Dec 4

Tips About Tip-Pooling

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Sometimes, the tip pool can include someone you least expect.

Sometimes, a tip pool can include someone you least expect.

Everyone knows servers must heavily rely on tips to get by. For that reason, California’s tip law deems a tip an employee’s “sole property.”1 Thus, an employer and his “agent” may not collect, take, or receive any part of a tip, deduct any part of a tip from an employee’s paycheck, or – unlike federal law – require an employee to credit any part of a tip as wages. 2 The law reflects the state’s fundamental public policy of preventing an employer from tricking patrons into thinking they are tipping servers, when, in reality, they are tipping the employer.3 Unfortunately, an employer may force employees to share their tips with non-tipped employees and even minor supervisors.

Everyone in the “Chain of Service” Can Jump in the Tip Pool

The practice of mandatory tip-pooling, though seemingly in conflict with the tip law’s declaration that every tip is a tipped employee’s “sole property,” long predates the tip law.4 Thus, an employer may require an employee to share a tip that a patron has directly paid, given, or left her – better known as an “individual,” or “direct,” tip – even if the patron expressly intended to tip that particular employee and nobody else.5 The rationale for tip-pooling is that it allows an employer to manage disputes between employees over the ownership of a tip and minimizes friction between tipped and non-tipped employees.6

Historically, a restaurant tip pool could include only those who provided “direct table service” to the tipper. The table service/non-table service distinction lead to arbitrary results. Restaurants could require servers to tip out busboys, but not cooks and bartenders, who contributed equally, if not more, to the patron’s dining experience than busboys did. For that reason, courts broadened the tip pool to allow restaurants to include anyone in the “chain of service.”7 Thus, a restaurant can force a server to share her tips with bartenders,8 cooks,9 and even dishwashers.10 Presumably, an employer could require a server to tip out a hostess or valet.

Can Minor Supervisors Also Jump in the Tip Pool?

Even if an employer or his “agent” is in the “chain of service” or even “direct table service,” they may not participate in the tip pool.11 The tip law defines an “agent” as “every person other than the employer” who has the authority to (1) “hire or discharge” an employee or (2) “supervise, direct, or control” an employee’s acts.12 Courts have split hairs over the second definition of “agent.” In Jameson v. Five Feet Restaurant, Inc., 107 Cal.App.4th 138 (2003), the Court of Appeal expansively interpreted “agent” to include an employee who spends any amount of time, however little, performing supervisory functions.

More recently, the Court of Appeal signaled that a supervisor is not necessarily an agent. In Avidor v. Sutter’s Place, 212 Cal.App.4th 1439 (2013), casino card dealers made between $750 and $1,500 per week in tips. The casino required the dealers to drop a fixed amount of their tips (between $2.50 and $5.00) per hour into a tip pool that included the surveillance director, housekeeping supervisor, services manager, various other non-dealer employees. The dealers sued the casino to recover the tips they had dropped into the tip pool. The dealers argued that the non-dealer employees, being supervisors, were “agents” and therefore could not participate in the tip pool.

The trial court rejected the dealers’ argument and ruled in favor of the casino. The dealers appealed, but in a 3-0 decision, the Court of Appeal affirmed. The Court explained, without citation to authority, that an employee who “merely ‘direct[s] another employee in the performance of some of his or her duties’” is not an “agent.” The Court suggested in dicta that the non-dealer employees’ possible status as agents was immaterial because the casino had fixed the amount the dealers had to drop into the tip pool. Thus, the dealers still would have lost their tips, regardless of who participated in the tip pool.

  1. Lab. Code §351. 

  2. Lab. Code §356. 

  3. Chau v. Starbucks Corp., 174 Cal.App.4th 688, 705 (2009)(fundamental public policy); Lab. Code §356 (providing that purpose of tip law is to prevent fraud on tipping public). 

  4. Leighton v. Old Heidelberg, Ltd., 219 Cal.App.3d 1062, 1067 (1990). 

  5. Avidor v. Sutter’s Place, Inc., 212 Cal.App.4th 1439, 1448-1449 (2013). 

  6. Budrow v. Dave & Buster’s California, Inc., 171 Cal.App.4th 875, 883 (2009). 

  7. Etheridge v. Reins Int’l California, Inc., 172 Cal.App.4th 908, 923 (2009). 

  8. Budrow, 171 Cal.App.4th at 884. 

  9. Etheridge, 172 Cal.App.4th at 923. 

  10. Id

  11. Lab. Code §351. 

  12. Lab. Code §350(e). 

Ben Rothman, Esq.

Ben Rothman is a Los Angeles-based attorney practicing in the areas of personal injury, employment, and workers' compensation on a "no recovery, no fee" basis. Call him at (424) 465-2948 for a free, no-obligation consultation.