Tip Pools – Law Changes (Again)
Two years ago, the Ninth Circuit held that employers may not share tips from tip pools to back of the house staff who aren’t in the “chain of service.” Last month, this rule was revised by federal law. This means that California employers in the restaurant, hotel, and other service industries where tips are common place, may now distribute tips to those who were previously excluded, such as cooks and dishwashers. This is a welcome change that many of my clients who own restaurants and hotels believe is the fairer rule. Below is a recap on what this means for California employers: Tip pooling policies may now provide that back of the house employees can share in tip pools. This means that tip pooling policies may now require tip pools to be distributed not only to bussers but also to cooks and dishwashers, for example. This practice was prohibited in the last 2 years. Certain employees are still prohibited from being paid from tip pools. Owners, managers, or supervisors of the business may not share in tip pools. Employers should … Continue reading
Paying Tips & Tip Pooling in California
Clients in the restaurant and food services industry often ask me about California laws on paying tips. Here are the basics on paying tips in California. General Rules on Paying Tips in California Definition of gratuity – “Gratuity” is defined by the California Labor Code as a tip, gratuity, or money 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 for services rendered or for goods, food, drink, articles sold or served to patrons. It also includes any amount paid directly by a patron to a dancer covered by IWC Wage Order 5 or 10. Rule #1 – Gratuities are the sole property of the employee or employees to whom they are given. Rule #2 – According to California Labor Code Section 351, employers may not share in or keep any portion of a tip or gratuity that a patron left for or gave to one or more employees. Rule #3 – It is illegal for employers to deduct the employee’s wages from the tips, … Continue reading