As soon as Nevada’s current coronavirus shutdown of casinos and restaurants ends, workers at restaurants, bars, and other venues will be up against a controversial federal proposal; these employees could be forced to share their tips with other workers, under the direction of their managers.
The proposal would require frontend workers, such as wait staff and bartenders, to share their tips with backend workers, such as cooks and dishwashers. Currently, Nevada employees who receive tips also must earn at least the minimum wage, excluding tips.
The Wage and Hour Division of the Department of Labor released a draft of the new regulation last year. Since then, regulators have been gathering comments from the public before making a final decision.
The Las Vegas-based Culinary Union is among those opposed to this ruling. The culinary union points out the proposal conflicts with Nevada state law.
As a result of the Culinary Union’s 2006 drive to pass a living wage amendment, the Nevada Constitution prohibits offsetting tips against the minimum wage in the state,” stated Geoconda Arguello-Kline, secretary-treasurer of the Culinary Union.
“We are concerned about the effects of the current administration’s proposal concerning employees who live in states where an employer may offset tips against the minimum wage,” Arguello-Kline said. “The Culinary Union is opposed to this shortsighted and anti-worker proposal.”
Ruben Garcia, co-director of UNLV’s Workplace Law Program, further added that the proposal “gives management more discretion” than they have now.
Tip-Sharing Litigation is Possible
If approved, it will likely lead to litigation against the final ruling by both workers and unions, Garcia said. In the past, tip-sharing proposals have led to litigation related to the Las Vegas casinos.
Currently, Aria Resort & Casino Las Vegas is involved in a lawsuit from a former employee who says the casino violated federal law by pooling tips that were given to slot managers and supervisors, as well as casino workers that waited on the casino customers.
Wynn Resorts also faced a drawn-out legal dispute with a group of dealers; that litigation dates back to 2006. Hundreds of dealers claimed that Wynn Resorts owed them around $50 million, because the Wynn’s policy of tip pooling was illegal. That case was argued in federal courts for many years, but was finally thrown out in December 2018.
Nevada Attorney General Aaron Ford has expressed concern about the new proposal, and has joined with authorities from 19 additional states to oppose the rule in a letter sent to the Labor Department.
US Restaurant Industry Backs the Rule
In contrast to the casino industry, the restaurant industry backs the proposed rule. In a statement, the National Restaurant Association expressed support for the proposed tip regulations under the Fair Labor Standards Act.
“… The Labor Department needs to step back from micromanaging restaurant work at the task assignment level, and instead, focus on what the Wage and Hour Division is designed to do; ensure that employees receive the wages that the Fair Labor Standards Act guarantees,” the statement said. “… limitations on tip pooling need only apply in circumstances where a tip pool includes at least one tipped employee, since there may be circumstances in which non-tipped employees, including leaders and managers, may themselves directly receive tips from customers, or may even create tip pools only among non-tipped employees.”
However, the National Restaurant Association would like a few limited clarifications in the wording used in the proposal. The Labor Department said in its own statement that the rule would mean tips would be shared by a “broader group of workers.”
The proposed rule would also prevent managers, supervisors, and employers from keeping tips received by employees. If an employer or a manager keeps tips illegally, that would lead to fines not to exceed $1,100.
