Tips and Gratuities Under California Labor Law
If you often receive tips and gratuities, you need to know your legal rights, especially if your employer is involved. Tips are basically the money left by a patron over the amount due for goods and services rendered. They often come in different forms, mostly in the form of cash.
However, when the customer pays his or her bills with a credit card and the payment includes tips, it is expected that the employee pay you the full amount not later than your next regular pay after the day the credit card payment was authorized. If you think your employer is withholding your tips, deducting credit processing fee from the tip, or considering it as part of the regular rate of pay for overtime calculation, then you might need an attorney to represent you.
Current rules for credit card processing fees in California
In California, employees are protected by labor sections 350 through 356. The Labor Code section 351 prohibits the employer from deducting any fee from the tip or credits our time against the money they owe you. They are required to pay the full amount paid on the credit card. No deductions are to be made; you are entitled to the full payment.
Tips are not part of the wage
Under California law, tips and gratuities are not technically, part of wage paid by the employer and therefore are not considered part of your regular rate of pay when calculating overtime. Unlike other federal laws, California law requires that an employee pay the overtime based on the regular rate of remuneration.
Mandatory service charges are not treated as tips
Some employee mistakes mandatory service charge with tips of gratuities. Tips are voluntary amount left by a patron, but mandatory service charge is the amount required from the patron based on the contractual agreement listed on the menu of an establishment. These service charges legally belong to the employer who distributes them to the employee at their discretion.
Important rules for tips and gratuities to note in California
In most states, an amount is deducted from the tip as a processing fee, but in California, the employer should not deduct any amount.
Tip Pooling
Tip pooling under California labor law is considered to be legal so long as certain conditions are set. Basically, tip pooling is gathering tips earned by several employees and splitting them up in previously agreed percentage. However, this practice has to be participated by employees and not the employer.
California laws also prohibit tip credits, therefore, any employment contract allowing it is illegal. To recover money held by the employer, you need to file a claim with California Division of Labor Standard enforcement for an investigation to take place or file a conversion lawsuit.
In most cases, it is critical to act fast depending on the claim you intend to pursue.