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What’s the California law on tip credits?

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in Compensation and Benefits

Q. We are a national restaurant chain that pays our waiters and waitresses less than the minimum wage because they earn tips. We are planning to open our first restaurant in California. Can we continue to pay our tipped employees less than the minimum wage?

A. No. Federal regulations permit employers to pay tipped employees less than the minimum wage. However, in California an employer cannot use an employee’s tips as a credit toward its obligation to pay the minimum wage.

Section 351 of the California Labor Code requires employers to pay employees at least the minimum wage, plus any tips left for them by patrons of the employer’s business.

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