Tip Pooling

A “tip” is money a customer leaves for an employee over the amount due for the goods sold or services rendered. Tips belong to the employees not the employer. If tips are left on a credit card, the employee must be paid the tip during the next regular pay period. Employers may not charge the employee any credit card processing fees from the amount of the tip.

Under California law, employers cannot share in the tips or tip pools of their employees. A supervisor may take a fee or percentage of the employees’ tips under certain circumstances, depending on which rules apply.

Employers often dip into the tip pools of their employees. Illegal tip pooling is commonly practiced in restaurants, hotels, and casinos. Regulation of this misconduct is scarce. Employees generally can recover attorney fees in an action against an employer for illegally dipping into the tip pools of their employees.