The 9th U.S. Circuit Court of Appeals on Tuesday reversed a U.S. District Court ruling that allowed Wynn Las Vegas to pool its dealers' tips and distribute them among other employees.
The decision was applied to two cases involving employers' tip pooling procedures: Oregon Restaurant and Lodging Association v. the Department of Labor and Cesarz v. Wynn Las Vegas.
Wynn's tip pooling policy, which took effect in September 2006, required dealers to share their tips with box people at the craps tables and customer service team leaders who track players, help with credit lines, address casino-floor disputes and act as concierges.
In 2010, the 9th Circuit Court of Appeals decided in Cumbie v. Woody Woo Inc. that an employer who pooled employee tips and distributed them to "both customarily tipped and non-customarily tipped employees" was within his or her rights because the Fair Labor Standards Act of 1938 was silent about employers who don't take a "tip credit."
The act allows an employer to fulfill its obligation to pay employees a minimum wage by taking a tip credit. Because Wynn paid its tipped employees at least the minimum wage, the company did not take a tip credit.
A group of casino dealers sued Wynn in 2011, arguing the casino required tip pools that redistributed tips from servers and dealers to normally nontipped employees, such as kitchen staff and casino floor supervisors. The U.S. District Court sided with the employers based on the circuit court's 2010 ruling.
On Tuesday, the panel of judges on the 9th Circuit Court of Appeals reversed and remanded that decision.
"There is no convincing evidence that Congress's silence, in this context, means anything other than a refusal to tie the agency's hands," 9th Circuit Judge Harry Pregerson wrote of the Fair Labor Standards Act.
Pregerson said the panel used a two-step review that found the labor standards act was silent on the cases before them and that the agency charged with enforcing the act, the Department of Labor, made a reasonable argument in 2011 that is "more closely aligned with the Congressional intent" than the Circuit Court's 2010 ruling.
"We've received the verdict and are considering our next steps," Wynn spokesman Michael Weaver said Tuesday night. He would not say whether Wynn expected the reversal or what the company's next steps might be.