Federal and California Tip Law
Does your employer comply with Federal and California tip law?
Both theFair Labor Standards Act (FLSA) and California labor law include provisions regarding workers who receive tips as a significant portion of their wages, such as waiters, waitresses and bartenders.
Both Federal and California tip law state that tips are the sole property of the tipped employee. In other words, employers and supervisors are prohibited from taking any portion of their employees’ tips. An exception to this provision is the practice of “tip-pooling” in which tipped employees combine and share their tips. Both California and federal law permit tip pooling, but restrict the types of employees that can participate in the pool. California law allows only employees that provide “direct table service”, such as waiters/waitresses, busboys, and hosts/hostesses to participate in the tip pooling arrangement, with the exclusion of owners, supervisors, and managers. Federal law prohibits employees who have not customarily participated in tip-pooling arrangements such as "dishwashers, cooks, chefs, and janitors" from partaking in tip pools.
Credit Card Tips
The California Labor Code states that if a tip is left by credit card, the employer must give his employee the full amount indicated on the credit card slip and may not deduct any amount for a credit card processing fee. Federal law allows employers to deduct the percentage paid to the credit card company from the employees tip, but this deduction cannot reduce the employee's wage below the federal minimum wage. Under Federal and California tip law, employees must receive their payments for credit card tips by the next regular payday following the date the tip was given.
Tip Credits
Under California law, employers may not deduct their employees’ tips from their wages, nor can they credit tips towards future wages. This differs from the FLSA tip credit provision, which permits employers to apply tip earnings toward the balance of the minimum wage obligation. Under the FLSA, employers must still pay their employees a minimum of $2.13 an hour and notify them if they are employing a tip credit arrangement. In California, if an employee's tips combined with the employer's direct wages of at least $2.13 an hour do not equal the minimum hourly wage of $7.25, the employer must make up the difference.
What can I do of I believe my employer violates Federal or California tip law?
If you believe that you have not been fully compensated for tips that you have received, or that your employee rights have otherwise been violated, please fill out the form below or call us at (866) 981-4800 for a free consultation with a labor and employment attorney.
Important Note: This summary is intended to provide a basic overview of the typical types of employment cases handled by our firm. It is for informational purposes only and does not constitute legal advice.
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Girard Gibbs is a national litigation firm specializing in securities litigation, consumer class actions and complex business litigation. Girard Gibbs' managing partner Daniel Girard was voted one of Northern California's Super Lawyers in 2007, 2008, and 2009 by Law & Politics, recognizing him as one of the top 5-percent of attorneys practicing in Northern California.


Want more information about tip law?
Fill out the form below, or call toll-free (866) 981-4800 for a free consultation.
FOR MORE INFORMATION ABOUT THE EMPLOYMENT & LABOR LAW PRACTICE AT GIRARD GIBBS:
- Employment & Labor Law Overview
- The Fair Labor Standards Act
- California Labor Law
- Overtime Pay Overview
- Overtime and the FLSA
- California Overtime Pay
- Exempt v. Non-Exempt
- Minimum Wage Overview
- Federal Minimum Wage
- California Minimum Wage
- Independent Contractors
- The Federal Warn Act
- The California Warn Act
- The Illinois Warn Act
- The New Jersey Warn Act
- The New York Warn Act
- Wage and Hour
- Off the Clock Work
- Donning and Doffing
- Tipped Employees
- Farmworker Rights
- Breaks and Meal Periods
- Prompt Payment at Termination
- Itemized Pay Stubs
- Employment Discrimination
- California Vacation Law

