Are Tip Pooling Arrangements Legal In California ?
In Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, a waitress brought a wrongful discharge action against her employer, alleging she was improperly fired for refusing to share her tips with the employer's busboys. (Id. at pp. 1064-1065.)
The trial court granted the employer's summary judgment motion.
On appeal, the waitress argued that the employer's policy requiring that she share a tip paid to her constituted a "'taking'" (id. at p. 1068), and thus violated section 351's mandate that an employer not "collect, take, or receive any gratuity ... paid, given to, or left for an employee ..." ( 351).
The Leighton court rejected this argument for several reasons. First, it observed that a tip left for a waitress is not necessarily the waitress's "personal property" because a customer generally "does not really care who benefits from the gratuity he leaves, as long as the employer does not pocket it." (Leighton, supra, 219 Cal.App.3d at p. 1069.)
In this regard, the court noted that section 351 contains the phrase "'employee or employees'" (219 Cal.App.3d at p. 1069), and stated that "if more than one employee ... directly serve the table of a patron, the gratuity is left for the 'employees' within the meaning of section 351, and thereunder becomes their sole property as against the employer, to be equitably distributed between them" (id. at p. 1070).
The court thus concluded that a gratuity left for an employee actually belongs to all of the employees "who contributed to the service of that patron." (Id. at p. 1072, fn. 6.)
Thus, it does not violate the statute to require a sharing of tips among the service employees. (Id. at pp. 1068-1071.)
The Leighton court also discussed at length the public policy reasons supporting the legality of "tip pooling" arrangements. (Leighton, supra, 219 Cal.App.3d at pp. 1067, 1069-1071.)
The court stated the "ruling allows for a fair distribution of the gratuity to all those who earned it by contributing to the service afforded the patron, which sharing can only promote harmony among the employees, provide a peaceful environment in which to work and improve service to the public." (Id. at p. 1072, fn. 6.) the court further stated:
"An established tip-pooling policy encourages employees to give the best possible service... . to permit a waitress to determine what if anything she should share with the busboy ... can only lead to the surrender of the employer's prerogative to run his own business, dissension among employees, friction and quarreling, loss of good employees who cannot work in such an environment and a disruption in the kind of service the public has a right to expect. An employer must be able to exercise control over his business to ensure an equitable sharing of gratuities in order to promote peace and harmony among employees and provide good service to the public. to deprive a restauranteur of the ability to regulate and control the conduct of his own business, leaves the door open to anarchy in the restaurant industry." (Id. at p. 1071.)
The court additionally noted that "tip pooling has been around for a long time, as has section 351, and had the Legislature intended to prohibit or regulate such practice, it could have easily done so ... ." (Id. at p. 1067.)
Thirteen years later, a Court of Appeal followed Leighton, but held "tip pooling" violated section 351 if a waiter or waitress (a "server") is required to give a share of his or her tips to a manager who is an "agent" under section 350, subdivision (d)'s definition. (Jameson v. Five Feet Restaurant, Inc. (2003) 107 Cal.App.4th at p. 141.)