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Understanding your rights regarding tips in California

In California, the service industry forms a significant part of the economy, and many workers in this sector earn tips as a substantial part of their income. There are specific laws in California that govern the handling of tips and gratuities, ensuring that employees receive the compensation they rightly earn. Sadly, the Economic Policy Institute reported that California service workers lose nearly $2 billion each year from not receiving the correct earnings.

If you are a service worker in California, knowing these laws helps protect your earnings and ensures that your employer is complying with state regulations.

Employers cannot take your tips

In California, an employer cannot take any part of a tip that a customer leaves for an employee. This means that all the money you earn in tips is yours to keep. Employers also cannot use your tips to make up for paying you less than the minimum wage. They must pay you at least the minimum wage in addition to any tips you earn.

Tip pooling is okay

While your employer cannot keep your tips, they can require tip pooling. This means that managers collect all tips and then distribute them among the employees. However, the employer must distribute these tips fairly and equitably among the employees who typically receive tips, such as waitstaff and bartenders. Managers and supervisors, who typically do not receive tips, cannot participate in the tip pool.

Service charges are different from tips

Be aware that service charges are not the same as tips. A service charge is an amount a business adds to a bill. California law allows employers to keep service charges, although some businesses choose to distribute them to employees.

Understanding these laws helps you ensure that you receive all the compensation you earn in your job. If you work in the service industry, remember these rules to protect your hard-earned tips.