Tipping occurs when a customer leaves money for an employee as a thank you for goods sold or services given. Tip pooling occurs when an employer requires employees to combine all their tips and split the money among the employees. Under California law, tip pools are allowed when the tips are shared with employees who provide direct services that result in a tip. In a restaurant this would include hosts, servers, busboys and anyone else who provides direct table service. Chefs are only included in tip pooling in restaurants where the chef prepares the meals at the customer's table.
What many employees do not know is that tips belong to the employee, not the employer. This means that supervisors cannot share in tip pools. Essentially, tips can only be share with employees who do not have the authority to hire or fire employees or to supervise or direct the actions of other employees. Furthermore, employers cannot deduct money from wages because of earned tips, nor can tips be used to compensate business owners.
Any tips that are made on a credit card must be paid to the employee by the next regular payday that follows the date the credit card payment was authorized. Employers must give their employees the full amount of a tip given on a credit card and may not deduct any credit card processing fees from the tip.
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Workers whose employers violate California labor law can file a lawsuit against their employers. In the case of employers who use tips as a credit toward minimum wage owed, plaintiffs can file a lawsuit to recover lost wages. It is also illegal for an employer to retaliate against an employee who objects to the practice of crediting tips against wages. Here, too, that employee has the right to file a lawsuit against his employer.