Thierman Buck Achieves Big Victory For Tipped Employees. This is a class action under federal law for failure to pay minimum wage and overtime pay due to an alleged unlawful tip pool policy.
In April of 2013 Joseph Cesarz and Quy Ngoc Tang filed a class action lawsuit against their employer Wynn, Las Vegas, LLC, alleging that the Wynn’s tip pool policy was unlawful because the Wynn shared their tips with non-customarily tipped employees—casino floor supervisors.
The United States District Court for the District of Nevada granted Defendant Wynn’s motion to dismiss the case and Plaintiffs appealed to the Ninth Circuit Court of Appeals.
Federal minimum wage law requires employers to pay employees a minimum of $7.25 per hour. Additionally, under federal law, an employer may fulfill part of its hourly minimum wage obligation to a tipped employee with the employee’s tips by taking a tip credit through a valid tip pool. However, under federal law the employer must (1) give notice to the employees, and (2) allow employees to retain all tips unless the employees participate in a valid tip pool. A tip pool is only valid if it is comprised exclusively of employees who are “customarily and regularly” tipped.
In 2011, the Department of Labor (“DOL”) promulgated a rule that said the tip pool restrictions actually extended to all employers, not just those who take a tip credit, and that tips are the property of the employee in absence of an agreement to the contrary. Relying on a case decided prior to the 2011 DOL rule, the United States District Court for the District of Nevada found in favor of the employer Wynn, asserting that the DOL’s rule did not apply to employers who did not take a tip credit. (The United States District Court for the District of Oregon also found in favor of the employers in Oregon Restaurant & Lodging v. Solis, which was argued at the same time the Wynn case.)
Joshua D. Buck of Thierman Buck LLP argued on behalf of the employees at the Ninth Circuit, who agreed with the employees that the 2011 DOL rule does in fact regulate the tip pooling practices of employers who do not take a tip credit, like the Wynn. The Ninth Circuit reversed both of the District Court decisions and remanded them back to those courts for further proceedings.
Defendant petitioned the Court of Appeals for the Ninth Circuit to rehear the Court’s decision in Plaintiffs’ favor. However, the Ninth Circuit declined to rehear the Wynn case and stayed the rehearing of the companion Oregon Restaurant & Lodging Ass’n v. Perez (ORLA) case. The Defendants in Wynn and ORLA petitioned the United States Supreme Court to hear the issue of whether 2011 DOL rule permissibly regulates tip pooling from employers such as the Wynn. The Supreme Court denied the petition for a writ of certiorari on June 25, 2018.
UPDATE
The Parties engaged in extensive discussions regarding their respective positions and with the assistance of a mediator, the parties reached a settlement through arms-length negotiations. The Honorable Andrew Gordon approved the settlement on July 22, 2021; a copy of the Order granting final approval can be accessed here. Settlement checks were mailed to the class around August 2021.
Read the Ninth Circuit’s full decision
If you are a tipped employee and believe your employer has an unlawful tip pool, contact us.
