What You Need to Know About Tipped Employee Rights
A tipped employee maintains rights over their earned tips that are protected by the California Labor Code. Here is everything you need to know about tipped employee rights.
The U.S. Department of Labor defines a tipped employee as an employee that is engaged in an occupation where they regularly receive more than $30 per month in tips. Any employee who falls under this definition is therefore entitled to all of the rights and protections a tipped employee has. California Labor Code Section 351 ensures that every tip given to an employee becomes their property.
Tips in Addition to Wages
California Labor Code Section 351 prohibits tips from being counted toward the minimum wage. The California minimum wage as of 2021 is $13.00 an hour for a company with less than 25 employees and $14.00 an hour for a company with 26 or more employees. Therefore, all employees who earn a tip at their job and make minimum wage must earn the tips in addition to their regular minimum wage rate.
Additionally, tips are prohibited from counting towards overtime pay. They must be counted in addition to the employee’s regular wage, and include overtime pay if applicable. Tips are never used as a substitute or inclusion when calculating an employee’s regular wage or overtime pay.
Related: California Labor Code 510: Overtime Law
A tipped employee is also entitled to the protection of their tip rights in respect to credit card tips. Every credit card tip is counted the same way as normal cash or check gratuity would be, in addition to the regular wage and overtime pay of the employee. Additionally, every employee has the right to the full amount of any credit card tips without any deductions for credit card processing fees that may be charged to the employer. The payment of tips made via credit card must be included in the next regular paycheck of the employee.
Employer Interference with Tips
According to Labor Code Section 351, no employer is allowed to share in, keep, or adjust any gratuity left for any employee. Every tip earned by an employee is their direct property, and no employer has a claim over any part of the tip earned by the employee. This applies to any situation where an employer may attempt to adjust or withhold an employee’s claimed tip. Every employee has complete ownership over the full amount of their earned tip, and any employer interference is illegal.
Additionally, no employer is allowed to deduct the tips from an employee’s wage. This applies to any situation where an employer may attempt to subtract an employee’s tips from their regular wage and only pay the difference. For example, if any employee makes $14.00 an hour as a bartender and earns a $5.00 tip, their employer may not subtract the $5 from their regular wage and only pay them $9 for the hour.
Violations of Tipped Employee’s Rights
Any employee or company who violates the rights listed in California Labor Code section 351 is subject to a misdemeanor. The charges for a misdemeanor crime in California are up to sixty days in county jail and/or a fine up to $1,000.
An employee who wishes to file a tip wage violation has the right to do so. They can file a wage claim with the Division of Labor of Standards Enforcement or their local Labor Commissioner’s Office. Upon receiving the complaint of a tip violation, the Labor Commissioner’s Office will hold a hearing regarding its legality. The outcome of the hearing will determine whether the employee will receive compensation for lost tips and/or whether the employer will face legal consequences.
Additionally, an employee has the option to file a wage lawsuit against their employer if they feel it is applicable. Although an employee is not eligible to sue their employer under California Labor Code 351, there are other legal violations they are entitled to sue on. Here are the legal violations in which an employee has the right to sue either their employer or company:
- Conversion
An employee is entitled to sue their employer for conversion if they believe their employer has been unlawfully stealing their tips. - Unfair business practices
An employee has the right to sue their employer under California’s Unfair Competition Law if they believe that the method in which their employer has handled their tips falls in the form of an unfair business practice. - Breach of implied contract
An employee can sue their employer if they believe that their employer broke an agreement with its customers in ensuring that all of their tips go to the appropriate employees.
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If you or a loved one would like to know more about tipped employee rights, get your free consultation with one of our California Employment Attorneys today!