Gayle Eskridge Law

Under the California Labor Code, an employer or its agent is prohibited from collecting, taking, or receiving a patron’s gratuity. In a recent California appellate court ruling, the court upheld a jury verdict that found that a restaurant floor manager illegally took from a server $1,075 in tips.

Who is an agent of the employer? In the recently decided case, the court found that the restaurant floor manager was an agent of the employer. California law defines an agent as “any person (other than the employer) who has authority to hire or discharge an employee or to supervise, direct, or control the acts of employees.” So what types of factors might the court look at to determine whether someone, such as a floor manager, is an agent of the employer? A court might look at the following:

If any, or all, of these apply to one of the floor managers, a court may find that the floor manager is an agent of the employer.

What you should do: To avoid facing tipping problems, employers should keep in mind the following wage-and-hour rules:

1. Know who is in the “tip pool.” Although California law permits tip-pooling, your management team must not share in the pool. The tip-pooling policy should follow these requirements: 1) the server can be required to share tips only with other employees (i.e., not managers) involved in direct service to the guests; and 2) the server generally can’t be required to share more than 15% of their tips with the busboy and 5% each with the bartender, wine steward, and nonmanagerial host.

2. Don’t use “tip credits.” California’s wage-and-hour rules prohibit employers from paying less than minimum wage to a tipped employer by including the tips the employee receives in the calculation of the employee’s wage.

3. Pay your employee credit card tips. If a customer tips with a credit card, you must pay the employee the full gratuity expressed on the charge slip. This tip must be paid no later than the next regular payday after the customer authorizes the credit card payment. Also, don’t deduct any processing fees you might have to pay the bank or credit card issuer from the employee’s tip.

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