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Attention business owners: It’s illegal to take tips given to employees

July 9, 2014
A waiter picks up a tip left at a table in a Koreatown restaurant.

A waiter picks up a tip left at a table in a Koreatown restaurant.

Business owners and managers: You do realize taking tips given to your employees is illegal, right?

It’s a violation of California labor laws and can lead to nasty lawsuits.

A 45-year-old man identified only as Kim has worked at a Koreatown restaurant for two years. Kim said he’s on the hunt for a new job after witnessing the owner slip tips from tables into his own pockets.

“I work on minimum wage and am upset at having my tips taken away from me,” Kim said. “I was going to report him, but people around me said it would be better to just move to another restaurant. I’m thinking of quitting as soon as I find another job.”

Restaurants aren’t the only places tips are disappearing. Park, a 33-year-old hairstylist, said the owner of her salon takes customers’ tips at every chance.

“A few other hairstylists and I are planning on raising the issue soon,” Park said. “After contacting a lawyer’s office, I learned that this behavior is a clear violation of the law.”

She’s right — according to California Labor Code Law No. 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 … Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.”

Most Koreatown restaurants practice “tip pooling,” in which waiters and waitresses are required to share their tips with non-tipped employees making minimum wage. California allows the controversial practice as long as it does not extend to employers or managers and as long as tips are divided fairly.

“Business owners absolutely cannot touch tips unless it is put into their hand directly by a customer,” said Kim Hae-won, an attorney specializing in labor laws. “Even if the business practices tip pooling, owners, managers and supervisors cannot take tips.”

Tips given to employees via credit cards also fall under the same law, although large-party gratuities automatically taken by restaurants do not.

“Conflict between owners and employees over tips are ongoing and have caused the food industry a headache,” said Daniel Oh, owner of Koreatown’s Western Soondae. “We’ve been calculating tip amounts from both cash and credit cards and distributing them fairly to employees according to their work hours.”

2 Comments

  1. Gary R

    July 15, 2014 at 1:08 PM

    It makes no sense at all that it is legal for an employer to require that an employee give part of his or her tips to another employee when it is illegal for an employer to take an employee’s tips. An employer who requires his employee to give up part of his tips to another employee is taking the employee’s tips. If I was to force you to give part of the money in your billfold to someone else, It would be quite evident that I am taking your money. I am simply using force to take your money from you.

    And what is a fair amount? How can any amount be fair when the law says 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. Any part taken by an employer would be not only unfair but prohibited by state law.

    I just don’t see how there can be a fair amount employers may take from their employee when the law says it’s illegal to take even a part of the gratuities paid, given or left for an employee.

    Reply

  2. gratuity

    October 26, 2017 at 5:14 PM

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