Question: I’m a server at a certain Davis restaurant that I’d rather not name. People who come into the restaurant almost always leave us tips. My boss (the manager) has a policy of taking all those tips, putting them into a single account, and then deducting a portion for the restaurant before equally splitting the remainder among all the waiters, bartenders and other staff. The tips make up the majority of my paycheck, but they’d make up a lot more if I got to keep my own tips rather than sharing with everyone, including the boss (who did nothing to earn them!). Is it legal for a restaurant to split tips like this?
— G.N. Davis, CA
Answer: No, it’s not legal. The part about your boss taking your tips is definitely against the law in California. Mandatory tip pooling is fine; he can force all the service staff to share tips with each other as long as they are distributed fairly. But your boss cannot skim a percentage off the top before distributing the tips.
In California, your right to your tips are protected by Section 351 of the California Labor Code. Section 351 states in part:
“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, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.”
This means that your employer cannot keep any of the optional gratuities that customers give you. The ban applies to all management and supervisors. But there’s an important caveat: The restaurant can indeed require you to “tip out” to other employees on the service line, unless they are managers. Courts have upheld such tip pooling arrangements as long as they are reasonable, “fair” to all employees and do not include managers.
Here’s an example. Your boss might occasionally wait on tables if the restaurant gets busy or another server flakes on his shift. Even though he pitches in as a waiter sometimes, your boss can’t collect other people’s tips or join the tip sharing pool. He is still a supervisor, and supervisors can’t participate in tip sharing. He can still require you and the other employees to pool your tips and give it to the bus boys, though.
Mandatory service charges are trickier. Your restaurant might charge patrons an 18 percent fee for large parties. I hate those fees, for both legal and moral reasons. The labor code defines a gratuity or tip as money that a patron has left for an employee in excess of the actual amount due for the services or goods he bought. In other words, a tip is a discretionary amount that the customer voluntarily leaves behind for the wait staff. If a customer’s bill is $15 and he leaves a $20, saying “keep the change,” that extra $5 is a tip.
A service charge, however, is usually mandatory, not discretionary. And since it’s not discretionary, it’s not a tip. Patrons might think that they’re leaving an 18 percent tip for their waiter, but there’s nothing forcing the boss to actually give that service charge to the employees. Only discretionary tips are yours; mandatory tips are not really tips at all, so they’re not yours to keep unless the boss decides to be nice.
You should also keep in mind that the same section of the Labor Code prevents your boss from charging you credit card transaction fees when customers pay tips by credit card.
As regular readers of this column know, California is really strict about credit card surcharges. Even though Visa and Mastercard charge merchants a fee for every credit card transaction processed at their store or restaurant, the merchant is banned from passing the fee along to consumers. Restaurants can’t charge their customers a fee when paying with a credit card, and they can’t pass the fee along to their employees, either.
California has strict rules about credit card fees and employees, too. If your employer charges you a fee for each tip received via a credit card transaction, your employer is breaking the law.
And your boss has to pay out these credit card gratuities in your next regular paycheck. They can’t wait until the end of the year or delay payment. Refusing to pay you the tips, or delaying payment of tips, would constitute an unlawful withholding of your wages. In such circumstances, you’d be entitled to sue the employer for up to 30 days’ worth of waiting time penalties for each day he delays paying you what you’re owed.
Show this column to your boss and have him Google section 251 of the California Labor Code. If he still withholds your tips, you can file a claim with the California Labor Commissioner at dir.ca.gov/dlse/HowToFileWageClaim.htm.
Daniel is a Sacramento attorney, former Davis City Council candidate and graduate of UC Davis School of Law. He’ll answer questions sent to him at email@example.com or tweeted to @governorwatts.