Can Managers Receive Tips in California?

No. Under California law, a manager cannot take any part of a tip that’s left for an employee. This means that you can’t be forced to share your tips with the manager, supervisor, or owner of the business.  In California, when an employer or another supervisor or manager takes an employee’s tips, it is considered a wage and hour violation.

By Brad Nakase, Attorney

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Can Managers Receive Tips in California?

In California, managers are generally prohibited from receiving tips under the state’s strict labor laws. According to California Labor Code Section 351, employers and their agents—which include managers and supervisors—are not allowed to share in or keep any portion of gratuities given to employees by customers. The law ensures that tips, which are considered the sole property of the employees to whom they are given, remain untouchable by those in managerial positions.

Additionally, Labor Code Section 351 explicitly forbids employers from using gratuities to offset wages, either directly or indirectly, or making wage deductions from gratuities. This reinforces the principle that tips are supplemental to wages and belong solely to the non-managerial staff who earn them through service to patrons.

If you are dealing with concerns about tip-related issues, I can help you recover what is rightfully yours. As your attorney, I work on a contingency fee basis, meaning there are no upfront out-of-pocket fees. I only take a small percentage of the amount recovered for you.

Understanding the intricacies of tips law in California can be a perplexing endeavor, especially in a state like California, where regulations are stringent and subject to interpretation. Labor Code Section 351 prohibits employers and their agents from sharing in or keeping any portion of a gratuity left for or given to one or more employees by a patron. Furthermore, it is illegal for employers to make wage deductions from gratuities or from using gratuities as direct or indirect credits against an employee’s wages.

Can You Receive Tips as a Manager?

If you are a manager and unsure about your rights to receive tips under California law, or if you’ve been wrongly denied your earnings, I can assist you in recovering your tips. There are no upfront costs; my fee is a small percentage of the amount I recover for you.

California’s labor laws are clear on this issue. California Labor Code Section 351 states: “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.” In other words, tips are considered to be the sole property of the employee or employees to whom they are paid in recognition of the services and the quality of services they have rendered.

While the law generally prohibits managers from receiving tips, there are a few exceptions and considerations worth noting. For instance, if a manager performs substantial customer service duties alongside their supervisory responsibilities, they may be considered eligible to participate in tip pooling arrangements. However, participation must be voluntary, and managers cannot be coerced into sharing tips. Federal labor laws make it clear that while managers and supervisors are prohibited from retaining tips earned by other employees, they are allowed to keep tips that they received directly from customers based on the service the manager or supervisor “directly and solely” provided.

How to Report Manager Receiving Tips

If you believe your manager has unlawfully taken your tips, contact me for guidance and legal representation. I charge no upfront fees and work on a contingency basis, taking a small portion of the recovered funds to ensure your rights are protected.

If your employer, manager, or supervisor wrongfully and unlawfully takes tips you earned, you may be able to file a lawsuit against your employer to recover those lost tips or wages. In California, when an employer or another supervisor or manager takes an employee’s tips, it is considered a wage and hour violation. Employees can file a complaint with the Division of Labor Standards Enforcement (DLSE) or pursue a lawsuit in court.

After your claim is completed and filed with a local office of the Division of Labor Standards Enforcement (DLSE), it will be assigned to a Deputy Labor Commissioner who will determine, based upon the circumstances of the claim and information presented, how best to proceed. If the decision is to hold a conference, the parties will be notified by mail of the date, time, and place of the conference. The purpose of the conference is to determine the validity of the claim and to see if the claim can be resolved without a hearing. If the claim is not resolved at the conference, the next step usually is to refer the matter to a hearing or dismiss it for lack of evidence.

What to Do if Your Manager Is Receiving Tips

If your manager has been unlawfully taking your tips, I can help you take legal action to recover your earnings. You won’t have to pay anything upfront, as my fee comes from a small percentage of the recovered amount.

If your employer or manager unlawfully takes your tips, you have several options. Labor Code Section 351 provides that tips are the sole property of the employee to whom they were given. If this right is violated, you can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner’s Office), or you can file a lawsuit in court against your employer to recover the lost wages. Additionally, if your employer is crediting your tips against your wages, you are being underpaid your wages and thus, if you no longer work for this employer, you can make a claim for the waiting time penalty.

Can I Sue My Boss for Receiving My Tips?

Yes, you can take legal action if your manager has been unlawfully taking your tips. Contact me to ensure your rights are enforced, with no out-of-pocket fees required. I only receive a small portion of the recovered funds as my fee.

Yes, you can sue your manager if they unlawfully take your tips. Labor Code Section 351 prohibits employers, managers, and supervisors from taking any portion of an employee’s tips. Employees who prevail in their claims can recover lost wages, damages, and penalties. Furthermore, if the employer retaliates against you for asserting your rights or filing a claim, you can file a retaliation complaint with the Labor Commissioner or pursue a lawsuit for wrongful termination. If your employer discriminates or retaliates against you in any manner whatsoever, for example, discharging you because you object to their crediting your tips against your wages, you can file a discrimination/retaliation complaint with the Labor Commissioner’s Office.

Mandatory Service Charges vs. Tips

If you’re confused about the distinction between mandatory service charges and tips, and suspect your tips have been misappropriated, reach out to me for assistance. I work on a contingency basis, ensuring you don’t pay anything unless I recover your earnings.

It is essential to differentiate between mandatory service charges and tips. While tips are voluntary payments made by customers to employees for services rendered, mandatory service charges are fees imposed by the establishment. Unlike tips, which belong to the employees, mandatory service charges are considered revenue for the employer. California law requires that mandatory service charges be clearly distinguished from tips and not be distributed to employees as part of a tip pool. If a restaurant pays some or all of that additional money to tipped employees, they have to treat it like regular taxable wages, not like tip income—meaning it’s subject to regular tax withholdings. Failure to adhere to these distinctions can result in significant legal penalties for employers.

Key Differences Between California Tip Laws and Federal Regulations

California’s labor code is more comprehensive than most other states’ regulations. Section 351 gives the most information on gratuities or tips, stating that tips belong to employees, not employers (“declared to be the sole property of the employee or employees to whom it was paid, given, or left for”). Federal law allows employers to deduct credit card fees from tips when customers pay using a credit card, but California labor code doesn’t allow this. In California, the employee must receive the entire tip amount, and the employer must cover any credit card processing fees.

Summary of Key Points

  1. California law is explicit that tips belong solely to the employee or employees for whom they are intended.
  2. Managers are generally prohibited from receiving tips unless they perform substantial customer service duties and the tips are directly and solely for those services.
  3. If your employer or manager wrongfully takes your tips, you can file a wage claim or a lawsuit.
  4. Retaliation for asserting your rights under California tip laws is illegal and can lead to additional legal claims.
  5. California law prohibits employers from counting employees’ tips toward their obligation to pay minimum wage.
  6. Employees must be informed about any tip pooling arrangements, ensuring transparency and fairness in the distribution of tips.

Final Thoughts

Understanding California’s tip laws is essential for employees to protect their earnings and ensure fair treatment. Employees who face violations of these laws have several legal avenues to recover lost wages and hold their employers accountable. Employers and managers must strictly adhere to these regulations to foster a compliant and fair workplace environment. Navigating the complexities of tip laws in California can be a daunting task, but seeking the assistance of an experienced attorney is crucial to understanding your rights and obligations.

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