California Labor Code 351 protects tips as the sole property of the tipped employees. The company or managers may not take the tip for themselves or deduct the tip amount from employees’ wages. Employers must give tips paid by credit card to the employee by the next regular payday.
The full language of the statute reads as follows:
351. 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. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for. An employer that permits patrons to pay gratuities by credit card shall pay the employees the full amount of the gratuity that the patron indicated on the credit card slip, without any deductions for any credit card payment processing fees or costs that may be charged to the employer by the credit card company. Payment of gratuities made by patrons using credit cards shall be made to the employees not later than the next regular payday following the date the patron authorized the credit card payment.
Legal Analysis
California Labor Code 351 prohibits employers – and agents of employers – from taking any part of the tips given to their employees. Gratuities are the sole property of the employee. Therefore, waiters, hosts, valet drivers, workmen, and others who receive gratuities can keep them without giving them any part to their boss.1
When tips are paid by credit card, the employer must provide the tip amount to the employee by the next regular payday. And the employer may not deduct any credit card processing fees from the tip amount.2
Furthermore, employees who receive tips must still receive their full wages from their employer. The employer may not use the tips as an excuse to reduce their regular rate of pay.3
Labor Code 351 protects tips as the property of the employee given the tip.
See our related article on tip pooling.
Legal References
- Labor Code 351 – Collecting, taking, or receiving gratuity by employer; Deduction from or credit against wages; Gratuity as sole property of employee; Application of section. See GMRI, Inc. v. California Dept. of Tax & Fee Administration (Cal. App. 3d Dist., 2018), 230 Cal. Rptr. 3d 183, 21 Cal. App. 5th 111.
- Same.
- Same. O’Grady v. Merchant Exchange Productions, Inc. (Cal. App. 1st Dist., 2019), 254 Cal. Rptr. 3d 494, 41 Cal. App. 5th 771.