Casinos to fight ruling on cash shortages

David Strow

Tuesday, Aug. 10, 1999 | 11:26 a.m.

A judge has upheld the Nevada Labor Commission's ruling that a casino company can't withhold funds from employee paychecks to cover cash shortages.

The company, Coast Hotels & Casinos Inc., says it will appeal to the Nevada Supreme Court. Observers say the case would set a critical statewide precedent for a common gaming industry practice.

Answering a request for judicial review filed by Coast Hotels against acting Labor Commissioner Gail Maxwell, state Judge Michael Cherry ruled that the commission had acted properly in ordering Coast to pay back $520 in wages withheld from a former employee. Cherry did, however, throw out the commission's levy of $2,548 in penalties against Coast.

Cherry's ruling provides some guidance for other state judges ruling in similar cases.

"This case may set a precedent for the district court," Maxwell said.

Coast Hotel's general counsel predicted dire consequences for casinos and workers alike if the ruling stands.

"I fear that if the statute is interpreted to never permit withholding, a lot of people will end up losing their jobs over this ruling," said Barry Lieberman. "In a large part, that's why we'd appeal. It's not the money or the individual. This is detrimental to the casino and the workers ... it provides a safety valve."

Most major casinos have some kind of deduction policy for shortages, particularly among change persons, said gaming Deputy Attorney General Keith Kizer.

"It would be to the benefit of everyone to have the Supreme Court rule on this, and in a very quick fashion," Kizer said. "Hopefully the Court will decide on the parameters of when, if at all, an employer may deduct for cash shortages."

MGM Grand Inc. and Harrah's Hotel-Casino are also appealing similar decisions by Maxwell to state district court, but hearings haven't begun on their cases yet.

The Coast Hotels case revolves around Sandra Meranian, a former cage cashier at the Orleans Hotel & Casino.

When she was hired by the Orleans in November 1996, Meranian signed a blanket authorization that permitted the casino to deduct any shortages from her paycheck. On two occasions in February and March 1998, $520 was deducted.

After she was discharged by the Orleans for an unrelated matter in May 1998, Meranian filed a complaint with the Labor Commission, which ordered Coast Hotels to pay more than $3,000 in March.

The Labor Commission held that Coast Hotels was in violation of Nevada Revised Statutes 608.100 and 608.110. That law prohibits an employer from paying an employee less than the agreed upon wage, unless the deduction "is for the benefit of the employees, or other deductions authorized by written order of the employee."

In the Coast Hotels case, as well as the other two cases, the Labor Commission said employees felt they would be fired if they protested the deduction policy. In its order, the commission wrote that a "pre-loss blanket authorization is not a prospective waiver of any employee's rights and is not a knowing or intelligent waiver of her right to receive full pay."

The commission also felt the policies were little more than attempts to use employees as insurance against losses. Employers have other methods, such as discharge or litigation, at their disposal for handling chronic shortages, the commission argued.

Patrick Christoff, a former deputy attorney general for the Labor Commission, said he believed the Supreme Court would overturn the Labor Commission's ruling, based on his reading of the statute. He said a lot of workers can't afford to pay the shortages through payroll deduction -- or any means for that matter.

"I don't think it's an infrequent occurrence to have employees be several thousand short ... accidents happen," Christoff said. "I've seen $10,000 shortages. That would take a lifetime for some of these workers to pay back."