The Nevada Restaurant Association has filed a lawsuit against an attempts to eliminate tip pooling and employee grievance process established by the Office of the Nevada Labor Commissioner.
Overview of Pending “Tip Pooling” Initiative
The key problems with the initiative are housed under two categories--the first is the substantive or operational problems that restaurateurs can readily see/already know and the second, the legal issues which under Nevada law could be sufficient to remove it from to the ballot. Be aware that this is only a preliminary overview of potentially difficult issues the legislation could present to operators.
PRELIMINARY STATEMENT
The initiative being circulated is a
statutory initiative which means that if certified with the minimum number of
required signatures, it has to be presented to the Nevada State Legislature
(2009 Session) first before going on the ballot (2010 General
Election). As a statutory initiative, it is for passing or as in this
case, amending an existing statute. The process requires: 1) presentation
to the Legislature as one of the first issues and action by the 40th day; 2) if
passed word-for-word/no changes, it goes into effect without having to go to
the ballot; and 3) if rejected, amended or countered by another proposal, is
required to go on the ballot in the General Election in 2010 as
written/certified. If passed, it is not like any other statute in that it
is protected from any amendment for three years of effectiveness.
SUBSTANTIVE/OPERATIONAL ISSUES
1. This puts tipped employees in charge
of whether tips can be pooled. [Note: Does not seem to be drafted to preclude
an employer from requiring tip pooling, but does restrict employer from
interfering with tip pools put together by "eligible
employees."] This means that there could be myriad number and sizes
of tip pools put together throughout the "business" with the employer
having no say about a) which employees can be allocated a share of the pool(s)
or b) any allocation to any particular employee (in or out of pool).
2. While this is directed at the
dealer/floor supervisor model recently debated in the 2007 Nevada State
Legislature, its worst effect is that it is not limited to gaming employees and
affects every employer/business with tipped employees in the state…especially
restaurants.
3. It defines "eligible
employees" who can decide their own tip pools as only those "who are
the actual and direct recipients of the tips or gratuities." This
means that those who "indirectly" receive tips (as well as their
employers) are at the mercy of others as to whether they will receive any share
of the tips, or will continue to under an agreement because they have no
leverage under the law. It also leaves open the issues of what happens
when one employee no longer wants the agreement--does it require the pool to be
dissolved, or does it continue over the objection of the employee, for
example. [Note: it is unclear whether an employer can impose pooling as a
condition of employment prior to "employee" status; whether
this statute overrides any pre-employment restriction/hiring condition; or
whether if allows an employee to decide that he/she does not want to participate
in a pool--agreed or required.] The morale and operational stability issues are
multiple, and their resolutions are up in the air even if this passes as it may
require further legislative battles to clarify, assuming these do not amend the
passed initiative.
4. It also allows a private cause of
action not only to enforce this statute, but also expands it to include an
individual' employee's private lawsuit "to enforce the employee's rights
or to address grievances resulting from an employer's violation of any of the
provision of this Chapter." In other words, it opens up all of NRS
Chapter 608 regarding employment practices/restrictions in Nevada to
private action, a significant change for every employer even non-tipped employees
as it covers minimum wage, overtime, etc. In other words allows an employee to hire an attorney to sue a business
owner over any alleged wage and hour violation instead of the current system of
filing a grievance with the labor department
5. The "but not limited to"
language relating to damages could change the current limit on
punitive/exemplary damages regarding employment-related issues (minimum 300,000
or three times compensatory damages)
PRE-CIRCULATION LEGAL ISSUES
Note: These issues are governed/created by
statutes, the Nevada Constitution and case law which set the contents,
requirements, etc. for such initiatives which must be complied with for it to
move forward as a proper initiative for signature-gathering. This is why
we have worked to include more restrictions and more successful cases as a
basis for disqualifying petitions before they go out for signature, or before
the ballot/legislature. Also, please note that some of these are cured by
court-ordered amendment or by proponent redrafting and may not be fatal.
Pre-circulation issues generally do not go to the substance of the initiative
or any merits (constitutionality, equal protection, etc.) as the court usually
defers those to later, sometimes after it is successfully voted on.
1. Recent law clarifying "single
subject" rule should apply to remove parts of initiative (e.g., extra
subject creating private cause of action for all of Chapter 608).
2. May breach requirement that any new
expenditure or program created must be funded by initiative as well.
3. Description of effect may be
inadequate, incomplete or deceptive.
http://sos.state.nv.us/elections/pdf/GratuitiesPetition.pdf
-Summary provided by Samuel P. McMullen, Snell & Wilmer L.L.P.
