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Can your employer keep the tips you earned?

On Behalf of | Mar 11, 2022 | Employee Rights

In today’s gig economy, many workers in California rely on tips to make ends meet. These tips are hard-earned and well deserved. However, some employers will try to make a claim for these tips left for workers. Is this lawful?

Who do tips belong to?

Under California Labor Code Section 351, employers cannot keep any tips left for employees by a customer. Tips cannot be deducted from earned wages. California differs from federal law in that tips cannot be used as a credit towards paying the worker the standard minimum wage. Tips belong to the worker they are left to. Tips are not considered part of a worker’s wages when calculating overtime pay.

Tip pooling

California Labor Code Section 351 allows for tip pooling. This means employers can require workers to combine their tips that will then be doled out between all who worked in the “chain of service,” such as bussers, hosts and servers. Owners, managers and supervisors cannot take part in a tip pool.

Mandatory service charges

Mandatory service charges are different than tips. Tips are left voluntarily. Mandatory service charges are required to be paid. The distribution of mandatory service charges is at the discretion of the employer. In this way, mandatory service charges are more like a bonus. They are counted towards the worker’s regular wages and are used when calculating overtime.

Workers depend on tips

Many workers in today’s gig economy rely on tips to make ends meet. When employers unlawfully keep these tips, it can cause workers real hardships. Unlawful keeping of tips is a wage and hour violation. Employees facing such wage and hour violations will want to make sure they understand all their rights and options for being compensated appropriately.

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