The service industry in California constantly grapples with the complexities surrounding tips, tip pooling, and mandatory service charges. Recently, on August 23, 2024, a federal appeals court blocked the Department of Labor’s (DOL) controversial 80/20/30 rule in Restaurant Law Center, Texas Restaurant Association v. United State Dept. of Labor. This rule, which created significant
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
A reader of the California Employment Law Report asks if it is possible to have employees enter into an agreement that would allow the employer to count a portion of the employees’ tips towards the minimum wage requirement. “Tip credit” is recognized by many states and it allows employers to count a portion of the