Whether you call it Murphy’s Law or “the law of unintended consequences,” history shows that legislation often produces effects that weren’t anticipated. In many cases, laws designed to solve a problem results in creating a worse one. Consider the case of an initiative petition called Prevent Employers from Seizing Tips (PEST). This initiative was drafted as a reaction to a tip-pooling program at Wynn Las Vegas that took effect in September 2006. Historically, casino dealers have collected, pooled and distributed their own tips. Wynn management decided to take a portion of the casino dealers’ tips and share it with table game supervisors in order to make wages more even between the two groups. Wynn argued that game supervisors provided customer service and deserved to share in tips, just as waiters in restaurants share tips with busboys.
Soon after the policy was implemented, more than 100 dealers complained to the State Labor Commissioner about the program, but the commissioner took no action. Then two Wynn dealers filed a lawsuit in District Court, but the court threw out their case, stating the dealers and Wynn did not have a contract of employment. During the 2007 legislative session, a bill that would have banned tip-sharing policies passed the Assembly, but was killed in the Senate.
In January 2008, the International Union of Gaming Employees (IUGE) took up the cause, forming the PEST committee and started the ball rolling to get the initiative put on the ballot. IUGE said Wynn was setting a dangerous precedent by taking control of money that belonged to the dealers, not to management, and they sought to limit an employer’s ability to require tip pooling.
Besides Wynn Las Vegas, opponents of the initiative measure include the Nevada Restaurant Association, Nevada Tavern Association and the Retail Association of Nevada, among others. This might look like a case of greedy big business lining up against the little guys. But it turns out there’s more to it than meets the eye, and that’s where “the law of unintended consequences” comes in.
The initiative would put employees in charge of whether tips can be pooled, with the employer having no say about which employees would be allocated a share of tips or whether any particular employee would be included in the pool or left out. Because it is not limited to gaming employees, it would affect every employer and business with employees who receive tips.
In addition to the potential for upsetting tip-sharing policies that have worked for many years in restaurants, bars and coffee shops across the state, the initiative goes further by including provisions that would change NRS Chapter 608, which contains regulations about overall wage and hour laws in Nevada.
According to a report published by the law firm of Kamer, Zucker & Abbott, “What should most alarm Nevada employers are subsections 4 and 5 of the initiative petition. Subsection 4 would give employees the right to file private lawsuits to enforce Nevada’s wage and hour laws. Currently, a private right of action exists only for minimum wage violations.”
An opinion issued by Sam McMullen of Snell & Willmer, who is representing the Nevada Restaurant Association, states, “It opens up all of NRS 608 regarding employment practices and restrictions in Nevada to private action, a significant change for every employer as it covers minimum wage, overtime, etc.” In other words, instead of going to the Labor Commission, any employee with a beef about overtime pay or coffee breaks could hire an attorney to put his boss through a lengthy and expensive court battle.
In addition, subsection 5 of the petition states that the employer can be assessed punitive damages in addition to actual damages, and if the employee wins the case against his employer, he can be reimbursed for attorneys’ fees.
Proponents of the PEST initiative must get 58,628 signatures on their petition by November 11 to put the issue before the 2009 Legislature. If the Legislature fails to enact its provisions, the measure will be placed on the ballot in 2010, and if voters approve it, it will become law.
Assuming the PEST petition withstands court challenges, it will probably enjoy popular support from voters who feel sorry for the dealers at Wynn. But regardless of the merits of the dealers’ case, this petition should not be passed, since its “unintended consequences” would negatively affect businesses all over Nevada.