Wage and Hour Rights for Tipped Employees: Are You Being Paid Enough?

Does something seem off about the way tips are treated at your job? Tips play a significant role in the income of many workers, yet misconceptions and employer violations related to wage and hour rights can unfortunately be fairly common. 

At Olivier & Schreiber PC, we recognize the frustration that comes when employers mishandle wages at any level, including tips. When it comes to receiving tips in California, there are several key rights to be aware of.

Employers Cannot Take Your Tips

Under California Labor Code 351 LC, tips belong to employees, not employers. An employer cannot use tips to cover expenses, offset wages, or justify paying less than the state’s minimum wage. 

Key Protective Measures

• Minimum Wage Guarantee: Tips are not considered part of your wage. You are entitled to California’s hourly minimum wage, separate from any tips received. At the time of posting, California’s minimum wage is $16.50, though some cities mandate higher minimum wages. 
• No “Tip Credits”: California prohibits employers from crediting tips toward meeting minimum wage obligations. 

If your employer is withholding your tips or using them improperly, you can take legal action to protect your rights.

Tip Pooling Explained

Tip pooling involves combining all collected tips and redistributing them among eligible employees. While legal in California, there are regulations on this practice to ensure fairness. 

Rules for Legal Tip Pools

• Who Is Excluded: Managers and business owners cannot benefit from tip pools.
• Timing: Employers must distribute pooled tips no later than the next payday after they are collected. 

Credit Card Fees Are Not Your Responsibility

Customers often include tips while paying by credit card. California law requires employers to pay for any associated credit card processing fees. 

What Are Your Rights?

• Full Tips Paid: You must receive the full tip amount left by the customer without deductions for credit card fees. 
• Timely Payment: Employers must ensure all tips paid via credit card are included in your paycheck by the next payday. 

If your employer deducts credit card fees from your tips or delays payment, this is a violation of your rights.

What To Do About Improperly Treated Tips

If your employer illegally withholds tips, there are several options you can explore to pursue justice. 

Filing a Complaint with the Labor Commissioner

Reporting a tip-related violation to the California Labor Commissioner’s Office is one of the fastest ways to resolve wage and hour issues. The process includes filing a complaint, participating in a hearing, and receiving an order for repayment if your claim is successful.  

Initiating a Lawsuit

Common grounds for claims regarding tips include: 

• Conversion: Arguing that your employer stole your tips. 
• Breach of Implied Contract: Claiming your employer failed to honor agreements with customers to pass tips to employees. 
• Unfair Competition Law Violations: Pursuing damages under California’s laws designed to prevent dishonest business practices. 

Protect Your Hard-Earned Tips

Understanding and protecting your wage and hour rights as a tipped employee is critical to ensuring you receive the compensation you deserve for your work. If you believe your employer may have violated these rights, the attorneys at Olivier & Schreiber PC can help. Our skilled wage and hour attorneys have significant experience fighting for the rights of California workers and helping employees obtain justice. Contact us to schedule a consultation today.