California Tip Pooling Laws – “Direct Table Service” Defined

California law protects hundreds of thousands of people who work as waiters, waitresses, servers, bartenders, etc. The law protects these employees from having to share their tips with the owners or managers of the company they work for. However, employers are allowed to implement certain types of mandatory tip sharing arrangements (most call this “tip pooling”), but these arrangements must conform to the law.

So what is the law? The California Labor Code states:

Section 351.  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….

Section 353.  Every employer shall keep accurate records of all gratuities received by him, whether received directly from the employee or indirectly by means of deductions from the wages of the employee or otherwise. Such records shall be open to inspection at all reasonable hours by the [government].

According to California case law, Section 351 allows involuntary tip pooling if certain parameters are met. An employer can require an employee to share her tips with other staff that provide service in the restaurant. Under the law, when a tip pooling arrangement exists, the tips are to be distributed only too employees who provide “direct table service.” Such employees could include waiters and waitresses, busboys, bartenders, host/hostesses and maitre d’s.

Employees who do not provide direct table service and who do not share in the tip pool include dishwashers, cooks, and chefs. Additionally, tip pooling cannot be used to compensate the owner, manager, or supervisor of the business, even if these individuals provide some direct table service to customers.

The most common violation is a tip pooling arrangement that keeps a certain portion of tips for the owner or manager. Any person who has authority to hire or fire employees or supervises, directs, or controls the acts of other employees is considered a manager and may not receive any portion of the tips.

Finally, Section 351 goes on to state that the employer cannot charge a credit card processing fee, an “accounting fee”, or any other type of fee, deduction, or charge, for handling or processing employee tips. Employees must be paid all of their tips without such charges. That is the only way the use of credit cards in tip pooling is legal.

If you believe that your employer has created and maintains an illegal tip pooling system, contact Branigan Robertson to learn about your legal rights.

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Branigan Robertson is a California employment lawyer who exclusively represents employees in workplace disputes. He focuses his practice on sexual harassment, wage & hour, wrongful termination, and retaliation. Visit his website at BRobertsonLaw.com or call his office at 949.667.3025.