restroom (n.)

also rest room, rest-room, 1887, "room set aside for rest and quiet" (in a workplace, public building, etc.); see rest (n.1) + room (n.). As these often later had (or were required to have) accessory toilet-rooms, by 1930s the word came to be a euphemism for "lavatory, toilet."

A. ... I walked into the rest room and three or four men went in there, talking, and it seemed to me as though the place was sort of disorganized.
Q. (By Mr. CARMODY.) What do you mean by "rest room"? Do you mean the toilet?
A. That is right.
Q. It really wasn't a rest room?
A. The rest room was upstairs, over the toilet.
[NLRB vs. Pennsylvania Greyhound Lines, Inc., transcript of record, U.S. Supreme Court, October Term, 1937]
Definitions of restroom

restroom (n.)
a toilet that is available to the public;
Synonyms: public toilet / comfort station / public convenience / convenience / public lavatory / toilet facility / wash room