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Tip Laws in California

Under California law, tips are the property of the employee who receives them. Employers may not take or share employees’ tips except under certain limited circumstances.

California tip law dictates that employers are prohibited from using employees’ tips to offset the employer’s obligation to pay them minimum wage. Under California labor code, an employer cannot pay an employee less than the minimum wage and use the employee’s tips to make up the difference. If they do, they could committing a tip law violation.

Additionally, employers are prohibited from requiring employees to share their tips with the employer or other employees, unless the employees are part of a valid pooling arrangement for tips and gratuities.

It is important to note that employers are also required to comply with federal tax laws, California tip laws, and credit card processing fees regarding employee’s tips. Employers are required to withhold income and payroll taxes on tips received by their employees and employees are required to report tips as income on their tax returns. If an employer (like a restaurant manager, for example) violates California tip laws, they could be violating federal law, as well as California tip laws, and may face unfair business practice penalties.

If a server in a restaurant believes that their employer violated tip laws in California, they may wish to contact an employment lawyer or file a labor board complaint. Violating California tip laws is a crime. Servers who provide direct table service deserve all their tip credits and they can file a wage claim if they are not receiving what they are owed.

Lawyers for Justice, PC helps California can employees file a wage claim that seeks to pay them for their services rendered, along with any overtime pay that is late or unpaid.

 

Pooled Tips Laws

Under California law, employers may require their California employees to participate in a tip pooling arrangement, in which tips are shared among a group of employees. Under California law, this is legal. However, there are certain requirements that must be met for a tip pool arrangement to be considered lawful.

California law requires that a valid tip pooling arrangement must meet the following criteria:

  1. The employees who participate in the tip pool must be in jobs that customarily and regularly earn tips.
  2. The tip pool must be distributed among the employees in a fair and reasonable manner.
  3. The employer cannot participate in the tip or gratuity pool.
  4. The employer must give notice of any required tip pools to the affected employees.

It is important to note that employers cannot require employees to share their tips with employees who do not customarily and regularly work for tips. Additionally, employers cannot take any portion of the tips received by employees as a credit towards the employer’s obligation to pay minimum wage. Tip workers usually earn a regular rate of pay, or minimum wage, in addition to their tip credits.

If a tip worker believes that their employer has violated California gratuity law in regards to the rules of tip pools, an employment attorney can help. Lawyers for Justice, PC ensures that the wage and hour labor code is enforced for tips and gratuities workers and that any tip law violation is remedied for tip workers.

 

What Is Tip Sharing?

Tip sharing is sometimes used as an interchangeable term as a “tip pool;” it is a practice in which tip workers share a portion of their tips with other employees who provide support services. For example, in a restaurant setting, servers might share tips with bussers, hosts, and bartenders.

The idea behind tip sharing is to promote teamwork for one or more employees and encourage all employees to work together to provide a good customer experience. It can also help to ensure that all employees receive a fair share of the service charge gratuities received by the establishment.

It is important to note that tip sharing must be done in compliance with state and federal gratuity laws. In California, for example, a valid tip poo arrangement must meet certain requirements, such as being distributed among employees who customarily and regularly receive tips and being distributed in a fair and reasonable manner.

 

Employment Lawyers Who Know Tip Laws

Whether it’s questions about tip pools, California tip laws, how the California labor code applies to tip workers, or minimum wage issues, Lawyers for Justice, PC can help. With a firm of over 25 employment attorneys, their powerful lawyers know California law inside and out. Each attorney that is paired with a new client’s case enforces the California labor code to ensure that each tip law issue or minimum wage violation is handled with precision, care, and legal expertise.

Call today for a FREE consultation. The firm only gets paid when the client does, so there are ZERO up front fees. Call (818) JUSTICE