Las Vegas Sun

October 10, 2015

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Tip income must be added to workers’ comp benefits, court rules

Employees in Nevada who receive tip income will receive a "windfall" if they are injured on the job.

The Nevada Supreme Court has ruled that tips received by a worker must be included in figuring workers' compensation payments. But the tip income must be reported to the employer.

The case involved Asen Negriev, an $8-an-hour bartender at the Big Tip Sports Pub in Las Vegas, who injured his back when he slipped and fell while on the job in November 2006.

Negriev had reported his tip income to the business after each shift. But he never reported the tips for federal income tax purposes, and the company never included the tip income on his paychecks.

Sierra Nevada Administration, which handled compensation claims for Big Tip, argued that tips should not be included in computing the average wage of an injured worker.

The average payment to a worker injured on the job is about 66 percent of a salary.

Sierra Nevada argued the tips should be included on the average wage only if the income was reported for federal tax purposes. And to rule otherwise would be a "windfall" for the injured worker, said Sierra Nevada.

District Judge Michelle Leavitt ruled in favor of Negriev, and the Supreme Court backed her.

The court, in a unanimous decision written by Justice Mark Gibbons, said the law requires an average monthly wage calculation to include untaxed tip income that a worker reports to his or her employer.

Gibbons referred to a prior ruling of another court that the failure to pay federal income taxes on tips is a matter between the worker and the government. He said that Negriev's federal tax liability remains the same.

Court documents did not reveal how much income Negriev reported in tips to his employer at the end of the shift. But he was rated as incurring a 6 percent permanent partial disability.

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