What are the laws governing wages and tips for tipped employees?

In California, tipped employees are subject to laws that govern wages and tips. Under state law, employers must pay a minimum wage. As of 2021, that minimum wage is $13 per hour for employers with 25 or fewer employees, and $14 per hour for employers with 26 or more employees. Employers must also pay an additional amount for employees who earn tips. This additional amount is called a "tip credit" and is equal to the difference between the minimum wage and the federal tipped minimum wage of $2.13 per hour. For example, if a tipped employee is paid the federal tipped minimum wage of $2.13 per hour and is paid $10 in tips, the employer must pay an additional $11.87 to make up the difference between the federal tipped minimum wage and the state minimum wage. Tips that are received by the employee must also be treated according to California wage and hour laws. According to state law, employers are prohibited from taking any portion of a tip that is left for an employee, and employers must also inform employees of their right to keep their tips. Furthermore, employers cannot require tipped employees to pay or share tips with non-tipped employees. Finally, California law also requires employers to keep accurate records of tips that are received by employees. Employers must make sure that tipped employees are paid on time and that they receive their tips in full. Failing to comply with these laws can result in significant penalties.

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What are the laws governing wages and tips for tipped employees?

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