Tips are wages and they belong to the employees, not the employer. Tips must be paid to employees in a timely manner. For instance, if a customer leaves a credit card tip, then the tip money must be paid to the employee no later than the next regular payday following the day the customer made the credit card payment. The employer must pay the employee the full amount of the tip and is not allowed to deduct any credit card processing fees from the employee’s tip. A restaurant employer may require its food servers to share a potion of their tips with busboys and bartenders. Tip money is not used in the calculation of the “regular rate of pay.” Similarly, tip money cannot be used to go towards an employee’s minimum wage. California law requires employees to receive at least the minimum wage in addition to the tip money left by the customers. Tip pooling is allowed in the State of California, so long as the distribution of the tip money is fair and reasonable. However, an employer’s management and/or owners may not participate in a tip pool.
