Clark County District Court judge upheld Wynn Las Vegas' new tip-pooling policies, rejecting arguments that the hotel-casino's dealers are contract employees and that the new policy -- which reclassified some supervisors and allowed them to share some of the tip monies that had been given exclusively to dealers in the past -- illegally changed employment agreements.

The justices could uphold a ruling by District Court Judge Douglas Herndon dismissing a lawsuit brought by dealers Daniel Baldonado and Joseph Cesarz.

They could also overturn the lower court decision or send the dispute to the labor commissioner to resolve.

During the Monday hearing, labor attorney Leon Greenberg restated many of the same arguments he made during the District Court hearing: the change in the tip-pooling policy violated an employment agreement drafted before the property opened and that the new policy forcing dealers to share tips with supervisors violates state law.

"The tips no longer belong to the dealers, but to the Wynn, which distributed them as it saw fit," Greenberg argued.

When Justice Michael Douglas asked Greenberg if the dealers were at-will employees, which would allow the casino to modify its hiring agreements, the attorney said the resort should have terminated all employees and asked them to reapply for their jobs if it wanted to change the employment agreements.

That, however, would have opened the resort to unemployment claims and possible disruption in business, he said.

Justices Ron Parraguirre and Nancy Saitta did question Greenberg's use of the words "policy" and "contracts," asking whether what employees signed could be classified as employment contracts.

When the gaming company announced the new policy, it said the change was necessary because of the wide wage disparity between the property's dealers and supervisors.

The resort's attorney, Greg Kamer, on Monday described the policy change as a "modification" that changed the title and duties of casino floor supervisors to team leaders.

He also argued that the intent of the change was to improve customer service, and provide better game protection and greater accountability with front line casino employees.

In response to a question from Douglas, Kamer said a California court decision last month saying Starbucks shift supervisors aren't eligible to share in baristas' tips does not apply to the Wynn case because California law clearly states that tips belong to the workers that received them.

He added that he expects the ruling, which included an order for Starbucks to pay $105 million to coffee-servers in California, to be easily overturned on appeal.

Casino developer Steve Wynn attended the hearing, entering and exiting the 17th-floor courtroom at the Regional Justice Center through a side emergency exit door.

As soon as the hearing concluded, Wynn shook hands with his legal counsel, then took a private elevator primarily used by judges and their staff to exit the building, which allowed him to avoid a handful of protesters outside the courthouse.

Wynn declined to comment on the hearing.

In the District Court case, Herndon ruled that work agreements signed by dealers were not contracts of employment and that the resort's new tip policy was merely remedying an outdated system.

The judge added that the dealers need to lodge a formal complaint with the labor commissioner if they wanted to claim they were being mistreated under Nevada's labor laws.

Reno-based labor attorney Mark Thierman, a member of the legal team representing the dealers, said sending the dispute to the state labor commissioner would be a bad message for employees in the state.

"They could say there is no private cause of action for any employee in the state of Nevada for violation of the labor code," Thierman said. "They could say no employee in Nevada could sue for the violation of labor law. Welcome to the wild, wild West."