California Labor Code section 351 prohibits employers and their agents from keeping any gratuity or tip—money over the amount due for goods or services—that patrons leave for employees.
Gratuities paid by credit card must be paid in full to the employees, without deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company, no later than the next regular payday.
Employers may require that employees share their tips with other staff in the chain of service, as long as the division is fair and reasonable. In one tip pooling case, the following allocations were considered permissible: 80% to the server, 15% to bus staff, and 5% to the bartender.
An employer may not use an employee’s tips as a credit toward the minimum wage, which is $8.00 per hour in California. Tips are also not considered part of an employee’s regular rate of pay when calculating overtime.
Certain requirements concerning tips, such as reporting for tax purposes, can be complicated. Employers should contact legal counsel or an accountant with any questions..
– – – – – – – – – – – – – – – – – – – – – – – – – –
Back to Newsletter Menu