Yes, in California, it is illegal for employers to withhold tips from employees. California law provides strong protections for tipped employees regarding tip pooling, tip credit, minimum wage, and gratuities.
California Labor Code Section 351
- Employee Ownership: Tips are the sole property of the tipped employees for whom they are left. Employers, including managers, supervisors, and other employees, are prohibited from taking any portion of a tip left for an employee. An employer withholding tips could be in violation of the Fair Labor Standards Act or other minimum wage law or tipped employee law.
- Tip Pooling: Employers can require tip pooling among employees who typically receive tips, such as servers, bussers, and bartenders, but managers and supervisors cannot participate in the tip pool.
- No Tip Credit Deductions: Employers cannot deduct credit card fees or any other charges from tipped employees’ tip wages. If a customer leaves a tip via credit card, the employer must pay the employee the full tip amount.
Penalties for Violations
Employers who illegally withhold tip amounts from employees who regularly receive tips can face penalties, including:
- Paying back the withheld tips to employees.
- Additional penalties under California labor laws.
- Potential legal action from employees.
California Tip Laws – FAQ
can managers take tips? In the “chain of service” rule, managers and supervisors cannot partake in the tip pool even if they provide direct table service.
can salaried managers collect tips? Even if a restaurant has tip pools for various employees working, the tips earned in that tip pool are not to be shared with a salaried employer.
can my employer take my tips as punishment? No because under California Labor Code 351 LC, tips are the property of the employee to whom they are paid. An employer may not withdraw wages from a mandatory tip pool to retaliate against service employees for bad behavior.
is tip pooling legal? Yes, tip pooling laws state that employers can require tipped employees to share their tips with other employees, but only if they provide direct table service or are in the chain of service to the customer, like bartenders, bussers, or other service employees.
can employers withhold tips? No, employers withhold any portion of a gratuity left for an employee by a customer.
can owners take tips if they work alone? While an owner may not participate in a tip pool, they might be able to accept a direct tip paid by a restaurant patron. According to Avvo, “An owner or manager may, accept direct tips that they earn from serving customers. This is relevant in the case of a small restaurant, where an owner might also provide table service.” However, California minimum wage obligations and tip pool laws are subject to change. It may be prudent to speak to one of the wage theft lawyers at Lawyers for Justice, PC to find out all the ins and outs of laws regarding employees tips.
can restaurant owners keep tips? Restaurant owners cannot partake in a tip pooling system, but see the above question regarding tips received by a service industry manager.
can my employer deduct tips from my paycheck? Typically, credit card tips received are taxable. An employer should not deduct any additional amounts beyond the taxable amount.
can hourly managers take tips? Hourly managers cannot participate in tip pooling. If they do, they could be committing wage theft and may face penalties, like back pay.
how to report owner taking tips? Employees whose tips are stolen or inappropriately deducted by employers can call the powerful team of employment lawyers at Lawyers for Justice, PC or file a complaint with the California Labor Commissioner’s Office.
