California Laws for Tipped Employees

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California Laws for Tipped Employees


If you work in the restaurant business, tips are a very important factor in your everyday line of work. Therefore, you should be well-aware of your rights as an employee. If you are a server, bartender, or whatever the case may be, tips from satisfied customers often add up to being more than actual hourly wages paid by employers. When receiving tips as part of compensation, your legal rights under wage and hour laws can become a little complicated. There are many rules that come into place, such as what counts as a tip, how much your employer must pay you, and whether you have to participate in a tip pool. These factors all vary state by state. Federal law does cover these issues; however, whatever the law is, employers must follow federal, state or local law. In the state of California, the law is very protective of employees, so state laws certainly work more in favor of employees as opposed to federal laws. When it comes to tips in California, here is what you need to know regarding the laws that are out there to protect employees who receive tips.

The Basics About Tips

The overall rule about tips is that they belong to the employees and not the employer. In the state of California, employers are not allowed to claim tips that are left for employees, which means you will not be forced to share tips with the owners, managers, or supervisors. In addition, employers are not allowed to count tips as part of minimum wage responsibilities. There are states that have “tip credit,” which means that if employees earn enough in tips, then employers may pay less than minimum wage. However, luckily for California employees, that is not the case, which means that “tip credit” does not exist in this state. Therefore, employers are required to pay employees the California minimum wage, along with any tips that they have earned.

Tip Pooling

Tip pooling is allowed in California. Tip pooling happens when an employer requires the employees to put together all of their tips, and are then distributed amongst everyone in the pool. It is important to know that if employers in California choose to do this, then they must follow certain guidelines when creating a valid tip pool. The following employees are allowed to participate in the tip pool, which are part of the “chain of service,” which means they provide a direct table service:
  • Servers
  • Bartenders
  • Hosts
  • Bussers
However, cooks, dishwashers, and cashiers are not allowed to be in the top pool, as they do not provide a direct table service. Additionally, managers and supervisors are also not allowed to participate in the tip pool, even if they provide a direct table service. Tips in the pool must be distributed fairly and in a reasonable manner. It is typically determined based on the amount of service the employee provided to the customer. For instance, in California, the following is the legal distribution for employees: 80% for the wait staff, 15% to bussers, and 5% to bartenders. However, each business differs case-by-case.

Mandatory Service Charges

In federal and California law, this is not considered a tip. In fact, the mandatory service charge is something added on for large parties, private parties, or catered events, which is taken by the employer. It is up to the employer on whether or not they would like to distribute the mandatory service charge to the employees; however, most employers do give at least a portion of service charges to employees.

Contact a Restaurant Worker Rights Lawyer

If you would like to learn more about your rights as an employee, you should get in contact with an experienced restaurant worker rights lawyer at Mann & Elias. Our firm specializes in restaurant laws for employees and we will thoroughly explain what is required for employers. If you believe that your employer is not abiding by the federal or California laws, feel free to reach out to us at any time. We are well-versed in restaurant worker rights and will get you the legal help and advice you need. We are the team of Los Angeles employment lawyers that you need on your side if you are experiencing unfair treatment in your workplace regarding restaurant laws.
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