CALIFORNIA TIP POOLING LAWS

TIP POOLING UNDER CALIFORNIA LAW

California law requires that customer tips are the property of the employee, not the employer.  Tip pooling is common in the service industries, where employees share in tips collected throughout the shift.  There are important laws that protect employees to ensure that their tips are fairly allocated and distributed without reduction.  Service industry employees throughout San Diego and Southern California may encounter unlawful tip pooling practices in conjunction with other unpaid wage issuesovertime violations and meal and rest period violations.  If you believe that your being shorted on your tips, you may be able to recover your losses.

MANAGERS AND THE TIP POOL

Because tips belong to employees under California law, owners, managers and supervisors cannot share in the tip pool.  It is illegal for a restaurant or bar to require that employees give any percentage of nightly tips to a manager or owner, as the tips are intended to compensate the service employees for their hospitality and are part of their wages.  An employer is liable for the amount of unpaid wages going back up to four years for unlawful tip pooling practices.

REASONABLE DISTRIBUTION OF TIPS

Tips must be distributed to employees within the tip pool in a fair and reasonable manner.  There should be a system for deciding how much the waiters, busboys and bartenders receive.  The Department of Labor Standards Enforcement (DLSE) considers it lawful and reasonable for the majority of tips to go to the servers, with a smaller portion going to the busboys, bartenders and hosts.

Additionally, California law does not allow “tip credits.”  Employees in the service industry must always receive at least the minimum wage, plus tips.

DAMAGES FOR UNLAWFUL TIP POOLING PRACTICES

An employee who has received a reduction in tips based on unlawful tip pooling practices is entitled to recover significant damages:

  • Payment of the unpaid tips
  • Interest on the amount of tips owed
  • Waiting time penalties
  • Wage statement penalties (up to $4,000)
  • Liquidated damages (double pay)
  • Punitive damages
  • Attorney’s fees and costs

WE CAN HELP RECOVER UNPAID OR REDUCED TIPS

Illegal tip pooling practices remains prevalent in the restaurant and service industries in San Diego and throughout San Diego and California.  Nicholas J. Ferraro specializes in these cases and will provide a free case assessment if you have any questions or concerns about your current workplace.