California Tip Pooling Laws

If you work in the service industry or at a job that allows gratuities, you might rely on your hard-earned tips to make ends meet. Given the importance of the tips you work for, what happens if your employer demands that you pool and share your tips with others at your job? Is this requirement legal? It can be, but your employer must be careful with how it deals with your tips and wages.

Below, we discuss California tip pooling laws and what your employer can and cannot do with the gratuities a customer pays you. And if you question the way your employer handles your earnings, our experienced wage and hour attorneys at Bibiyan Law Group, P.C., are passionate advocates who focus exclusively on helping employees from anywhere in California. Contact us today!

How Does California Law Define Tipping? 

When a customer or client of the business you work for voluntarily leaves you more money than the amount due for the service you provided or the goods you sold them, that excess is a tip or gratuity under California tip and gratuity law. But if your employer collects a mandatory extra fee or percentage from a patron as part of a service charge, that service charge is not a tip, and it is money that a patron owes your employer’s establishment. 

Employees who often earn tips include:

  • Restaurant employees,
  • Dancers,
  • Car washers,
  • Entertainers,
  • Bartenders,
  • Coffee shop employees,
  • Valets,
  • Hotel employees, 
  • Delivery employees, and 
  • Beauty industry employees. 

Whatever tip a customer pays you is your property and not your employer’s property. This means that your employer cannot engage in tip withholding (or keeping any part of your tip for itself), and your employer cannot use your tip as a credit toward its minimum wage or overtime obligations. However, depending on your employer’s policies, you might have to share your tip with fellow employees. 

What Are the California Tip Pooling Laws? 

Tip pooling occurs when tipped workers combine their gratuities and redistribute the sum (often evenly) among all employees on that shift or at that workplace. Employees may choose to do this on their own, or an employer might require this redistribution as part of its tip pooling policy. If the tip pooling at your workplace is involuntary, it can still be legal as long as the following criteria are met:

  • Funds from the tipping pool cannot be used to pay supervisors, owners, or managers of the business; and
  • The pooling policy must be fair and reasonable.

Fair and reasonable tip pooling can include a requirement that employees share tips with all other employees who were in the “chain of service” for tipped work. For instance, if you work in room cleaning services at a hotel, you might have to share your tips with the bellhops and employees who work in hotel laundry. And if you are a part of the wait staff who must participate in restaurant tip pooling, you might have to share your tips with bussers, dishwashers, and hosts. 

What If My Tips Are Paid by Credit Card?

Many customers enjoy the convenience of tipping by credit card instead of leaving cash. If you receive your tips this way, your employer cannot deduct any credit card processing fees and must pay you the entire tip noted on the customer’s credit card slip. When you receive tips by credit card, your employer must ensure you see that payment by the next regular payday. 

What Happens If My Employer Does Not Comply with California’s Tipping Laws? 

You have the right to legally confront your employer if it violates wage laws, including tipping and gratuity laws. You can recover damages from your employer by filing a wage claim with the California Division of Labor Standards Enforcement or filing a lawsuit in civil court. Employers who have committed wage theft through their unlawful tipping policies could be found guilty of a misdemeanor and be required to pay a $1,000 fine or spend up to 60 days in jail. A knowledgeable wage and hour attorney from Bibiyan Law Group, PC, can guide you through this process and make sure you receive every penny you have earned.

Contact Our Firm Today

Your employer needs to pay you every portion of your hard-earned wages and the gratuities you receive. And when your employer doesn’t comply, Bibiyan Law Group, P.C., is the employment law firm you should call for help. We are passionate and hungry for justice for employees throughout California. Our owning attorney received his education at a top-three law school and takes the most effective and innovative approach to resolving each case. We are also well-known in the legal community and have a large network of attorneys who are ready to help you. You can call us or reach out to us on our website to schedule a consultation.  

Author Photo

David Bibiyan is a distinguished attorney at Tomorrow Law, renowned for his expertise in employment law. With a strong focus on representing employees in various workplace disputes, he has become a trusted advocate for those facing discrimination, harassment, wrongful termination, and wage and hour issues. Bibiyan’s approach is characterized by a deep understanding of both state and federal employment laws, ensuring that his clients receive knowledgeable and effective representation. His commitment to justice is evident in his dedication to each case, where he meticulously works to secure the best possible outcomes for his clients. Bibiyan’s reputation is built on a foundation of successful case resolutions, marked by his skillful negotiation and, when necessary, aggressive litigation strategies. His work at Tomorrow Law reflects a genuine passion for defending workers’ rights and promoting fair employment practices.

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