Division of Labor Standards Enforcement Skip to Main Content CA.gov LinkedIn Flickr Twitter YouTube Bluesky Instagram Press room Careers at DIR Índice en español Settings Translate Reset High contrast Increase font size Font increase Decrease font size Font decrease Dyslexic font Search Menu Custom Google Search Submit Close Labor Law Labor Commissioner's Office Judgment Enforcement Unit Wages Offices BOFE Minors Outreach Policy Databases Opinions Retaliation Training Postings Registration Services Public Works Electrician Certification Cal/OSHA - Safety & Health Cal/OSHA Home Consultation Enforcement Heat Illness Prevention Injury & Illness Prevention Program Partnership Programs Payment Options Permits, Registrations, Certifications, & Licenses Public Safety Required Notifications Worker Safety & Health in Wildfire Regions Workplace Postings Workers' Comp Workers' Comp Home A - Z Index Court calendar Disability Evaluation Unit District Offices Electronic Adjudication Management System Employer Information Independent Medical Review Information and Assistance Unit Injured Worker Medical Unit The Return-to-Work Supplement Program UEBTF & SIBTF Self Insurance Self Insurance Home About Employers Groups Third Party Administrators Joint Power Authorities Audits Forms Regulations Contact Apprenticeship Apprenticeship Home Apprenticeship Search Public Works Sponsors Overview Educators Employers Veterans Director's Office Director's Office Home Office of Legislative and Regulatory Affairs Office of the Director - Research Office of the Director - Decisions and Determinations Press Room Public Works Self Insurance Plans Labor Enforcement About DIR Boards Boards and Commissions Home Commission on Health and Safety and Workers' Compensation (CHSWC) Occupational Safety & Health Standards Board (OSHSB) Occupational Safety & Health Appeals Board (OSHAB) Workers' Compensation Appeals Board (WCAB) Fast Food Council Industrial Welfare Commission (IWC) Labor Commissioner's Office Tips and gratuities Printer friendly version      Labor Code Section 351 prohibits employers and their agents from sharing in or keeping any portion of a gratuity left for or given to one or more employees by a patron. Furthermore it is illegal for employers to make wage deductions from gratuities, or from using gratuities as direct or indirect credits against an employee's wages. The law further states that gratuities are the sole property of the employee or employees to whom they are given. "Gratuity" is defined in the Labor Code as a tip, gratuity, or money that has been paid or given to or left for an employee by a patron of a business over and above the actual amount due for services rendered or for goods, food, drink, articles sold or served to patrons. It also includes any amount paid directly by a patron to a dancer covered by IWC Wage Order 5 or 10. 1. Q. What is a tip? A. 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 employee, not to the employer. 2. Q. When a customer pays their bill with a credit card and the payment includes a tip, when can the employee expect to receive the money from the employer? A. Payment of a gratuity made by a patron using a credit card must be paid to the employee not later than the next regular payday following the date the patron authorized the credit card payment. Labor Code Section 351 3. Q. My employer is deducting the credit card processing fees from my tips. Is this legal? A. No. Labor Code Section 351 provides that the employer must pay the employee the full amount of the tip that is indicated on the credit card. The employer may not make any deduction for credit card processing fees or costs that are charged to the employer by the credit card company from gratuities paid to the employee. 4. Q. I work in a large restaurant as a waiter. My employer told me that I am required to share my tips with the busboy and the bartender. Am I obligated to do this? A. Yes. Labor Code Section 351 provides that "every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for". The section has been interpreted to allow for involuntary tip pooling so long as the tip pooling policy is not used to compensate the owner(s), manager(s), or supervisor(s) of the business, even if these individuals should provide direct table service to a patron or are in the chain of service to a patron. In addition, the policy must be fair and reasonable. Therefore, your employer can require that you share your tips with other staff that provide service in the restaurant so long as the employees that share in the tip pooling policy are employees to whom the tip was paid, given, or left for. In this regard, the courts have validated policies that distributed tips among employees who provide "direct table service" or who are in the "chain of service" provided that employee in the chain of service bears a relationship to the customers' overall experience. (updated March 2013). 5. Q. Are the tips I receive considered part of my "regular rate of pay" for overtime calculations? A. No. Since tips are voluntarily left for you by the customer of the business and are not being provided by the employer, they are not considered as part of your regular rate of pay when calculating overtime. 6. Q. Is a mandatory service charge considered to be the same as a tip or gratuity? A. “Service charges” may be considered a “gratuity” (tip) under Labor Code section 350 or not depending upon whether the specific facts show the charge is perceived and intended by a customer to be a gratuity. Courts have examined what customers thought the “service charge” was meant for, how the contracts between the parties described the charge, and the custom and practice in the industry. 7. Q. My employer deducts my tips from my paycheck. Is this legal? A. No. Your employer can neither take your tips (or any part of them), nor deduct money from your wages because of the tips you earn. Furthermore, your employer cannot credit your tips against the money the employer owes you. Labor Code Section 351 8. Q. My employer pays me less than the minimum wage because he includes my tips in my hourly pay. Is this legal? A. No. Unlike under federal regulations, in California an employer cannot use an employee's tips as a credit towards its obligation to pay the minimum wage. California law requires that employees receive the minimum wage plus any tips left for them by patrons of the employer's business. Labor Code Section 351 9. Q. What can I do if my employer credits my tips against my wages? A. You can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner's Office), or you can file a lawsuit in court against your employer in to recover the lost wages. Additionally, if your employer is crediting your tips against your wages, you are being underpaid your wages and thus, if you no longer work for this employer, you can make a claim for the waiting time penalty. 10. Q. What is the procedure that is followed after I file a wage claim?   A. After your claim is completed and filed with a local office of the Division of Labor Standards Enforcement (DLSE), it will be assigned to a Deputy Labor Commissioner who will determine, based upon the circumstances of the claim and information presented, how best to proceed. Initial action taken regarding the claim can be (i) referral to a conference, (ii) referral to a hearing, or (iii) dismissal of the claim. If the decision is to hold a conference, the parties will be notified by mail of the date, time and place of the conference. The purpose of the conference is to determine the validity of the claim, and to see if the claim can be resolved without a hearing. If the claim is not resolved at the conference, the next step usually is to refer the matter to a hearing or dismiss it for lack of evidence. At the hearing the parties and witnesses testify under oath, and the proceeding is recorded. After the hearing, an Order, Decision, or Award (ODA) of the Labor Commissioner will be served on the parties. Either party may appeal the ODA to a civil court of competent jurisdiction. The court will set the matter for trial, with each party having the opportunity to present evidence and witnesses. The evidence and testimony presented at the Labor Commissioner's hearing will not be the basis for the court's decision. In the case of an appeal by the employer, DLSE may represent an employee who is financially unable to afford counsel in the court proceeding. See the Policies and Procedures for Wage Claim Processing pamphlet for more detail on the wage claim procedure. 11. Q. What can I do if I prevail at the hearing and the employer doesn't pay or appeal the Order, Decision, or Award? A. When the Order, Decision, or Award (ODA) is in the employee's favor and there is no appeal, and the employer does not pay the ODA, the Division of Labor Standards Enforcement (DLSE) will have the court enter the ODA as a judgment against the employer. This judgment has the same force and effect as any other money judgment entered by the court. Consequently, you may either try to collect the judgment yourself or you can assign it to DLSE. 12. Q. What can I do if my employer retaliates against me because I objected to his crediting my tips against my wages? A. If your employer discriminates or retaliates against you in any manner whatsoever, for example, he discharges you because you object to his crediting your tips against your wages, or because you file a claim or threaten to file a claim with the Labor Commissioner, you can file a discrimination/retaliation complaint with the Labor Commissioner's Office. In the alternative, you can file a lawsuit in court against your employer. Labor Commissioner's Office Quick Links Judgment Enforcement Unit Outreach Bureau of Field Enforcement Wage Claim Adjudication Retaliation (RCI) Garment Work Registration Services Public Works Electrician Certification Unit New Labor Laws in California Frequently asked questions Legislative reports License and Registration Search Private Attorney General Act (PAGA) Resources Judgment Search Port Drayage Search Wage Claims Search Frequently asked questions License and Registration Search Legislative reports Publications Forms About the Labor Commissioner's Office About Us Locations, Contacts, and Hours of Operation Careers with LCO Now Hiring: LCO Chief Counsel You can pay your bill online. Need to make a payment? ( Haga un pago en línea. ) Back to top About DIR Who we are DIR Divisions, Boards & Commissions Tribal Consultation Contact DIR Work with Us Career Opportunities Licensing, registrations, certifications & permits Required Notifications Public Records Requests Learn More Acceso al idioma Frequently Asked Questions Federal Funding Disclosure Site Map Report a website issue Back to Top Conditions of Use Disclaimer Privacy Policy Nondiscrimination Notice Accessibility Site Help Contact DIR Flickr Twitter YouTube Copyright © State of California   Language Services at DIR Close modal The Department of Industrial Relations (DIR) recognizes the importance of communicating effectively with individuals, including those with limited English proficiency. DIR is making an effort to provide meaningful services for individuals that speak languages other than English. If you need to access information in a language other than English: Use the Google Translate function below: Note: This is a service provided by Google. Google Translate cannot translate all types of documents, and may not provide an exact translation. Contact DIR to request an interpreter over the phone: Office Name Topic Phone Numbers Cal/OSHA Workplace Safety and Health 833-579-0927 Labor Commissioner's Office Wages, breaks, retaliation and labor laws 833-526-4636 Division of Workers' Compensation Benefits for work-related injuries and illnesses 1-800-736-7401 Office of the Director Any other topic related to the Department of Industrial Relations 844-522-6734 Bilingual Services Complaint Process DIR is committed to providing equal access to all our programs and services for persons with limited English-speaking skills. If you are not satisfied with the bilingual services you have received with DIR, you may file a complaint by sending an email to DIO@dir.ca.gov. Close