Understanding Laws Concerning Wages and Tips in California

It can seem complicated to reconcile both federal and state laws regarding tips or wages in the state of California. While there are federal laws regarding minimum wage and tips to protect workers in the United States, California has its own laws and regulations that often trump federal guidelines. Take a few moments to review some useful information about wages and tips in California.

Can My Employer Keep a Portion of My Tip?

In the state of California, it is illegal for your employer to keep even a portion of a gratuity intended for you. This is clearly defined in California Labor Code Section 351. In addition, the entire tip amount must be awarded to the employee, including the cost of credit card fees that may be attached to processing the payment. In states other than California, up to 3% of an employee’s wages can be withheld to compensate employers for these fees.

“Tip-Pooling” in California

While it is illegal for employers to keep tips, it’s completely within the law for an employer to pool together all the tips accumulated and evenly distribute the earnings among staff. However, there are important caveats to this rule in California. Only employees who participate in what is called “the chain of service” are permitted to receive money from this tip pool. Cashiers, cooks, and supervisor staff are not included. Also, California law stipulates that these tips must be distributed in a fair and equitable manner to wait staff, bussers, hosts, and other members of the service team. For the most part, it is considered good practice to provide 80% of tips from the pool to wait staff, reserving the remaining 20 percent for bussers, hosts, and bartenders.

Protections for Workers in California

In other states, an employer is allowed to adjust or reduce the wage of a worker if he or she is receiving tips. In no way is a California employer permitted to decrease the hourly wage or any employee due to any “tip credits”. It is the responsibility of any business owner in California to pay the state-mandated $13 or $14 per hour minimum wage on top of any tips earned to their employees.

Possible Consequences of California Employer Non-Compliance

Any California employer who does not abide by state laws regarding wages and tips can face being charged with a misdemeanor. The consequences of this can be up to 60 days in jail, a $1,000 fine, or both. Individuals who believe their employer is violating California or federal employment law may have valid grounds to file a lawsuit or file a formal complaint with the California Labor Commissioner’s Office. 

If you are in need of legal assistance with wage and hour claims in California, our team at Davtyan Law Firm is here to help. Davtyan Law Firm is committed to protecting the well-being of California employees, with considerable experience handling claims of workplace discrimination, unlawful termination, and wage disputes. We will support and guide you throughout the process as we fight for your compensation.

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