Many employees in the state of California work for tips. However, we also realize that there is significant confusion about the laws surrounding tips in this state. Here, we want to briefly discuss the California tip law because we think that you need to know your rights when it comes to keeping the wages that you earn. The California tip law states that all tips are the property of employees and cannot be used to offset wages. It also details the legal stipulations related to tip pooling and service charges, highlighting the consequences for employers who violate these laws.
If you have any questions about whether or not your employer has properly handled wages and tips, or if you feel like you have been underpaid, we strongly encourage you to speak to a skilled Orange County employment attorney as soon as possible. You may be entitled to various types of compensation.
Understanding California Tip Laws
In California, a tip is defined as a voluntary payment made by a customer to an employee for services rendered. According to California law, tips are considered the sole property of the employee and cannot be taken by the employer. This means that employers cannot deduct tips from an employee’s wages or credit them toward their minimum wage obligations. The law ensures that employees retain full control over the tips they earn, reinforcing the principle that tips are an additional reward for their service.
Tips Belong to the Employee
When we look at California Labor Code 351 LC, we can see that tips are the direct property of the employee for whom the tip was paid or left for. This means that, under the law, an employer cannot:
- Take any portion of an employee’s tips or gratuity for themselves
- Deduct any amount of money from a worker’s wages due to the tips
- Credit any part of the tips against the employee’s wages
Another important factor in understanding California law regarding tips is that tips or gratuity cannot count toward the minimum wage in California. The minimum wage laws in this state apply only to what an employer pays, not what a customer leaves for the employee. In California, even workers who are tipped must still be paid minimum wage. This is in line with California’s tip laws, which prohibit using tips to offset minimum wage obligations, ensuring fair earnings for employees.
Is “Tip Pooling” Legal in California?
Tip pooling refers to arrangements where a business collects all of the tips received by employees in a given period of time and then splits them evenly amongst the workers. Tip pooling arrangements in California allow employees to collectively share tips while ensuring that management does not participate. In California, this practice is legal so long as it is only employees sharing the tips. Managers who have the authority to hire and fire employees are not allowed to share tips in these situations.
When tip pooling, this can include employees who have some supervisory duties, including shift supervisors. Any tip pools at a restaurant may also be shared by workers who do not provide direct table service, including hosts, bussers, bartenders, etc.
What Exactly Counts as a Tip?
Under California law, a tip will count as any money that is paid, given to, or left for an employee by a customer of the business and that is not included in the amount for the regular services or goods. Mandatory service charges, which are typically added to bills for large parties, are not considered tips under federal and California law, and employers can retain them, impacting how wages and taxation are handled for employees. For example, there are some businesses that require a “service charge” on a person’s bill. If a customer has no choice but to pay this amount, this will not count as a traditional tip or gratuity.
Minimum Wage and Tips
In California, employers are required to pay employees the minimum wage, which is currently $16.50 per hour. Tips do not count towards the minimum wage, and employers cannot use tips as a credit towards their minimum wage obligations. This means that employers must pay employees the full minimum wage, in addition to any tips they may receive. For example, if an employee earns $10 in tips per hour, the employer must still pay them the full minimum wage of $16.50 per hour. This ensures that employees receive a fair base wage regardless of the tips they earn.
Credit Card Tip Laws
In California, employers are required to pay employees the full amount of tips left on a credit card without deducting any credit card processing fees. This means that if a customer leaves a $20 tip on a credit card, the employer must pay the employee the full $20 without deducting any fees. Employers are also required to pay employees their tips promptly, no later than the next scheduled pay date after the date the customer added the tip on the credit card slip. This regulation ensures that employees receive their earned tips in a timely manner and are not penalized for the costs associated with credit card transactions.
Violations of California Tipping Laws
Violating California tip laws can lead to misdemeanor charges against employers. This means that an employer, upon conviction, could face up to 60 days in jail as well as a fine of up to $1,000.
State law requires employers to keep detailed records regarding tips. This means that they need to keep records of any tips that they receive directly or indirectly from customers or employees. Violations of tip laws will be taken seriously by labor regulators in this state.
Protect Your Right to Tips with Callahan & Blaine
If you believe your employer has unlawfully withheld your tips or violated California’s tipping laws, it’s crucial to take action immediately. At Callahan & Blaine, we have over 40 years of experience representing employees in labor disputes and ensuring their rights are upheld. Our team has a proven track record of securing compensation for workers in a wide range of employment-related matters, including tip violations and underpaid wages.
Understanding the complexities of California’s tip laws can be challenging, but with our skilled attorneys on your side, we’ll fight for your fair compensation. Don’t let your employer take advantage of you. Contact us today to discuss your case with a senior attorney who can help you navigate your legal options. Call (714) 241-4444 or reach out via our contact form to schedule a consultation.
