Is Tip Pooling Legal?

Whether working in a small coffee house or renowned steak house, employees working for tips rely largely on the additional money they can take home after a shift. In California, there have been several cases and laws addressing tips and the many questions associated with them. Is it ok for an employer to require employees to pool all their tips? Can an employer take a share of the tips? What happens to the jar of coins next to the register?

In a 1990 case, Leighton v. Old Heidelberg, Ltd., California courts determined that some forms of tip pooling is permissible.  Employees in the “chain of service,” such as bussers, waiters and hostesses, may participate. The employer can require that all affected employees chare equally. When courts look at a case involving a tip dispute, they focus on the intent of the customer.

However, the employer, or any employee with managerial or supervisory functions, may not take any part of your tips, regardless of whether they are pooled or not. An employee in a managerial or supervisory role may still get tips, but they must be clearly distinct from those in a tip pool or earned by other employees.

Well what about the jar filled with coins on the counter? Is that a tip pool? Yes, that mug could be a “collective tip box.” Therefore, making it a “tip allocation” and not a “tip pool” means employees with managerial or supervisory functions could take a share.

California will be adopting even more tip laws this year. Going forward, tips automatically added to a restaurant bill, meaning those that automatically apply to parties of 6 or more, may now be taxable like wages and subject to payroll tax withholding. This means a server will not see those tips until payday, rather than taking it home as cash.

If your employer violated employment laws pertaining to tips, you can bring a claim for damages and violation of the California Unfair Competition Law and for penalties under the California Private Attorney General Act.

2016-08-09T22:13:31+00:00 May 13th, 2014|General Labor Law|