District Judge James Wilson has issued a stay of his order striking down regulations that let employers count tips as part of employee salaries.
Wilson ruled August 12 employers can’t count tips to determine whether employees should get $8.25 an hour or the lower $7.25 an hour allowed for businesses who provide health insurance. They are allowed the lower pay rate if they offer workers health insurance that costs 10 percent of the worker’s earnings or less, under the constitutional amendment tying the minimum wage to inflation.
Lawyers for Cody Hancock and Kwok Yen Moy of Las Vegas argue employers offer insurance policies that are either sub-par or far more expensive than workers can afford. They use tip income to inflate the worker pay to a much higher level, allowing them to offer a much more expensive health plan and still say it’s under the 10 percent level. When workers reject those health plans, the employers, primarily in the resort industry, cite that as justification for paying the lower minimum wage.
Labor Commissioner Shannon Chambers said the office will continue using the contested regulations until the Supreme Court will decide the appeal.
“Nothing in the amendment says tips are not part of pay,” argued Deputy Attorney General Scott Davis.
But Wilson agreed lawyers Don Springmeyer and Bradley Schrager the minimum wage amendment addresses the gross taxable income of the employer, not tips which are gifts from customers.
“The drafters of the amendment expressly excluded tips and gratuities form the calculation of the minimum hourly wage,” Wilson ruled.
Wilson agreed this past week to stay the effect of his ruling “until the Nevada Supreme Court has given finality to the issues raised in this case.”
“The court recognizes that a serious legal question is involved in this case as it involves the interpretation of a constitutional provision with ramifications affecting persons throughout the state,” the stay order says.
It also says no one will “suffer irreparable injury” from the stay.
The case is on appeal to the high court for a final ruling on the issue. If Wilson’s ruling stands, it would affect the pay rates of thousands of workers in the resort industry.