California Tip Laws

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 laws because we think that you need to know your rights when it comes to keeping the wages that you earn. 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.

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 towards 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 wages.

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. 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 supervisor 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. 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.

Violations of Tipping Laws

If an employer violates California labor laws surrounding tips or gratuity, they could be charged with a misdemeanor offense. 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.