Here’s some clarity on tip pooling in California

Government Affairs Sharokina Shams

Much dramatic and incorrect information is being published regarding tip pooling. Here are the facts for California businesses.

The Trump administration is proposing a reversal of the 2011 U.S. Department of Labor tip-pooling rule. If the current proposal is finalized, it would mean that restaurants could pool tips in order to share them with back-of-house workers.

After studying state and federal labor laws that regulate tipping, the CRA has learned that if the Trump administration’s proposal moves forward, it would apply in California as it would in other parts of the country where restaurant owners don’t take a tip credit.

One important note: California Labor Code Section 351 provides that “every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” According to the California Department of Labor Standards Enforcement, the section has been interpreted to allow for mandatory tip pooling so long as the tip pooling policy is not used to compensate the owner(s), manager(s), or supervisor(s) of the business, even if these individuals should provide direct table service to a patron or are in the “chain of service” to a patron

The California courts have further suggested that employees who participate in the “chain of service” may participate in tip pools, such as dishwashers, bartenders, and other unspecified members of the kitchen staff.