Wynn club workers want to air tip dispute in court

They see shared gratuities as subsidy for managers, supervisors with relatively low base salaries

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Steve Wynn

Nearly six years ago, people hired for Tryst nightclub at Wynn Las Vegas signed off on a company-run plan to pool tips and redistribute them under a point system to others — including managers.

The statement raised eyebrows among employees who viewed it as an unprecedented maneuver by a major employer to dictate how tips should be distributed. Hospitality workers across the country voluntarily pool tips among themselves — servers, bartenders, hosts, busboys, barbacks and cooks.

But mandating that nightclub workers share their tips with their bosses is new territory. Now the rank-and-file workers are wondering: Who exactly is getting their grubby paws on our money? They’ve filed a lawsuit to force an answer.

And union members are threatening to sue their own leadership for signing a contract that allows tip sharing in the first place.

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Wynn Resorts CEO Steve Wynn has created some of the world’s most expensive and elaborate resorts. He also has different ideas on tips. Wynn decided his dealers would share tips with their immediate supervisors, giving an added incentive to interact with gamblers and provide better customer service. With supervisors earning tips, line workers can aspire to become supervisors who should earn more than underlings.

But workers tell a different story, one in which tips intended for them subsidize the earnings of higher-ups. Friction over the issue is still playing out on the legal front.

Workers at Tryst and, later, when XS nightclub at Encore opened in 2008, fall under a tip-sharing point system that changes at management’s discretion, according to how much is collected and how many employees work per night. Because management divides the tips at the end of the night, workers say they don’t know who gets what, or how much ends up in managers’ envelopes.

“It’s not a transparent system,” said one nightclub worker, who requested anonymity because of a company policy preventing employees from speaking to the media. “They’re making it up as they go along.”

Wynn Resorts representatives declined to comment.

Employees say Tryst and XS generated at least $70 million in revenue last year — not including hundreds of thousands of dollars in tips.

Although some Las Vegas hotels, shows and restaurants have closed or reduced hours in the recession, Wynn and Encore nightclubs are hopping from the time they open Friday through Monday, when they go dark again, workers say.

“It’s like the largest party of the year every night,” another employee said. The clubs attract thousands each night, with more than 8,000 people circulating through any one club on a Saturday, the employee said. “It’s crazy. We’ll work 11 hours straight, with no breaks.”

A 10-year contract finalized in 2005 with Culinary Union Local 226 and Bartenders Union Local 165 allows Wynn and a “gratuity committee” to determine “a formula that allocates a portion of the tips to any other classifications that have taken part in the service for which the original tip was given.”

The language, unique to the Wynn Resorts contract, appears to give employees the discretion to decide whether to include managers and other kinds of employees in the tip pool.

“Management will be prohibited from receiving any other moneys from employees outside the decisions of the gratuity committee,” according to the contract. It names the “Secretary Treasurer of the Union” and Wynn management as the “final arbiters” of tip-related disputes, however.

Not long after they were hired, some workers say they began complaining to union and management about sharing tips with more than a dozen managers and supervisors, including office employees who don’t work in the clubs.

Those complaints intensified after workers studied the contract, which wasn’t finalized until after Wynn Las Vegas opened in April 2005. Employees asked why they had not heard of the tip committee. They suspected union management of agreeing to the tip-sharing plan as part of a deal with Wynn to recognize the union.

Employees say they complained to both parties over the years, to no avail.

Meanwhile, dealers at Wynn voted to be represented by the Transport Workers Union, obtained a union contract and filed suit against the company for splitting tips with supervisors who get a 15 percent cut of the pool. That fight suffered a setback last year when the Nevada labor commissioner declared the practice legal.

The bartenders union agreed to take up the cause under threat of legal action, nightclub workers said.

Terry Greenwald, secretary-treasurer of Bartenders Union Local 165, said he took action as soon as he knew of the tip dispute — last June.

That’s when the bartenders union agreed to file an employee grievance against Wynn for splitting tips with managers without approval of a tip committee.

Greenwald downplayed the problem, saying some nightclub employees are OK with managers getting tips because they think managers bring them customers.

Disagreements over tips are common in tip-heavy Las Vegas, he said. “Lots of people don’t like how tips are distributed ... (they think) the servers are getting too much money, or the bartenders are getting too much money.”

Employees have little cause for complaint as long as a tip committee of their peers has approved the distribution plan, he added.

Workers said Wynn management months ago annulled the first vote of the committee to reject managers, claiming it represented a minority of dissidents rather than the will of all nightclub workers.

The committee — and the convoluted point system — are company inventions that are ripe for manipulation, workers say.

“The tip committee is a joke. (Management) is hoping if they get the right people on the committee, they can vote the managers into the tip pool,” a third worker said. At stake are thousands of dollars per night per manager and tens of thousands in extra earnings per manager per year, the worker said.

To avoid potential tax-reporting problems with the Internal Revenue Service involving tips, many Las Vegas clubs instead began tacking a mandatory service charge onto customers’ bills, with a fraction of that going to management. Strip banquet workers have long had a similar arrangement spelled out in their union contracts.

After a panel of union and Wynn officials denied the workers’ tip grievance in September, the workers sued Wynn in October, seeking to return tips management has received over the past five years. Wynn has filed a motion to dismiss the suit, saying the dispute must be resolved by an arbitrator as spelled out in the labor contract. Workers say arbitration isn’t mandatory and think they have a better chance in court, as they say management is delaying resolution after informing workers, according to the lawsuit, “that no further discussion of the issue would be undertaken.”

Some Strip observers say Wynn’s union contract is a reasonable compromise that benefits the most lower-paid yet well-compensated workers such as housekeepers, whose work is more physically demanding, to the potential detriment of high tip earners such as bartenders and cocktail servers who are sharing tips with managers. Servers in Wynn’s high-end restaurants also share tips with managers.

Still, the contract provides for other benefits workers might not have had Wynn rejected the union altogether, they say.

“The system only works if it benefits the majority,” said one casino executive not employed by Wynn or involved in the tip dispute.

Some nightclub workers say the tips aren’t an incentive for their bosses to provide better service, as management would have them believe. Rather, they call it an automatic subsidy for managers with lower base salaries than counterparts around town.

Moreover, workers point to their own base wages, which are less than their counterparts on the casino floor and in other union resorts.

By contract, the starting wage for Wynn nightclub workers was $7.55 to $7.75 per hour, less than the $11 to $15 per hour earned by their counterparts at the resort and others on the Strip. Excluding tips, workers make close to $8.25 per hour, a dollar over minimum wage.

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