gratuities

California law in Labor Code § 351 prohibits employers and their agents from sharing or keeping any portion of a tip or gratuity left for or given to one or more employees by customers. it is also illegal for employers to make wage deductions from gratuities, as well as illegal to use them as direct or indirect credits against an employee's wages.

A "gratuity" is defined by the California Labor Code as a tip, gratuity, or money that has been paid or given to or left for an employee by a patron of a business over and above the actual amount due for services rendered or for goods, food, drink, articles sold or served to patrons. Under California law, tips or gratuities are the sole property of the employee to whom they are given.

Here are answers to some frequently asked questions about the law related to tips and gratuities.

*What is a tip or gratuity?

A tip is or gratuity is money that a customer leaves for an employee over the amount due for the goods sold or services rendered. Tips and gratuities are the property of the employee, not the employer.

*Are employers permitted to deduct tips or gratuities from their employees’ paychecks?

No. An employer may neither take these tips or any portion thereof nor deduct money from an employee’s wages based on any tips that are earned by an employee. An employer may not credit an employee’s tips against the money the employer owes the employee.

*Is it legal for an employer to deduct credit card processing fees from an employee’s tips?

No. California law requires employers to pay employees the full amount of the tip stated on the credit card payment receipt. Employers are prohibited from making any deduction for credit card processing fees or costs charged to the employer by the credit card company from gratuities paid to employees.

*Is it legal for employers to require employees to share tips?

Yes, provided that the arrangement is fair and reasonable. Involuntary tip pooling is lawful provided that the tip pooling policy is not used to compensate an owner, manager, or supervisor of the business, even if these individuals provide direct table service to customers or are in the chain of service to customers.

*When a credit card payment includes a tip, when may an employee expect to receive this money from the employer?

Employers must make payment of a gratuity to the employee not later than the next regular payday following the date the customer authorized the credit card payment.

*Are tips considered part of an employee’s "regular rate of pay" for the calculation of overtime?

No. Tips are voluntarily given to employees by customers and not provided by the employer. Thus, they are not considered as part of an employee’s regular rate of pay when calculating overtime.

*May an employer include tips in an employee’s hourly pay and pay less than minimum wage?

No. California law prohibits an employer from using an employee's tips as a credit towards its obligation to pay the minimum wage. California law requires that employees receive the minimum wage and any tips left for them by customers of the employer's business.

*What are an employee’s options if an employer credits tips against an employee’s wages?

Employees working for California businesses may either file a wage claim with the Division of Labor Standards Enforcement or file a lawsuit in court against the employer to recover the lost wages. If you believe that your rights as an employee have been violated, Moss Bollinger can help you protect and assert these valuable rights.

California employees have the legal right to compensation if their employers violate federal and state employment laws, including tip and gratuity laws. The experienced and knowledgeable employment law attorneys at Moss Bollinger will help ensure that your rights as a California worker are protected if your employer has engaged in any illegal conduct under federal or California law. Contact Moss Bollinger today at 866-942-7974 or reach us online.

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