Many people in California work in the service industry. They may be servers, bartenders, hosts, hair stylists and more. These workers often depend heavily on their tips to supplement their wages. Tips, referred to as “gratuity” under California law, include money paid for services rendered that goes above and beyond the amount due. It is important that both employees and employers in California understand state tipping laws, as they differ in some ways from federal tipping laws.
California tipping laws
Under California law, employers cannot keep any portion of an employee’s tips. Employers also cannot deduct tips from a worker’s wages or use tips as a credit against the worker’s wages. Tips belong to the employee who received them. This includes tips included in a bill paid for with a credit card. Unlike federal law, employers in California are not permitted to use a worker’s tips as a credit towards paying the minimum wage. However, tips are not included as part of an employee’s income for overtime purposes. In addition, tip pooling is legal in California.
Tip pooling is a common practice. It is permissible under California law for an employer to have worker’s “pool” their tips — even involuntarily — and then share the tips amongst workers in the chain of service, such as bussers or bartenders. However, owners, managers and supervisors cannot share in the tip pool.
Employees and employers should understand tipping laws in California. This way they both know what their rights and obligations are, so they can make decisions that are in their best interests should a wage and hour issue arise.