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Can an employer take your tips?

On Behalf of | Oct 13, 2023 | Wage & Hour Law

Service industry workers are often rewarded for good service with tips from their customers. These gratuities are usually calculated as a percentage of the entire bill, somewhere between 10-20%. Baristas, waiters, bartenders, valets and taxi drivers are just a few of the workers who rely on tips to supplement their wages.

Employers in California are not permitted to take an employee’s tips. According to California Labor Code 351 LC employers may not pocket any of the tips that their employees earn. Nor may they deduct those tips from the employee’s regular wages.

Are tips the same as service charges?

No, tips are not the same as service charges. A service charge is a fee added by the employer to a customer’s bill. Service charges are often seen on bills from

  • Hotel room service
  • VIP bottle service
  • Large parties in restaurants

The employer has the option to retain the service charge or to split it among the employees.

What about tip pooling?

Tip pooling is legal and many places encourage their employees to contribute to the pool. What this means is that all tips are added together and split equally among the employees. This allows back-of-the-house employees such as table bussers and dishwashers to receive a share of the tips earned during their shifts. Some of the establishments that might engage in tip pooling include:

  • Restaurants and drive-thru food services
  • Hotels
  • Bars
  • Coffee bars
  • Food delivery services

Cash tips are the easiest to pool. When a customer pays with a credit card the tip can still be pooled, but the employees may have to wait for the credit card company to clear the payments.

Tips are considered independently earned wages that may not be withheld by an employer in any way. An employee who has had their tips taken away by the employer has the right to seek legal assistance to resolve the matter.