Important Laws About Tipped Employees

We all know that there is a minimum wage and pursuant to Federal and California law, failure to pay an employee the minimum wage, can allow the unpaid or underpaid employee to sue for sometimes significant damages. In fact, California even makes it a crime to withhold certain income that is owed to employees.

But what about tipped employees? In California, tipped employees still must be paid the standard minimum wage, currently $14 per hour for businesses with 25 or fewer employees, and $15 for those with 26 or more employees.

Keeping Your Tips

But many employers are frustrated with this. They see tips as a windfall—after all, they are paying you the full minimum wage, and you are still getting tips. Many employers try to skirt the rules, to put some of those tips in their pocket. This is illegal, and an employer who does this can be sued.

Under California law, your tips are yours and yours only; your employer cannot take any part of your tip. So, the first thing many employers try to argue is that the money that you are receiving, isn’t actually a tip, and thus can be taken by the employer.

What is a Tip?

The first question is whether you receive tips from customers at all. To get tips—and thus prohibit your employer from taking them—the tips must meet a certain legal definition.

The tip also must be voluntary; a mandatory charge on a customer’s bill, that the customer has no ability to not pay, will not be considered a tip. The customer must have the ability, at his or her discretion, to decide who to tip, whether to tip, and how much to tip.

Crediting With Tips

Many employers will give the employee all of his or her earned tips, but then deduct the tips from the hourly wage. So, for example, if the employer owed you $15 for one hour, and you earned $10 in tips that hour, the employer would try to only pay you the $5 difference.

This practice is illegal; an employer cannot replace your normal wage, with tips that you have received, or give itself a credit from the tips you have earned. Your employer can’t even deduct credit card fees from your tips.

Tip Pooling

California does allow tip pooling, a practice where all tipped employees’ tips are added up together, and then divided amongst all the tipped employees. This is allowable only if certain employees are included-for example, a restaurant could not include a cook, a job that doesn’t normally get tips, in the tip pool.

If your supervisor’s primary duty is serving customers, then he or she can share in the tips. But if your supervisor doesn’t do that on a regular, daily basis, he or she cannot share in the tip pool.

Contact the San Jose employment law lawyers at the Costanzo Law Firm today if you are a tipped employee, and feel that you are not being paid tips that are owed to you.

Sources:

dir.ca.gov/dlse/faq_tipsandgratuities.htm#:~:text=Labor%20Code%20Section%20351%20prohibits,more%20employees%20by%20a%20patron.

leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=351