Here’s a tip: It looks like Steve Wynn wins again

When Steve Wynn instituted tip sharing among the casino floor’s dealers and supervisors in 2006, a huge legal and philosophical fight broke out.

It’s a transaction that occurs thousands of times a day in our city’s service industry-dominated burg: The tip.

It can be a well-directed “thank you” to somebody who goes above and beyond the call of duty or it can be a message to workers that their efforts didn’t measure up. My dad always used to tell me, “If you really want to get somebody’s attention, leave them a penny or a nickel. That way, they know that you didn’t forget to leave a tip, but that you thought their efforts were so bad that it didn’t merit a reward.” I’ve never taken my father’s advice, though at times I’ve felt like it.

In Las Vegas, tipping is a whole ’nother animal. There’s a lot more of it here because of the massive service industry.

Shine your shoes after you get off the plane? Tip. Pile into a cab to get long-hauled to your hotel? Tip. Drop off your suitcase to the bell captain to be hauled up to the room? Tip. Grab a meal at a place that has servers? Tip.

Tipping guides say that you should give gratuities to baristas, bartenders, baggers, barbers, pizza delivery drivers, maitre d’s, waiters, valets, chauffeurs, housekeepers, cabdrivers, bus drivers, stylists, manicurists, massage therapists, spa attendants, shoe-shiners, skycaps and coat-checkers.

And then, there’s that extraordinary personal bond that develops in Vegas between the blackjack player and the dealer.

Gamblers almost always tip dealers when their luck is good. Deal me a 21 and I’ll place a side wager for you on the next draw. If I win, we both win. Dealers rap the chip on the table, thank you and deposit it in the toke box.

At the end of the day or the shift, chips are collected and split among dealers.

That’s always been the Vegas way. Until 2006.

That’s when Steve Wynn—who’s been right about how to do things in Las Vegas since he built the Mirage volcano—decided to dramatically change his company’s tip distribution policy.

That August, Wynn issued a memorandum to employees directing that tip revenue would be divvied up among not only dealers, but also with their supervisors. The new policy was to take effect Sept. 1, the memo said, and new positions were to be created in a massive makeover of the management of the floor. Several dealers sued the company, leading the Nevada labor commissioner to issue an order almost a year ago over the policy’s legality.

In a definitive 19-page decision last July, Labor Commissioner Michael Tanchek said Wynn could, in fact, set the policy.

Now, the inevitable court appeals are making their way through the system and in the weeks ahead, you’ll certainly be hearing a lot more about the Wynn tip policy controversy.

Lawyers representing dealers have until July 5 to answer a Wynn petition opposing the dealers’ assertion that the labor commissioner’s decision is flawed. A hearing is scheduled before District Court Judge Kenneth Cory on July 12.

As we stand by for the legal battle to unfold, questions remain: Is it OK for Wynn to share tips with managers? Shouldn’t the people who provide the service get the reward for that service? Is the Wynn policy the creation of a smart businessman who occasionally colors outside the lines and has discovered a new way to be innovative or is it the product of a greedy casino magnate looking for a way to crush the little guy and build more separation between the wealthy and the working man? Will the policy be replicated by other companies and for other employee groups?

Because the case is in litigation, there are precious few relevant people who can (or will) go on record. But there’s still plenty of history and reams of documents that spell out the feelings of the policy combatants.

Gregory Kamer of the Kamer Zucker Abbott law firm in Las Vegas, an employment law expert who represents Wynn, says the tip policy was incorporated into the collective bargaining agreement at Wynn. It’s in place at Encore, the Wynn’s sister property that opened in 2008.

“From a legal standpoint, the matter has already been to the Supreme Court and most of the allegations that were made were dismissed,” Kamer says.

Tanchek’s ruling was no surprise—it relied on precedent. Former Labor Commissioner Gail Maxwell ruled on a similar case in 1999 involving a Summerlin casino that wanted to force dealers to share tips with their bosses. Tanchek determined that the Wynn received no direct benefit from the change in policy and that the company was within its bounds to make the change. Leon Greenberg, a Las Vegas attorney who has handled wage cases nationwide, appealed Tanchek’s ruling to District Court in Clark County on behalf of the dealers.

Greenberg argues that the Wynn policy constitutes a prohibited “taking” of funds for employees who wouldn’t otherwise receive tips.

“The Wynn ‘took’ those tips and used them for its own benefit to increase floor supervisor compensation and lower the Wynn’s management labor costs, purposes for which those tips were never given by the Wynn’s customers,” Greenberg wrote in a February response to Tanchek’s ruling.

“Allowing the Wynn to take the dealers’ tips and give them to the non-tipped floor supervisors saved Wynn the cost of paying those floor supervisors such additional compensation itself. The money thus saved by Wynn was used for other purposes, just as if the Wynn had elected to take a portion of the dealers’ tips and use it to pay a bonus to the Wynn’s senior management.”

The bottom line: Is Steve Wynn right? Yes, he is.

The appropriateness of employees sharing tips is a great debate. If a waitress refills my water glass seven times, should she have to share my 20 percent gratuity with the waitress who looks the other way when I need something? The casino culture seems to be all in for tip sharing, but I’m sure there are more than a few dealers out there who really rock and genuinely believe they should be entitled to pocket a tip given to them instead of dropping it into the toke box. But if they’re willing to share with other dealers, they should also be willing to share with the whole casino floor team.

Casino lore is littered with tales of whales who have dropped massive tips on floor personnel after a fabulous night at the tables. The late Australian billionaire Kerry Packer once reportedly tipped MGM Grand staff $1 million that split out to a $1,000 windfall for everybody who worked that night.

Steve Wynn created a problem most of us wish we had. He built an operation and brand so great and instilled so much pride in serving the customer that Wynn and Encore employees routinely collect the biggest tips in town. They were so high that front-line dealers were making more than their supervisors. He decided to solve this upside-down payroll problem by including managers in the tip pool with dealers. But one problem that emerged was good management candidates passed on being promoted because without a share of the tips, they’d take pay cuts if they were promoted.

Some have argued that Wynn should simply pay his supervisors more and leave the tip pool alone. But why increase expenses when you don’t have to?

According to the labor commissioner and the courts, it’s perfectly legal. What’s unfortunate is that employee groups and unions think it’s a decision they should be making instead of him.

But the last time I checked, the name on top of the bronze-colored 45-story luxury edifice on the Strip is “Wynn,” so he’s entitled to set the agenda.

Sure, he risks driving away some good employees or discouraging good workers from applying. But to him, it’s a risk worth taking to drive down his costs.

The concern that the practice would spread to other industries and that every Las Vegas casino would adopt Wynn’s policy seem to be unfounded, although other companies could step in once the legal appeals have run their course. Representatives of Caesars Entertainment have said they’re reserving judgment for now.

Employees who don’t want to play by Wynn’s rules don’t have to. They can move on. Nobody’s forcing them to work there.

But here’s a tip: If you’re making $70,000 throwing down cards at one of the finest casinos on the planet, quit complaining. You could be working for tips shining shoes or waiting tables.

Because that, too, is the Vegas way.

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  1. Practice needs to match policy. "Sharing" needs to work both ways. If the busboy gets a tip, he shares with his "manager". But if the manager gets a tip, and sticks it in his pocket, it isn't shared. This is a real problem because many high rollers will tip the manager but the Wynn practices allow the manager to pocket money that is the result of service by the whole team.

    It is one thing to base pay on performance, but in practice, this policy turns compensation upside down. Essentially, managers are being paid by their employees, with the source of that being the tip pool (plus what they can pocket without first reporting it to the pool). That puts hours and working conditions into play as vehicles for extortion of employees. ("If you give me more money, you will get better hours or better tables." Or "if you insist that I put the $50,000 tip into the pool, I will see you get fired.")

  2. In the retail industry you choose to become management knowing that some employees might make more than you do. Everyone has their own reasons including long term stability, better pensions, greater upward mobility. Sometimes you are just better suited as a manager than a worker. Therefore, I think the casino argument on tip sharing with management is a smokescreen and just ANOTHER WAY TO LOWER THE WORKING MAN'S WAGES.

  3. This is always been a touchy issue. In the case of Steve Wynn, Wynn is correct. You can say it not right to take a toke away from the dealers, but Steve Wynn has the right to handle tip policy at his properties. The courts will always rule in favor of the owner when it comes to tipping. First off, Wynn has created the conditions for patrons to tip in the manner they tip at the Wynn. Millions invested in brick and mortal, steel, marketing, quality products, and much training in customer service for all front line employees. The employees only has to bring themselves to Wynn's property. The setup is in play.

    Now, many will say is this fair? Yes, sadly, it is fair!

  4. Mr, Velotta

    what gives you the right to say mr. wynn is right? I do not see you as a judge or jury on this case please step back and just report both sides. your opion is more than welcome in the comentary section.

    This issue is a strong one and I wonder where does it stop how many peoples hands can be put into one pot of money! People say wynn is right i dont visit his property and thats my right.

    And not every person in a casino makes that amount. Go show me a dealer downtown who makes that. or how many dealers on the strip are working 2 jobs just to get by in this economy.

    people often wonder why there are so many minority dealers that is beucse what person in there right mind would start downtown and work there way up. its just sad that these dealers who worked there way up and down the strip to finnaly end up at a good job have to have that reward taken away becuse of a billionars sence of fairness.

  5. Bignick7775 --

    Actually, my employer, VegasInc, gives me the right to say Mr. Wynn is right.

    The magazine's philosophy is to take a point of view in its big feature stories. After talking with several people, my point of view is that Mr. Wynn, as the owner of his company, is within his rights to make the policy he made since it violates no law and has been upheld by regulators.

    Had another writer been assigned this story, it very well could have said Mr. Wynn is not right in this philosophy.

    And to TheTruth51: No, that was not me coming out of Mr. Wynn's office.

    I don't believe I vilified people who work in the resort industry. In fact, I think they are the best in the world at what they do. But they don't own the resorts and make the rules.