Q. Some of our employees receive tips from customers. Do we need to include those tips when we calculate these employees’ rate of pay for purposes of paying them overtime?
A. No. Section 350 of the California Labor Code defines a gratuity, in part, as “any tip, gratuity, money, or part thereof 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 the business for services rendered or for goods, food, drink, or articles sold or served to the patron.”
Since tips or gratuities are left voluntarily for employees by customers and are not being provided by you, the employer, they are not considered part of the employee’s regular rate of pay when calculating overtime.