In O’Grady v. Merchant Exchange Productions, Inc., the California Court of Appeals held that a mandatory service charge could potentially be found to be a gratuity that must be distributed to service employees. The issue in the case is whether a “service charge” can be a “gratuity” that Labor Code section 351 requires to
Plaintiff Jacob Davis brought a putative class action against International Coffee and Tea, LLC (the company that operates Coffee Bean and Tea Leaf) alleging that the company’s tip pooling policy violated California’s Labor Code section 351. The trial court sustained Coffee Bean’s demurrer to plaintiff’s second amended complaint without leave to amend. Plaintiff appealed the
In a huge development in the last couple of weeks, a change in federal law now permits California employers to include back of the house employees in tip pools. This week’s post is an update and a general discussion about issues facing restaurants, hotels, and other industries where tipping and gratuities are left for
This week, a federal court in northern California certified portions of a class action 
brought by Uber drivers who worked in California since 2009 (click here for the decision [PDF]). Over 160,000 drivers have worked for Uber in California during this time period, and while the case is making a lot of news,
1) Gratuities
All tips are the emp
loyee’s property, and cannot be taken by the employer. Labor Code section 350 states unequivocally that “Every gratuity is hereby declared to be the sole property of the employee or employees for whom it was paid, given or left for.” In addition, Labor Code section 351 clearly states
Today’s Friday’s Five provides a few points for employers to consider who have employees that 
receive gratuities. California law is very specific regarding gratuities left for employees, and since tips are property of the employee, employers must approach this area with caution. Here are five “tips” about tips in California.
1. Tips are employee’s property.
1) Who owns a tip?
California law is clear that voluntary tips left for an employee for goods sold or services performed belong to the employee, not the employer. Labor Code section 351 provides, “No Employer or agent shall collect, take or receive any gratuity or a part thereof that is paid, given to, or