The Top Ten Things You Need to Know About California Tips Law

Posted on February 8, 2012 | 91 comments

The Top Ten Things You Need to Know About California Tips Law

Before I became an attorney and started to practice employment law, I worked as a waiter at various restaurants in San Francisco, California. Having spent 8 years in the food and beverage industry, I know that for many people tips are the primary source of income. The practice of tipping is a well-accepted part of our daily lives. California law and courts have long recognized that by voluntarily leaving tips, the customers reward  the wait staff for good service and an employer has no right to take the tip. Employers often forget this simple rule and unlawfully collect tips from employees. This article is intended to educate my former colleagues and restaurant business owners about California tips law.

1) A gratuity is the sole property of the employee.

To protect employee’s tips, the California Legislature enacted section 351 of the Labor Code. The section prohibits employers and their agents from collecting, taking, or receiving any portion of a gratuity given to or left for an employee by a customer.

Section 351 of the Labor Code makes it clear that gratuities are the sole property of the employee or employees to whom they are given. Henning v. Industrial Welfare Commission, 1988.  The term gratuity is defined to include “any tip, gratuity, money, or part thereof that has been paid or given to or left for an employee by a patron of a business over and above the actual amount due the business for services rendered or for goods, food, drink, or articles sold or served to the patron.”

2) Employer may not deduct the cost of credit card transaction from gratuities.
For every credit card transaction, employers pay a certain percentage to credit card companies (e.g. Visa, MasterCard or Amex). Because this percentage also applies to the gratuities charged, the employer never receives the full amount owed and paid by the customer. Section 351 prohibits any deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company. Therefore, if an employer permits customers to pay gratuities by credit card, he or she must pay the employees the full amount of the gratuity that the customer indicated on the credit card slip.

Payment of gratuities made by patrons using credit cards shall be made to the employees not later than the next regular payday following the date the patron authorized the credit card payment.

3) CA employers may not credit tips against wages to meet the requirements of minimum wage laws.

California law does not allow a tip credit. For example, section 351 expressly prohibits employers from crediting any part of a gratuity against the wages. Almost all employers who are covered under both state and federal law must pay tipped employees the full minimum wage regardless of how much money employees earn in tips. Employers who credit tips to satisfy the minimum wage requirement are violating the unfair competition law. Henning v. Industrial Welfare Comm’n (1988) People v. Los Angeles Palm, Inc. (1981)

4) Employers are allowed to impose a mandatory tip pooling policy.

A wait staff may voluntarily agree among themselves to pool or share tips. The same is true for involuntary tip pooling policies imposed by employers. According to California case law, a gratuity left for an employee belongs to all of the employees “who directly contributed to the service of the customer.”

California courts have long recognized employers’ right to exercise control over business to ensure an equitable sharing of gratuities among those who directly involved in providing services to the customers. A fair distribution of the gratuities promotes peace among employees and improves service to the public. Leighton v. Old Heidelberg, Ltd. (1990).  The Division of Labor Standards Enforcement of California subscribes to the same rule and allows employers to impose a mandatory tip sharing policy. (Wage and Hour Opinion Letter No. 1728).

5) Employers may require waiters to share tips with kitchen staff.

A mandatory tip pooling rule also applies to those who do not provide services directly to the customer’s table. For example, an employer may require servers to share their tips with kitchen staff, dishwashers, and bartenders, none of whom provide direct table service to patrons. Etheridge v. Reins Internat. California, Inc, (2009).  Section 351 does not distinguish between the various functions that restaurant employees perform.  There are only two conditions created by section 351: (1) the person must be an employee and (2) the tip must have been “paid, given or left for” the employee. Budrow v. Dave & Buster’s of California, Inc, (2009)

6) A floor manager who has authority to fire and hire may not share tips with staff.

If a restaurant floor manager or supervisor has the authority to hire servers without the consent of the owners and also has the power to supervise and discipline the servers, such manager is considered to be  an agent of the restaurant within the meaning of Labor Code § 350 and may not require waiters to share tips with him or her (even thought the manager assisted in serving customers) Jameson v. Five Feet Restaurant, Inc. (2003).

7) A mandatory tip pooling with  managers who have no authority to hire or fire is legal.

In another case, California court has held that the  tips of a casino’s dealers could be shared with the casino’s floor managers because the floor managers were not agents under Section 351. The court explained that while the floor managers had some authority over the dealers, the floor managers’ principal responsibility was to ensure the games ran smoothly. Managers did not have the authority to hire or discharge dealers and they did not supervise, direct, or control the acts of the dealers. Grodensky v. Artichoke Joe’s Casino (2009).

8) A shift-supervisor who provides services to customers is allowed to be part of a tip allocation arrangement.  

Many fast-food restaurants and coffee shops, including Starbucks, have implemented a tip allocation (or apportionment) plan where all tips are collected in a common fund and shared at the end of each week based on the time worked by each employee. In  Chau vs.  Starbucks (2009), the court had to decide whether the Starbucks’ shift manager could be a part of such tip sharing arrangement. The court held that even though the Starbuck’s shift supervisors were agents for purposes of section 351, it was legal for supervisors to share tips because (1) they spent 90-95% of their time doing the same work as baristas and (2) by leaving tips in a tip jar, customers expected the entire crew of baristas to share the tips, including the supervisors.

Employers must be careful when it comes to a tip allocation plan, because only tips placed in a collective tip jar could be shared among workers. Tips intended for a specific employee cannot be shared by others. What is important here is the customer’s intent. Section 351 does not permit the misappropriation of gratuities intended for a certain employee or employees.

9) Mandatory Service charges are not “gratuities” and belong to employers.

As of 1989, the California Division of Labor Standard Enforcement adopted a position that a mandatory service charge is not a gratuity and belongs to an employer. A mandatory service charge  is a part of the amount due for services rendered or for goods, food or drink.  Accordingly, Section 351, which makes gratuities the sole property of the employees for whom they are left, does not apply to service charges and employers are not required to pass them to wait staff.  D.L.S.E. Management Memo 89-2. See also, Garcia v. Four Points Sheraton LAX (2010).

California courts have not yet reviewed whether a 15-20% gratuity added on parties of five and more is subject to section 351. Plaintiff’s attorneys may argue that such gratuity belongs to an employee, because it is generally added to a bill to protect employees from being stiffed by  foreign customers. In addition, when the customers pay a mandatory 15-20% gratuity, they usually intent and expect the sum to be passed on to a waiter.

10) Allowing Employees to take Double Tips is Legal.

Employers may add a service charge to customer’s bill and allow waiters to take additional tips.

In one California case, a guest sued a hotel alleging that double tipping violated the unfair competition law. The guest argued that adding a 17 percent service charge on all room service delivers, passing the charge to the server and then allowing this server to take an additional tip was an unlawful practice. The court disagreed with the guest and held that that a service charge added to a room service bill was the property of the hotel, and the hotel was free to do with it whatever it wished. The hotel could keep it or give it away to a server.  The service charge is not a gratuity and is  not subject to the discretion of the individual patron.  Searle v. Wyndham Int’l, Inc. (2002).

No private cause of action under Labor Code section 351.

Employees who have been victims of a tip abuse should keep in mind that section 351 does not provide for a private cause of action to recover any misappropriated tips from employers, which means that aggrieved employees may not sue their boss in court for violations of section 351 of the Code. Lu v. Hawaiian Gardens Casino, Inc. (2010). However, wronged employees may file a complaint with the Labor Commissioner’s office that has the authority to investigate the alleged violations. In addition, employees may retain an employment law attorney who can recover wrongfully withheld tips under alternative legal theories, including common law conversion, unlawful business practices and the Private Attorney General Act.

Legal Assistance and Free Case Evaluation

If you have questions about this article or other employment-law-related issues, feel free to contact me. I am a San Francisco employment law attorney and will be glad to answer your questions.

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  1. Here are some things you failed to mention about Californornia’s tip laws.

    There can be no laws governing the tips customers present workers in the ser ice industry. Tips are the customer’s private property.

    Tips belong to whomever the customer chooses to tip. Any sharing or appropriating of the customer’s tip without his express consent is unauthorized and unlawful.

    No one is authorized to be a part of a tip appropriating arrangement unless the cust0mer has consented to his tip being appropriated by someone other than the person to whom he has presented his tip.

    Employers are prohibited from requiring that employees share the customer’s tip with other employees.

    Calfornia labor code 351 is binding upon all department of the state which includes the California department of justice. The intend of the law is to protect the public from fraud, which would include, but is not limited to, insuring that customers know that it is their right, not the right of the courts, to determine who their tip is intended for. The intent of to law is to insuere that customers remain aware of the fact that they are solely responsible for determning who their tip belongs to and who will subsequently be protectedto their tip under state and federal law.

    It would be fraud for anyone other than the customer to suggest that they know who tips belong to because only the cusotomer is authorized to determine who his tip belongs to.

    It would be fraud to suggest that someone other than the person whom the customer choose to tip is authorized to appropriate the customer’s tip.

    • G Money,
      I work in a regular old restaurant in marin, tonight I will be going into to work to be a server and wait on a party of 30ish people. THe owner has a posted letter stating that private parties will tip %4 to a “party planner” whom took the reservation, %3 to a busser, %1 to the bartender, %1 to the food expediter, %1.5 to the food runners, and %1 to the hostess. Leaving %8.5 for me to SPLIT w my fellow server, thats OF the %20 “automatic gratuity”. I guess my question is would I simply tell them NOPE sorry I am not going to pay your assistant manager for you and keep that other %4?
      Overworked and underpaid.

      • Are you even capable of doing math while putting the % sign in front of the number? Your name should be “Overcompensated and undereducated”. You clearly don’t do jack shit during the shift if you have that much help. You should be happy with the 4% or find another job without all the help of food runners, expeditors, etc. Dyslexic moron. The fact you say “I work” is a slap in the face to the rest of us fellow bartenders/servers who actually do. Find a new profession.

    • The restaurant where I work. They started keeping 2% from add Gratuity , now we all make less money and I think is not fair

    • Are salary employees legally ok to also receive tips that we all pool from. Servers who make minimum wage?

    • g money

      you were not ” presented ” any tip. A tip was ” left ” at the table, and your greedy self ASSUMED that the whole thing was meant for you. YOU are the one that is doing something unlawful by not sharing with the other employees involved in the direct table service. The customer was MISLED BY YOU SERVERS into believing that you would be honest and distribute the tip that THEY LEFT AT THE END OF THE SHIFT.

      your entire comment convicts yourself for fraud. you are an idiot. and a selfish and greedy one at that.

  2. Tips are a sum presented by the customer. Only the customer is authorized to determine who is entitled to his tip. There are no laws and can be no laws which suggest that certain types of employee are eligible for a share of the customer’s tip.

    There is a blatant lie currently being perpetuated in California that suggests that judges have somekind of authority to determine who the customer’s tip belongs to. Do not believe these lies. The only reason judges in California are fraudulently suggesting that they are authrorized to determine who customer tips belong to is so that those employees who are actually presented tips will have no recourse against their employer for taking their tips from them. Calfifornia judges are simply claiming an authority to govern tips so that the employees who are actually presented tips connot claim ownership of their tips. No employee can claim ownership of his tips when it is fraudulently asserted that tips are governed by someone else. Jusdges in Clalifornia are asserting that they are authorized to detetmine who the customer’s tip belongs to in an effort to prevent employees who have presonally been presented tip from claiming ownership of thier tips. As a result, employers in California are now free to take the tips bestowed upon their employeees,thus contrravening section 351.

    • I absolutely agree with you, tips is the sole property of the person to whom the customer intended to leave those tips. However, how do we know who are the intended recipients? How a waiter or employer can possibly know whether the customer did not intend the tips to be shared with a busser or foodrunner. The only way to find out is to call the actual customer to testify in court during a trial, which is a hard, if not impossible, thing to do. Therefore, somebody has to make determination.

      • That is why when you work in a restaurant, and you have subordinate staff that help you serve your table, that you agree to tip these individuals out, otherwise, no help. So, yes, the waiter does get the tip and then decides to distribute based on common practices in the industry. Tip stands for “to insure proper service.” Proper service is a team effort and not just 1 individual. I wish all waiters knew this, because as a customer, I expect others to receive part of the money I am leaving. I am well aware of the help provided.

      • I’m in the middle of a dispute at work, high end restaurant in Beverly Hills.
        they are giving the door 12.5% and then 2 years later, changed it to 14%, That’s extortion! !
        But I’ve looked everywhere to see if mangers are the ones who set that policy, I’ve heard it’s up to all the direct tipped employees, however management can insure it’s fair.
        I’m looking for a labor lawyer who is willing to go up against high profile people and go public, I’m in Los Angeles if you’re interested in hearing entire story.

      • Customers must be afforded their right to decide who their tip belongs to. If you let someone else guess at who customers might have intended to tip, customer’s lose this right they should have Only when tips are logically viewed as belonging to the individual who was handed the tip does the customer retain his right to determine who their tip belongs to. If an employee keeps tips that might not have been solely intended for him or her, then it is the customers fault for not tipping who he intended to tip. This simple solution leaves no room for corruption. Your suggesting is littered with possible fraud and corruption.

  3. I have a question. You mentioned “a mandatory service charge is not a gratuity.” But what happens, if for example, I am a banquet server being paid $13/h and every customer, at the time of signing the contract, is told gratuity IS included in that “service charge” but the entire charge goes to the house? Isn’t there something unlawful and deceitful about that type of behavior? The client really believes either that charge or part of that charge is being given to the server and it’s not.

    • We are experience a similar situation. Can we please get a response? Thank You,

      • Yes, please answer this question. I work for a restaurant that does caterings. I am paid $13 and have been told by a few customers that the catering department told them the service charge included our tip. I am normally paid minimum wage in CA $10.50. Is my company breaking the law?

  4. Is it legal for an employer to deduct shortage from the drawer from tips, then give them to you?

    • The short answer is no, it is illegal. First, the employee is not responsible for cash shortages, unless he or she is stealing or grossly negligent in handling the register. Second, gratuity is the sole property of an employee. While some employer-mandated tip pooling practices are allowed, the employer may not use employees’ tips to cover cash shortages.

      • Hello,
        Would you let me know where I could find the legal statement of this? That an employer cannot remove any amount of the employees tips to cover a shortage in a cash drawer, unless employee was stealing or grossly negligent. Thank you!

      • I’m required to tip 25% of my tips and I pay taxes from my paychecks but the employees I give tips to don’t pay taxes on them from their paychecks , I tip out 5 to 6000 year, is this legal?

  5. In San Francisco, can a banquet hall can legally charge 20% service charge to clients and not pay it to banquet staff…they can keep it as 20% profit?

    • The short answer is yes. Service charge is a property of the employer and is not considered to be a tip or gratuity. Therefore, section 351 of the Labor Code does not apply to service charges and employers are not required to pass them to wait staff. D.L.S.E. Management Memo 89-2. See also, Garcia v. Four Points Sheraton LAX (2010).

  6. Dear sir,
    Please advise me on the following:
    I am a manager at a nice restaurant. Our employees have been required by the owners, in accordance with CA law, to declare 100% of their tips at the end of the night. The issue we are having is that the servers are required to tip bartenders, expediters, and hosts, as well as a breaker and also pay for their food. At the end of their shift, they are claiming the money that they walk with. So if they make $100 in tips and tip out $20, they are claiming $80. The owners are saying that the server should not be claiming $80, but claiming $100 since that was 100% of their tips. But those extra $20 are already paid out to other people, and are not included in the servers takeaway tips. Should the server be claiming 100% of their total tips? Or should they claim 100% of their tips AFTER tip out? Thank you!

    • Randi, your question is a tax law related and I do not have much expertise in this area of law. I suggest that you consult a qualified tax attorney.

    • This is a common question at the restaurant I work at. We commonly tip out 30% of our total tips per shift and are not allowed to adjust the total to reflect the lower amount on our point of sale system. The employees that receive the tips are not selling anything so there is no record of taxable tips and are not required to claim the tips. Our servers paychecks are practically 10% of our gross checks to cover the taxes on our reported tips. Any information regarding this would be very helpful.


    • Not a 100% on this because the laws don’t make sense sometimes, but you claim before tipping out, but you also claim the amount of money you tipped out at the end of the year, it has to be recorded though.

  7. My employer wants to change the tip distribution policy that is currently in place. Can they arbitrarily change it without the consent of the staff?

    • While I need to know more facts about the proposed tip pooling policy, I will try to answer your question as much as I can. Unless there is a collective bargaining agreement or some sort of other pre-existing agreement requiring wait-staff’s consent, the employer is not required to seek employees’ consent. L Analogously, unless the proposed tip-out policy is “unreasonable” and “unfair,” California law is not going to question employers’ business judgment. So the short answer is unless the employer and wait-staff agreed otherwise, no consent is required, yet the new policy must be “reasonable and fair and must not violate Labor Code section 351.”

  8. Is it legal for my employer to require that we document our credit card and cash tips so they can deduct the amount that we document from our paychecks? My employer will also be sending this information to the IRS.

    • I am not sure what you mean by “so they can deduct the amount that we document from our paychecks.” I need to know more information from you. If you mean your employer requires you to declare all tips earned in order to apply all applicable state and federal taxes, then the answer is such practice is most likely legal. In fact,m the employer may be liable for taxes owed by employees who failed to declare his or her tips as income.

    • totally legal this is a law implemented by the IRS not the employer. Employers have to enforce this law to their employees because if they don’t they are still responsible to pay taxes owed and the employer does NOT want to do this.

  9. I am a California server, and recently our management re-implemented the breaker position at our restaurant. Years ago, the breaker received $10/hour, and did not receive a tip out. Now management is requiring the breaker to clock in at $8/hour (minimum wage) and collect tips from the people taking breaks. This new policy is essentially making servers pay to receive a break that they are entitled to by law. Is this practice legal?

    • ILLEGAL!! California law is min wage no matter the position “tittle” etc

  10. My employer requires a tip amount to be reported at 10% of total cash in for shift. What if a person does or does not make that amount in tips? Where is there a law, for state or federal that demands a percentage of cash sales be reported as tip income? Thank you for your response.

  11. I am a server at a restaurant where the managers are basically stealing tables, taking their own section in the restaurant and keeping the tips they make. Originally it started out where they would take one or two tables, but now they are trying to make it to the tables first so they can take care of the table and keep the tip.

    Is there any type of California law preventing salaried managers from doing this to their servers or is it an issue that would need to be addressed with the corporation?

  12. I had a private party last night with a $1,000 minimum charge. They were $300 shy of the minimum $1,000 requirement. The remaining amount was listed on the bill as a “room charge” to meet the minimum. Tough my tip was included with bill, the customer wanted a portion of the $300 to go to me for good service instead of it all going to room charge and my manager said that was not allowed. Is that true?


  13. I’m sorry the line above should read “though my tip was included with the bill”
    Typing too fast!!

  14. I have a question, PLEASE HELP if you can
    My husband is a server and his resteraunt makes him claim 11% tax of all food sales he serves , for example if he sales 200$ in food he would have to claim 22$ in tips even if he only got a 10$ tip therefore they tax him for the 22$ and that tax is taken from his hourly wage check. And they make him tip out to other employees. The resteraunt is a small chain resteraunt in California and he’s been there for 6 years not making much at all, but on his taxes because they make him claim 11% which nowadays nobody tips , he looks like he’s making more than he’s bringing home…. Help please

  15. Hi. Me and my employees at work are in deep trouble! So someone please help me and advise me on what I should do! I work at a juice bar with other employees and we get tips from our tip jar and tips from the customers credit card. However we have lost the privilege to take our credit card tips from the registrar and HR is now splitting our tips. We haven’t been getting our tips equally and given at a consistent matter. Though the reason why HR is splitting our tips is that recently we have been short on our registrar. Does this sound wrong to you? So basically, if someone is short on the registrar, does it give HR the right to use our tips to replace money in the registrar??

    • How so funny Melissa… why would that be of concern? So your saying it’s okay for the business owner to lose money but not you guys???? Lol if you guys did your job right, then why worry?? I think, either u lose your job or take her being nice about it n doing it this way????

  16. I am helping to open an eatery in my neighborhood. Recently I was told that our credit card tips would be collected by the house and reallocated after the (almost 30%) is deducted in payroll tax from the gratuity amount. In addition we are required to tip out cooks. Shall I also deduct 30% from those tips, as I am having to pay that tax?

  17. One question : in a pick up type of business, where the patron calls in the order and comes in the restaurant to pick it up- is the cook entitled to some of the tips??

  18. Hi I currently work at a restaurant who forces the servers to tip out 33 percent of their tips. We are required to tip out the bartenders on our total sales instead of just bar sales. My question is in California is 33 percent considered by law reasonable?

  19. I work in a hotel that reduced the service charge share for the associates from 14 point to 12 points out of the 23% and that lowered my check significantly. Even though accounting says that they pay us the right percentage I am sure that many times they pay much less, but there is no way to check their numbers. I understand that in New York the whole service charge is paid to the employees. It will be fair if in the state of California we get paid at least 15 points out of the 23% service charge.
    What can we do to change the law?
    Are there any class actions on this issue?
    How can hospitality workers in California get organized to change the law?

  20. Hello,

    I am currently working at a new restaurant that just opened a couple of months ago in California. I have been working since the exact day they opened and when I signed the contract I signed it as a food runner. I have been getting tips at the same percentage as a server, and suddenly the other day they told me they were going to cut my tips 50% I have done nothing wrong is it legal to suddenly change my tip percentage??

  21. i work at a restaurant in california as a server. our policy is that we tip out 40% of all tips to the back of house. this includes two chefs and a dishwasher. i buss my own tables. there is virtually nothing outside of their job premise that they help me do, yet i have to tip out such a significant amount to them. i have tried to talk to my boss but he claims that the BOH works hard and deserves those tips, and i can either go along with it or work elsewhere. any advice on what to do or how to better approach my boss about this subject?

  22. Can a manager, who is a salaried employee, wait tables and take home the tips given to them? NOT taking away from other waiters/waitresses. The manager would wait on them (customers) from start of dinner to finish. They would only take home those tips given to them by said customers, NOT alter anyone’s tip share or bump up anyone’s check to compensate. Just simply take a few tables when the servers are overwhelmed and there is no other help except for the manager to step in… IS THIS ILLEGAL?

  23. Hi, a couple of question on your article.

    1. If the employer use the service charges to pay the employee, can that be used to satisfy the requirement under minimum wage? For example, pay employee $10 wage, then the rest come out of payment of service charges (which would be treated as wages), and the total pay come out to $12/hr?

    2. Is the service charge considered taxable sale and the employer has to pay sale tax on?

    3. Is restaurant delivery driver consider contractor or employee?

  24. I noticed on my check today that my tips areally being taxed as well as being deducted from my paycheck. Is that legal? And doesn’t that defeat the purpose of tips? As well wouldn’t that mean I’m being taxed on money I really didn’t revive if they give it to me and then deduct it from my check?

  25. After working for my chain restaurant for the last 8 years,I have just recently noticed that they have been falsifying my tips. After I’ve clocked out, they’ve gone in and adjusted my tips for a higher amount. Is this legal? I have brought it to their attention, but they brush me off and force me to sign off on the adjustments, claiming its a condition of my emolument. What can I do about this, it makes me uncomfortable and angry.

  26. Question, can a manager also take tables as a server? If so can they collect the tips? And if a manager refuses to print my report and the next day i turn in my paperwork can i still collect those tips? I still have the credit card slips. Also, if terminated does my employer also need to pay my tips owed to me with the final hourly check? Thanks.

  27. The owner of the bar where I work wants to impose a 15% tip limit on all credit card tips. He wants to do this to avoid paying the processing fees when a bartender gets a large tip on a small check. What they are planning to do is manipulate the cash registers to only accept 15% tips of the total check/. So if a customer comes in and leaves me $100 tip on a $10 drink the cash register will be programmed to only allow 15% of that $100 to go through as the tip I will receive on this guest check. Can this possibly be legal?? If a customer wants to leave a large tip and everything is on the up and up how can an employer just unilaterally change the amount the customer planned to leave me just so he can avoid paying the service fee. PLEASE ADVISE US……

    Mad as hell in Hollywood.

  28. Can a employer withhold my tips from the pooling jar as punishment for being late?

  29. I own a small pet services business with 7 employees. Frequently customers will tip individual employees and those tips are paid out to the employees that earned them. However my question is about other tips that are left. We are currently pooling them and distributing them based on hours worked. Since we are so small though, I am doing the exact same work as the other employees and I am wondering if it is legal for me to participate in the tip pool.

  30. Is it legal for a employer to take disciplinary action on an employee if the employer’s records show the employee isn’t claiming what he should in tips every night? Is it legal for them to require the employee to ‘make it up’ and each night claim some of those tips until it’s made up, to where the employer says, it should be? (dollar-wise)
    Hopefully that is clear enough.

  31. Can an employer ask for your tip amount back when a credit card charge is disputed? As in, if someone disputes the entire card charge…not just the tip amount. Can the employer then go to the employee and asks R that tip about back in cash to cover losses for the restaurant

  32. So what is the procedure for not closeing the credit card out in the guest favor. Whent the guest has writin and signed for it. Ive been off by pennies and getting written up for it and could lose my job literally for 5cents.

  33. I work as a server at a restaurant in Califirnia. I was recently tipped $500 which the bill was paid by debit/credit card. My manager says the guy is crazy and the card is probably stolen. So at the end of the night during my check out I was paid out my $500 tip but told by my manager that I couldn’t spend any of it until the transaction clears. Is this true?

  34. Is it legal for an employer to retain cash tips and include in next paycheck or must they give to employee daily?

  35. HI,

    My bar is putting a tip cap of 30% on all credit card tips. Is this legal?? We have one wealthy customer who comes in weekly and tips us between $200 and $400 on small tabs like $150 and below. They claim is has to do with audits. Again, is legal to put a cap on CC tips?

    Thanks you!

  36. Does this apply to 1099 independent contractors?
    I work in the beauty industry where professionals conduct their business inside a licensed establishment. Transactions are processed through one point of sale (the stylists don’t accept their own payments), and Management pays each contractor a commission by check weekly, including their tips received on a credit card. Can management charge a credit card processing fee on tips to independent contractors ? The only information I have found is regarding employees. Since independent contractors technically operate their own businesses, should they pay for processing fees on tips as well as all services rendered on credit cards?

  37. In California, does an employer have the right to withhold tips for the week for a breach of policy and give it to the rest of the team.

    If the customer breaches any policy relating to tips or company policy can the company withhold the tips?

  38. I am an owner of a small restaurant
    during the week I work the floor alone on Friday & Saturday I have a server come in & we work the floor together.
    When the server started I explained that we pool the tips, the server agreed.,
    Now the server is saying that I was breaking the law & the server should get all the tips even though I waited tables also

    Can you tell me where I stand

  39. I’m probably going to get a few sideways looks from you servers out there, but here goes, 2 questions:

    1) In the state of California, am I legally obligated to accept tips that the patron leaves on the credit slip? To clarify further, if a patron is kind and treats me well, and I feel bad about accept the tip that is left for me, can I choose to not accept it?

    2) Am I legally obligated to accept a tip-out from a server? To clarify again, I like the server, and I did not feel like I did much to help them out during our shift together, can I decline their tip without either of us getting in trouble?

  40. I work for a service business. Customer typically leave a tip when paying their bill. The tips are not designated for anyone in particular. They just leave a tip. Do the tips belong to the employees or can the owner decides how to divide/share the tips?

  41. I have a question regarding tip outs.
    We have automatic system that deducts 7% of sales directly to our sushi chef. But still have to tip out the kitchen the dishwasher and the busser. Technically I go home with only half of what i recieve. We also write down our tip outs in a book… Is this normal ? Am I not understanding a correct tip out percentage? Or are they just taking half of what I make because they can get away with it?

  42. I am a manager on the hourly rate. I often break my employees or cover the positions during their breaks. My employer prohibits me from keeping the tips customers leave me. legal?

  43. What is the rule/law of who decides who gets the amount of tip allocation in a pooled house?

  44. So I just started at a restaurant as pizza delivery using my own vehicle. Must I take part in the tip pooling among the house? First night – make 100 dollars in tips via cash . After counting my till for the night I put aside the 100 in tips I feel I have earned. And the shift manager says, “I must put it in the tip pool. Tips are counted out and disperses among everyone.” I feel I should not have to put the tips into the pool that are handed to me at each customers door. First night I left with only 25 dollars in tips.

  45. Can management check your pockets for more tips if they feel that you are not claiming enough % when the amount you are claiming is the true amount? Also, the IRS feels that the cash tips % should match the credit tips % but the tips share is not factored into the final walk home amount. Obviously, the amounts then wont match. The emplyer wants us to claim the tips that we tipped out too? Is thus legal?

  46. the restaurant I work for make us declare more tips than what we take home, is that legal? we have to report $20 to $30 more than what we take home. If I make $120 and tip out $25 that means I’m taking home $95 but their system wont let you clock out unless I declare $125-$130 What is the law on doing this?

  47. Is it legal for a large franchisor in California to prohibit employees in a take and bake pizza business from accepting tips from a tip jar and credit card tape receipt with a space to include a tip for the service of the employees?

  48. Can servers refuse to too out support staff?

  49. I am a spa director and would like to set up a new system for cash tips. We have a very lenient system of collecting cash tips daily but it has become very unprofessional because spa prof will approach the front desk to collect their tips when customers are checking out- I have asked them not to do it many times and it keeps happening. To avoid them from doing this we now have a cash tip drop box that only I have a key for and I would like to be able to distribute them ONCE a week. Just wanted to check in and make sure this is fair and legal. Any advise would be great!

  50. Do I need to claim my tip money that I leave for front desk and bus boys . My job is saying I have to claim it all even if I don’t come home with that money. Say I made 100 tip out 20 so I go home with 80 do I still have to claim the 100 or just 80 they are telling me I have to claim the hundred. How could I get taxes on money I don’t keep

  51. If your an independent contractor (massage therapist) can the lock your cash tips and hold them till the spa manager is available to unlock the tip box? Also can the take 4% of the credit card tips for credit card charges they pay?

  52. I am a manager at a deli and my boss is requiring that when I train somebody I give them half of my tips. I do not think that’s fair I think they should get trained and then when they start the regular shift then they collect tips. What do you think?
    Second question is should I have to split my tips when I am training someone when they only work a partial day. For instance I work 10 to 3 and they come in and work 10 to 1230 should I have to split the tips with them all day when they are not here?

  53. I’m an independent contractor a newspaper carrier are tips are usually left- when the subscriber Paces for their subscription we do not get to see or have any control over what tips come in what legal action can we take if they are not passing along are tips

  54. Have the tipping laws changed sice 2012 when this post was publish? I worked at a restaurant that shared all of its tips across waiter, bartender, cooks, and dish washer at first. All tip went to a tip jar and then distributed amongst all the staff.

    The store owner stopped sharing the tips with the cooks, bust boys, and dish washer because according to them an employee (waiter) complain ed about it being illegal for them to have to share their tips with anyone in the kitchen.

    Was a law really being broken by distributing the tips? Was the waiter right, or simple acting on greed?

  55. QUESTIONI: Is it legal for the restaurant to CHANGE my tip outs without my consent? I was told by my former manager that the office person at my restaurant changes our tip out to what they want it to be even after I already filled out my tip out sheet to determine how much each person gets. For example, if my busser was non existent all night and one manager said to tip accordingly if he didn’t help me at all, then the next day it gets changed without my knowledge or consent, to a full tip out for him. Is that legal? Also, if the restaurant has a buy-out and charges the guest a 22% gratuity fee in which 5% is for the house and 17% for the staff, but instead of paying the staff the due gratuity, the restaurant just pays the staff $40 per hour which turns out to be considerably less then the 17% they should be receiving. The guest isa under the impression that that gratuity is spread out among the staff, when clearly it is not. Is that legal?

  56. I worked for a restaurant where the owner held credit card tips from the wait staff, there was no cash register, so there was no way to cash out nightly, instead you had to take your tips out of your own cash out, however if you didn’t have enough cash paying customers which was the majority, now days most people pay with plastic, so you have to roll your tips over until you received enough cash to pay yourself back, this ultimately led to roll over negative for days, it wasn’t a unusual to be in the negative for average of $200-$700 in tips on a regular basis, however the law says your tips are yours, and the establishment can’t withhold tips for more then 24hrs, so isn’t this illegal business practice? Also they pooled the bussers tips and only tipped them out once a week sometimes even once every 2 week pay period, and bussers always complained they’re tips weren’t consistent to what servers said they were giving management

  57. My sister works at a restaurant and the employer is withholding tips until she passes a menu based test. The tips she earned since being employed goes into the pool for the other employees. Is that legal?

  58. I want to know more information at the new law of sharing my tips with the back of the house ? Where can I find out more information? Is tipping the line cooks part of their hourly wage and are those tips being claim by the cooks? Please help I’m totally confused with this matter. I life off my tips !

  59. My restaurant is a pooled house so at the end of the evening managers collect the money from all servers from that day, place the dollar amount from each servers tips, enters them in an excel spreadsheet so that 100% of our tips are being accounted for and distributes them the next day ( sometimes takes a few days)

  60. My employer tells all servers that we are to give 2% of our tips to the bussers 2% to the food runners and 1 percent to the bartenders,but they still want us to claim 10% and they claim nothing.the 10% the state requires us to pay just gave 5%of it away???

  61. Is it required for staff to count their cash tips on the clock? This would be after all end of shift financials, cc tip adjusting etc is done for the house on the clock. This would involve strictly counting and splitting their own cash tips.

  62. I want to promote a tipped employee into a working manager position, where they could still work 2-3 shifts a week on the floor and 1-2 as office hours. For the shifts on the floor are they allowed to collect tips?

  63. We are currently being forced to tip out 3.5% to our “server assistants”. We all have no problem tipping out what is deserved and earned, but we sometimes do not have any helpers. My other point is we sometimes do not get tipped on our checks, but we are still required to tip out from our other tips or from our pocket. I am asking if either of these senecio are legal or if we have to comply.

  64. I work at a restaurant as a server and I tip my busser 3% of my total sales.
    Some of my shifts I work 3 hours without a busser (so I have to bus my own tables) then the last 3 hours, the busser comes in.
    Do I have to tip out the busser 3% of my total sales of that shift or 3% of the total sales of the last 3 hours of my shift that the busser actually worked?

    (My manager says it has to be for the total sales of the whole shift even though they weren’t there the whole time but that doesn’t sound right to me)

  65. Hi,

    I work at a resort in Southern California as a banquet server. I receive a portion of the tip pool. The tip pool is also distributed to my Banquet Managers and a cut goes to the Catering and Convention Managers that plan the events. Is this legal?

  66. Thanks for the information

  67. Is it mandatory for a restaurant manager to be on the premises during all working hours?

  68. Can they make me tip out a percentage of my total sales?

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