Tip pooling arrangements are when a business collects all the tips received by employees and then splits them evenly.
Labor Code 351 requires employers to give tips to employees by the next payday after the tip is paid. Under California tip laws, employers are responsible for all credit card fees on gratuities and tips.Īlso, when patrons leave tips on a credit card, the tips must be paid promptly to the employee. When this happens, the owner deducts a 2% credit card fee when he passes the tip on to Amy.Īmy’s boss is breaking the law. But sometimes customers add the tip onto their credit card bill. The owner of the salon encourages customers to leave tips in cash.
The employees are entitled to receive the full amount of the tip left by the customer.Įxample: Amy is working at a nail salon. In other words, a boss can NOT deduct the amount of a credit card fee from an employee’s tips. The employer is required to pay all credit card fees on tips. Similarly, tips do not count for calculating overtime pay under California overtime law. 7 This applies to waiters, bartenders, etc.) (By the way, workers who earn much of their income from tips must still be paid the minimum wage in California. California minimum wage laws only apply to what an employer pays-not tips that a customer leaves.Īs of 2022, the California minimum wage is $14.00 an hour for companies with 25 employees or less, and $15.00 an hour for companies with 26 or more employees. Under Labor Code 351 LC, what an employee earns in tips also cannot count toward the minimum wage. Raul has the right to keep his tips, and his boss can’t reduce his hourly wages by that amount. What Raul’s boss is saying goes against California tip law. When Raul tells him, his boss says that this means he only has to pay Raul $5/hour. He finds that he is making about $10/hour in tips.Īt payday, Raul’s boss asks him how much he collected in tips. 5Įxample: Raul has just started working for a car wash, at an agreed-upon regular rate of pay of $15/hour.
Can employees sue their employer for withholding tips? What happens if an employer violates California tipping laws? What counts as a tip under California tip & gratuity laws? Payment of gratuities made by patrons using credit cards shall be made to the employees not later than the next regular payday following the date the patron authorized the credit card payment.”īelow, our California labor and employment lawyers answer the following top five questions about California tip laws: An employer that permits patrons to pay gratuities by credit card shall pay the employees the full amount of the gratuity that the patron indicated on the credit card slip, without any deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.
“No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Labor Code 351 LC is the main California employment law dealing with tips and gratuities. This office can order employers to pay misappropriated tips to employees. 3Įmployees whose tips are misappropriated by employers can file a complaint with the California Labor Commissioner’s Office. S/he could face six months in county jail and/or a fine of up to $1,000. 1 2Īn employer who violates California tip laws can actually be charged with a misdemeanor crime. They do not affect an employee’s rights under California wage and hour laws. force workers to share tips with owners, managers or supervisors.Under California law, employees have the right to keep any tips that they earn.