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A Comprehensive Guide to Tip Pooling in the California Workplace

December 31, 2023

In the California workplace, tip pooling is a common practice in which employees who receive
tips share those tips with other employees who may not receive tips directly from customers.
Tip pooling can be a beneficial practice for employees and employers alike, but it is subject to
certain legal requirements and restrictions. In this comprehensive guide, we’ll outline the laws,
rights, and best practices related to tip pooling in the California workplace.
What is Tip Pooling?
Tip pooling is a practice in which employees who receive tips share those tips with other
employees who may not receive tips directly from customers. Tip pooling is typically used in the
service industry, such as restaurants, bars, and hotels, where employees who interact with
customers directly may receive tips, while employees who do not interact with customers
directly may not.
For example, a server at a restaurant may receive tips directly from customers, while a
dishwasher or busboy may not receive tips directly from customers. In a tip pooling
arrangement, the server may be required to contribute a portion of their tips to the tip pool,
which is then shared with the dishwasher and busboy.
Tip pooling can be a beneficial practice for employees and employers. For employees, tip
pooling can result in a more equitable distribution of tips among employees who may not
receive tips directly from customers. For employers, tip pooling can help to motivate and
reward employees who do not receive tips directly from customers and may result in improved
customer service and satisfaction.
Laws Related to Tip Pooling in California
Tip pooling is generally allowed in California as long as certain requirements are met. Under the
California Labor Code, tip pooling is only allowed if the employees who participate in the tip
pool are “customarily and regularly” tipped. This means that employees who do not typically
receive tips directly from customers, such as managers or supervisors, are generally not allowed
to participate in a tip pool.
In addition to the requirement that only “customarily and regularly” tipped employees may
participate in a tip pool, there are a few other requirements that must be met in order for tip
pooling to be allowed in California:
The tip pool must be voluntary: Employees must be able to choose whether or not to
participate in the tip pool.

The tip pool must be reasonable: The amount of tips that are contributed to the tip pool must
be reasonable in relation to the services provided.
The tip pool must be fair: Employees must receive a fair and reasonable share of the tips based
on the amount of time they worked and the level of service they provided to customers.
In addition to the requirements outlined in the California Labor Code, the Fair Labor Standards
Act (FLSA) also has requirements related to tip pooling. Under the FLSA, tip pooling is generally
allowed as long as the pool is limited to “customarily and regularly” tipped employees, and the
employer does not take a tip credit (more on this later).
Rights of Employees Subject to a Tip Pooling Policy
If you are an employee in California and you are subject to a tip pooling policy, it’s important to
understand your rights as an employee. As mentioned above, you have the right to keep any
tips that you receive directly from customers, and you are not required to contribute those tips
to a tip pool. However, if you are part of a tip pool, you are entitled to a fair and reasonable
share of the tips based on the amount of time you worked and the level of service you provided
to customers.
If you believe that your rights related to tip pooling have been violated, you may have legal
remedies available to you. For example, if your tips are being shared with owners, managers, or
supervisors, you may be able to file a claim for unpaid wages with the California Labor
Commissioner. If your employer has violated your rights related to tip pooling in other ways,
such as requiring you to contribute an unreasonable amount of tips to the tip pool or failing to
pay you a fair and reasonable share of the tip pool, you may be able to file a claim for wage and
hour violations with the California Labor Commissioner.
You are entitled to the full amount of the tip that is stated on the credit card. This means that
an employer cannot deduct any amount of credit card fees related to the tip charged on the
credit card. See Labor Code section 351.
If you believe that your rights related to tip pooling have been violated, it’s important to seek
legal advice as soon as possible. An experienced employment lawyer can review your case and
advise you on the best course of action.
Understanding Your Employer’s Tip Pooling Policy
If you are an employee in California and you are subject to a tip pooling policy, it’s important to
understand your employer’s tip pooling policy. You should ask your employer to explain the
policy to you, including how it is applied, how it is calculated, and any exceptions or exclusions
that may apply. You should also ask for a copy of the policy in writing.
Your employer’s tip pooling policy should be clearly communicated to all employees who are
subject to the policy, and it should be in compliance with the requirements outlined in the

California Labor Code. If you have any questions or concerns about your employer’s tip pooling
policy, you should raise those questions with your employer or seek legal advice.
Recording Your Tips Accurately
If you are an employee in California and you are subject to a tip pooling policy, it’s important to
record your tips accurately. This means that you should keep track of the tips you receive
directly from customers, as well as any tips you receive from the tip pool. You should also
record any tips you receive on holidays, weekends, or other premium days.
Accurate record-keeping is important for a few reasons. First, it can help you ensure that you
are being paid correctly. If you are not keeping track of your tips, you may not be aware if you
are being underpaid or if there are errors in your pay stubs. Second, accurate record-keeping
can be helpful if you need to file a claim for unpaid overtime or other wage and hour violations.
If you are able to provide documentation of your tips, it can help support your claim.
Reviewing Your Pay Stubs
If you are subject to a tip pooling policy, it’s important to review your pay stubs regularly to
ensure that you are being paid correctly. You should pay close attention to the amount of tips
you are receiving and the amount you are contributing to the tip pool, as well as any deductions
that may be made from your tips. If you believe that you are not being paid correctly, you
should speak with your employer or seek legal advice.
It’s also important to note that your employer is required to maintain accurate records of your
tips and tip pool contributions. If you are unable to obtain accurate records from your
employer, you may be able to file a claim for wage and hour violations with the California Labor
Commissioner.
Consulting with an Employment Lawyer
If you are an employee in California and you have questions or concerns about tip pooling,
overtime pay, or other employment issues, it’s important to seek legal advice as soon as
possible. An experienced employment lawyer can review your case and advise you on the best
course of action.
An employment lawyer can help you understand your rights as an employee, advise you on the
best course of action if you believe that your rights have been violated, and represent you in
court if necessary. Don’t hesitate to seek legal advice if you have any questions or concerns
about tip pooling in the California workplace.

Tip pooling can be a beneficial practice for employees and employers in the California
workplace, but it is subject to certain legal requirements and restrictions. By understanding the
laws related to tip pooling, knowing your rights as an employee, understanding your employer’s
tip pooling policy, recording your tips accurately, and reviewing your pay stubs regularly, you
can navigate tip pooling in the California workplace and ensure that you are being paid fairly.
Don’t hesitate to seek legal advice if you have any questions or concerns about tip pooling in
the California workplace.

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