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California Labor Law's Tipping Pool

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The California labor law prohibits managers and supervisors from sharing in employee tips, yet judging by the number of questions LawyersandSettlements has received regarding payment of tips to restaurant employees, California's tipping pool is still murky. Many businesses apparently still practice tip pooling and other shady dealings, despite last year's ruling against Starbucks (the coffee giant was ordered to pay back more than $100 million to California baristas).

Tips"A supervisor at my restaurant recently added himself to the tip pool," says Julian. "It is complicated because his business card says "Maitre' D" but he is a manager with the authority to hire and fire. A few weeks ago, he decided tips accumulated by wait staff will be filtered through his hands, and he takes a percentage." Julian wants to know if this practice is legal.

Sarah says her General Manager and Kitchen Manager and even the bartender take a cut of her tips every day that she works. "I am a fairly new employee and estimate that they have taken about $1200 of my pay away from me, however it is continuing and the amount is growing by about $200 - $300 per week," she says.

As well, Sarah was told not to add her tip money to her income tax return. "I want to ensure that I do the right thing with my taxes this year, and am unsure how to go about it when my employers refuse to file the correct paperwork for me," she says. Sarah is carefully saving her pay stubs, and hopes that her employer will do the same when tax time rolls around.

" I am not a money hungry employee looking for anything that could result in a settlement," she says, "but I am willing to take it to that level because I am concerned with getting what I deserve. I do not want to exaggerate or enhance the story. I just can't allow my employer to take advantage of me."

Mellisa and Kenneth are also being taken advantage of—they both have to share tips with their employers. "Not only do I have to split tips with the owners," says Mellisa, "now they tell me that I have to share tips with other servers who don't work as many hours as I do." And Kenneth is even denied his tips. "I work in a kiosk and the main store is downstairs, where the cashier works," he says. "The company is taking any tips I make, either alone or with one other person who works with me and we haven't seen a dime."

Employers in the hospitality industry and other businesses where employees receive tips should expect court challenges to their tip practices in the wake of rulings such as Starbucks. (In April, 2008 a Massachusetts verdict against American Airlines awarded $325,000 in lost tips to skycaps.)

The Starbucks lawsuit focused on a section of California's Labor Code regarding the payment of tips to employees and the practice of tip pooling. Labor Code Section 351 provides, "No employer or agent shall collect, take or receive any gratuity or a part thereof that is paid, given to or left for an employee by a patron," and Labor Code Section 350 defines "agent" as "every person other than the employer having the authority to hire or discharge any employee or supervise, direct or control the acts of employees."

Starbucks shift supervisors were deemed by the court as "agents" and therefore were not entitled to share baristas' tips. It would seem likely that a court would rule in favor of Mellisa and Kenneth, Julian and Sarah: they are all giving their tips to employers and/or "agents", contrary to the California state labor law.

READ ABOUT CALIFORNIA LABOR LAW LAWSUITS

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