In California, a tip is generally considered the sole property of the employee for whom its left. Accordingly, employees whom receive tips may generally not be required to share their tips with any owner, manager or supervisor.

By contrast, a lawful tip-pool can require that employees share their tips with non-supervisory employees, so long as those receiving a share of an employee's tips provide direct service to the patron. This typically excludes non-supervisory employees, such as cooks or dishwashers in a restaurant, from taking part in a tip-pool.

Additionally, employers may not deduct from or collect any part of the hourly wages of their service employees as an indirect manner of obtaining a share of the tips. Employers are also prohibited from deducting any business cost incurred by the employer at any time from either the hourly wages or the tips of their employees.

Employees are entitled to recover from their employer all tips unlawfully taken from them during the last three or four years as a result of an unlawful tip-pool and may, in some cases, also be entitled to recover penalties and reimbursement of reasonable attorney fees and costs.

Employees Cannot Waive Right to Tips
An employer cannot require its employees to waive their right to tips. Therefore, any agreement (verbal or written) under which employees must share or pay a portion of their tips to either owners, managers, or supervisors, or to employees who do not provide direct service to a patron or customer is void and unenforceable. Employees will nonetheless be entitled to recover all tips unlawfully collected or obtained from them within the last three or four years, including interest, and in some cases, applicable penalties, reasonable attorneys' fees and costs of suit.

A Word About Service Charges
Generally, service charges are not considered tips in California and are, therefore, not subject to the same rules as those that apply to tips. However, under some circumstances, a service charge may actually be a tip “in disguise.” This largely depends upon how the policy is applied and treated by the employer. If you are interested in determining whether your specific service charge policy is lawful, please contact Duvel Law, APC.

No Retaliation
Employees who have complained about the legitimacy of an employer's tip-pool policy and who have suffered adverse consequences as a result, may also have a separate claim of retaliation which may make available the following additional damages: Compensatory damages, emotional distress damages, and punitive damages.