California Labor Law and Tip Pooling

San Francisco, CAWhen it comes to tip pooling, California labor law has a lot to say. Under the California labor code there are rules about who can and cannot be included in a tip pool and what employers can count tips for. Employers who violate those rules could face a California labor lawsuit from employees looking to recover lost tips.

California Labor Code Section 351 makes it illegal for employers or managers to share in an employee's tips or keep any portion of a tip or gratuity left for employees by a customer. California labor code does allow for tip pools, but does not allow managers or employers to take part in the tip pool.

Furthermore, employers are prohibited from using tips as a credit towards an employee's wages (i.e., including tips in the hourly wage and therefore paying servers less than minimum wage) or from taking wage deductions from tips. This means that aside from contributing to a tip pool, any employee's tips are hers to take home along with her regular wages. It also means that credit card processing fees cannot be taken from tips.

Regarding the tip pool itself, there are limits on who can and cannot share in the pool. According to the California Department of Industrial Relations the only people who take part in the pool are those employees who provide "direct table service." This includes servers (sometimes called waiters or waitresses), busboys, bartenders, hosts/hostesses and maitre d's. Employees typically not included in the tip pool are dishwashers, cooks and chefs, although in restaurants where the chef prepares food at the table, the chef may be part of the tip pool.

Regardless of whether or not they provide direct table service to customers, employers, managers or supervisors are not allowed to take part in the tip pool. It is important to note that a mandatory service charge is not the same thing as a tip or gratuity. A tip or gratuity is left by the customer voluntarily for the employee. Mandatory service charges are required by the restaurant and can be distributed at the employer's discretion.

Lawsuits have been filed against employers for illegally taking part in tip pools or for illegally running tip pools.