I worked in the food service industry off and on for many years, from my teenage years through my thirties. In my first job, I started as a busboy, became a cook, and eventually was promoted to manager. Back then, in my experience, only the wait staff got tips. I didn’t get tips, because in the positions I held I did not serve customers directly.
However, in more recent years, it has become increasing common for employers to implement various tip-pooling schemes by which not only workers with direct contact with customers reap gratuities, but, instead, the tips are “pooled” and distributed to other workers, such as cooks, bussers and bartenders. The news that came out this week about lawsuits against Café Gratitude based upon allegations of illegal labor practices, including its tip-pooling scheme, highlights the importance of understanding current California law on tip-pooling.
First, Café Gratitude appears to have implemented its tip-pooling scheme after obtaining its employees’ approval by some sort of vote. To certain commentators on web news sites, voting should be enough to stop a lawsuit: “You were given an opportunity to vote on this policy, and knew that your colleagues ultimately voted to implement a policy that acknowledges and rewards all the contributors of excellent service, from the kitchen to the table. When you made the decision to sign this tip policy and to work for Café Gratitude, you gave your word to support the community’s decision.” Fortunately or unfortunately, we do not work in little pods of isolated democracies, but in a state called California, in which labor laws are enacted by elected officials. Voting in the workplace is irrelevant. Indeed, some statutes governing wage and hour laws specifically state that the law cannot be waived by employee consent. Café Gratitude should have known better. It is the employer's responsibility to comply with labor laws.
Second, tip-pooling is legal in California, but only if the pooled tips are distributed to employees in the direct chain of service to the customer, not to agents of the employer such as management personnel, or the owners themselves. Including non-service employees or owners in the tip pool is an illegal “taking” under California Labor Code section 351. According to the allegations against Café Gratitude, that is what its tip-pooling scheme allowed.
Cal. Labor Code section 351 states: “No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” (Emphasis added.)
It is not always clear which workers can be lawfully included in a tip-pooling scheme. It is difficult, in part, because the Labor Code statute (section 351) refers to the patron’s intention. In a recent case against Starbucks, Starbucks was sued for including its “shift supervisors” in the tip pool. Plaintiff barista’s argued that the shift supervisors were agents of the employer because they held supervisory positions. Starbucks won this case on appeal, because the court found that the shift supervisors, though they were supervisors, had limited supervisory roles and also worked “behind the counter” serving drinks, thus the court determined that customers intended the tips to go them as well as the regular baristas. (See Chau v. Starbucks.)
But the Starbucks case involved tips being put in a collective tip box. What of a restaurant where a tip is left at the table to be collected by the particular wait staff that served you? There is a long line of California cases that has concluded that tip-pooling such a gratuity and requiring the wait staff to share that tip with bussers, cooks, dishwashers, and bartenders is permissible.
The upshot here is that a tip-pooling policy needs to be carefully crafted (and implemented) to meet the requirements of section 351 and the relevant, and evolving, case law on the subject.
Looking back on my days as a busboy, I would have been grateful to receive some share of the tips!
