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What should you know about tip sharing?

On Behalf of | Jun 15, 2023 | Wage And Hour Claims |

Understanding the intricacies of wage laws is critical for anyone working in a service industry where tips are part of the compensation structure. In California, specific laws govern tip pooling or sharing, which is the practice of pooling and dividing tips among employees. These rules can impact how much money you take home at the end of a shift and also affect the dynamics of your workplace.

California law distinctly recognizes tips as the sole property of the employee or employees to whom they are given. It’s illegal for an employer to take any portion of an employee’s tips, even if the employer pays the employee more than minimum wage. These regulations also affect who can share in a tip pool and how it should be divided.

Tip sharing: Who is eligible?

In California, only employees primarily engaged in providing table service to customers can be included in the tip pool. These might include the wait staff, busboys, bartenders and hostesses. The critical point is that they must contribute to the patron’s service experience.

Managers, supervisors and employers are prohibited from sharing in tip pools regardless of whether they provide direct table service. Additionally, employees who don’t regularly and customarily receive tips, such as dishwashers and cooks, can’t be included in a tip pool.

Navigating tip-sharing complexities

While it is legal to require tip sharing or tip pooling in California, the division of tips must be fair and reasonable. The law doesn’t provide clear guidelines for a “fair and reasonable” distribution. 

Tip sharing is common in many California service industries, but it’s governed by specific laws and regulations. Both employees and employers must know these rules to protect their interests and maintain a fair and lawful work environment.

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