Can Managers Take Tips in California? Laws, Tip Pools & SB 648

Can managers take tips in California, and what does Labor Code Section 351 say about tip pooling and supervisors? Find out how SB 648 strengthens enforcement against tip theft, helps workers recover withheld gratuities, and increases penalties for violations.

By Brad Nakase, Attorney

Email | Call (800) 484-4610

Have a quick question? We answered nearly 2000 FAQs.

Table of Contents

1. Introduction

2. Law Regarding Tips and Managers

3. Is Your Employer Allowed to Accept Your Tips?

4. Various Perspectives on Tip Distribution

5. What Are the Labor Commissioner’s New Enforcement Powers Regarding Tip Violations?

6. What This Signifies for Employees

7. The Significance of Error-Free Tip Enforcement

8. Takeaways

Introduction

Leaving a gratuity is a common practice in California, especially in the service sector. Many employees in California, whether in a restaurant, nail salon, or ridesharing service, rely significantly on tips to compensate for the absence of a decent salary in a state with extraordinarily high living expenses. Tipping regulations might be difficult at times. One of the most significant queries our California employment attorneys receive on this topic is whether managers and/or employers are permitted to keep any share of tips from workers.

Law Regarding Tips and Managers

Labor rules in California are unambiguous on this matter. According to California Labor Code Section 351, neither an employer nor an agent may collect, take, or accept any tip or portion of a gratuity that is offered, given to, or placed for a worker by a customer; deduct any sum from wages owed to an employee for the purpose of a gratuity; or demand an employee to credit the sum or portion of a tip against or as part of the wages owed to the individual from the employer.

That means the state has directly answered the question “Can managers take tips in California?” with a firm “no.”

To put it another way, tips are regarded as the sole ownership of the employees who receive them in exchange for their services and the caliber of those services. The law mandates that if an employer, like a restaurant, permits customers to pay tips using credit cards, the employer must reimburse the employee for the entire amount stated on the credit card receipt, without deducting any fees for processing credit card payments or other costs that the card issuer may impose on the employer.

Tips paid with credit cards must be paid to employees by the following normal paycheck, following the authorization of the credit card payment.

Is Your Employer Allowed to Accept Your Tips?

The practice referred to as “tip-pooling” takes place in many organizations, particularly restaurants, when the company pools worker tips. After that, they distribute the funds to workers as they deem fit. California courts have determined that tip-pooling is acceptable as long as it is carried out in a “fair & reasonable” way, despite the fact that California Labor Code (Section 351) seems to forbid the practice in question.

But it’s essential to keep in mind that your manager or employer is not allowed to keep any portion of your tips. It is forbidden for managers or supervisors to receive any portion of the funds from the tip pool, even if your firm has established one. This is amply demonstrated in Section 351.

If an employee ever wonders again, “Can managers take tips in California?” Section 351 makes it clear.

Various Perspectives on Tip Distribution

However, courts’ interpretations of who is qualified to take part in the tip pool have varied throughout time. In a restaurant, this can make people wonder if other staff members, such as bus guys, chefs, cleaners, or dishwashers, can make use of the tip pool. In previous years, courts have ruled that workers in the “broader line of service”—such as waiters—can get gratuities even if they have no direct role in providing the service to customers.

For instance, according to a different court ruling, bartenders are allowed to take part in tip pools regardless of whether they don’t actually deliver beverages to customers’ tables.

But in a more current instance in 2016, an appeals court decided that since consumers don’t usually tip cooks or dishwashers, tips shouldn’t be shared with them. Furthermore, federal labor regulations explicitly state that supervisors and managers are permitted to keep gratuities they receive directly from clients based on the services they “directly and entirely” supplied, but they are not permitted to collect tips received by other employees.

Therefore, the answer to the question of whether employers are eligible to take part in a tip pool is frequently determined on an individual basis. The purpose of the person who is leaving a gratuity is a crucial factor that courts consider. Whether your boss, supervisor, or employer broke any tipping regulations can be ascertained with the assistance of a skilled California wage & hour lawyer.

It’s also necessary to remember that, in contrast to other states that permit employers to compensate their workers less than the minimum wage when their total tips and hourly salaries equal or surpass the minimum wage rate, California forbids employers from deducting employee tips from the minimum wage responsibility.

The answer to “Can managers take tips in California?” remains unchanged. Managers cannot take pooled tips under any interpretation.

What Are the Labor Commissioner’s New Enforcement Powers Regarding Tip Violations?

California’s new law, SB 648, gives the Labor Commissioner much more power to enforce gratuity-related wage theft safeguards as of January 1, 2026. In the past, tip-related infractions could only be resolved through drawn-out legal proceedings. Tipped employees now have easier access to assistance:

Citation strength: Under Labor Code Section 351, the Labor Commissioner has the authority to look into, issue an administrative penalty, or bring a civil lawsuit for tips that employers have illegally collected or withheld.
The same steps as citations for minimum wage: Tip infractions now go through the same procedure as minimum wage violations, which includes:

Written notification detailing the statute and infraction
A window of fifteen business days for requesting an informal hearing
A ruling within thirty days of the request for a hearing
Results released within fifteen days of the ruling
A 45-day limit for submitting a superior court writ of mandate

Available civil penalties: The Private Attorneys General Act (PAGA) allows the Labor Commissioner to pursue civil fines. This is in addition to collecting withheld tips.
Quicker enforcement Tip violations can be combined with additional wage claims through the citation procedure. It is quicker and less expensive than going to court.

Stronger enforcement also ensures that the rules around “Can managers take tips in California?” are upheld consistently.

What This Signifies for Employees

Companies that withhold or steal tips are now subject to administrative accountability.
Citation is able to settle smaller cases that were previously too expensive to prosecute.
The Labor Commissioner’s authority now provides tipped employees with easier access to relief.

The Significance of Error-Free Tip Enforcement

Employees must continue to get tips: Employers are not allowed to compel gratuities to be divided with management, charge credit card costs, or apply tips toward the minimum wage.
Timely payment is necessary: After authorization, tips made with a credit card have to be paid by the following normal payday.
Criminal penalties: Under Labor Code §354, deliberate infractions of tip laws may result in criminal charges, fines of as much as $1,000, or jail time.

Takeaways

1. Prior to SB 648

Court litigation was required for tip-stealing.
Citation authority was limited to minimum wage and comparable infractions.
Enforcement required a lot of resources and was sluggish.
Recovering minor tip losses can often not be feasible.

2. Following January 1, 2026

Administrative citations may be issued by the Labor Commissioner.
Violations associated with tips are now included in citations.
Simplified, accelerated procedure for both minor and major claims.
At the government level, even small tip withholdings are enforced.

California law is designed to protect tipped workers. SB 648 has made enforcement faster, clearer, & more accessible. Whenever the question arises, “Can managers take tips in California?” the law gives the same unmistakable answer: no, they cannot.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment

Most recent blogs:

How Many Hours Can a Volunteer Work per Day in California? Laws, Limits, and Rights Explained

Find out how many hours volunteers can work per day in California under labor rules, protections, and scheduling limits. Compare volunteer and employee rights, including workers' compensation, harassment protections, discrimination safeguards, and key considerations for nonprofit and public organizations.

Show Up Pay California: Employee Rights for Being Sent Home Early or Given Short Shifts

Show up pay California explains employee rights to reporting time pay when sent home early or given short shifts. Review rules, exceptions, examples, and options for unpaid wages or retaliation claims if your employer ignores California reporting time laws.

Can Managers Take Tips in California? Laws, Tip Pools & SB 648

Can Owners Take Tips in California? A Complete Guide to State Tip Laws and Employee Rights

Find out when California business owners can share in tips, how tip pooling works, and minimum wage obligations. Get a breakdown of employee tip rights, illegal practices, service charges, penalties, and protection options for California workers.

Right to Disconnect Laws in California: AB 2751 for Employers and Employees

See how California's AB 2751 right to disconnect bill could reshape after-hours communication between employers and employees. Review potential effects on work-life balance, stress, productivity, and compliance planning as organizations anticipate possible enforcement.

Defamation California: Key Laws, Legal Defenses, and Damages Explained

Get an overview of California defamation law, including libel, slander, negligence standards, and the difference between public and private figures. Review key defenses, retraction rules, and available damages such as actual, compensatory, punitive, and emotional distress awards.

What Is a Level 1 Background Check and How It Differs from Level 2

See what a Level 1 background check covers and how it compares with a Level 2 screening for hiring. Get clear facts on definitions, state lookback limits, and how better screening supports safer workplaces and less fraud.

California Vacation Rollover Law: Employee Rights, Accrued Time, and Pay Rules

This article covers California vacation rollover rules, employee rights, accrued PTO, payout duties, and employer limits under state law. It explains how unused vacation counts as wages, when employers must pay it out, and options for unpaid wage claims.

SB 553 CA: New Workplace Violence Prevention Requirements for California Employers in 2025

Get a clear overview of California SB 553 workplace violence prevention rules and new obligations for employers starting in 2025. See what policies, training, recordkeeping, and enforcement changes SB 553 brings for injury prevention plans and compliance efforts.

Labor Code 226.7: California Meal and Rest Break Requirements and Employer Penalties

California Labor Code 226.7 explains meal and rest break rules for non-exempt employees and what employers must pay when breaks stop. See how missed breaks trigger premium pay, wage claims, penalties, and class actions for violations of California break requirements.

Building an Onboarding Packet That Welcomes and Retains Employees

Create an onboarding packet that welcomes new hires, sets clear expectations, and supports lasting engagement and retention. Include culture details, training tools, policies, and thoughtful gifts to lower turnover and reduce hiring costs.

Complete Guide to New Employee Paperwork: Required Forms and Documents for 2025

Make new employee paperwork for 2025 easier with a clear checklist of required hiring forms, documents, and compliance steps. Support HR and small business owners with practical tips for organizing onboarding packets, benefit elections, direct deposit, and policy acknowledgments.

Paid Time Off California: Laws, Accrual, Vacation Pay, and Employee Rights

Get clear guidance on paid time off in California, including PTO laws, sick leave rules, accrual, and vacation payout obligations. See how California PTO rules affect vacation requests, paid sick leave, layoffs, FTE status, cash-outs, and employee rights.

Can employers test for THC in California for hiring and workplace safety?

See when California employers may test workers for THC under AB 2188 without violating state protections for off-duty cannabis use. Review allowed testing methods, safety-sensitive role policies, and steps to align workplace drug testing programs with current impairment standards.

California notice to employee as to change in relationship: Requirements, legal steps, penalties, and sample notice

This article outlines California's notice rules for changes in employment status and the steps employers must follow. It also covers required details, timing, penalties, and includes a sample notice for practical use.

Bulletproof Documentation for Employee Records: Reduce Legal Risk and Stay Compliant

Keep employee documentation compliant and consistent to reduce legal risk and protect HR, managers, and staff. Use clear records, performance reviews, and PIPs to support decisions, track progress, and maintain workplace accountability.

Workplace Coaching: Benefits, Styles, and Methods to Improve Performance

Workplace coaching boosts employee performance, strengthens leadership, and encourages a culture of continuous growth within organizations. It refines communication, teamwork, and motivation while improving organizational effectiveness and satisfaction.

Essential Job Functions and the ADA: Insights from the Tenth Circuit Decision

ADA case from the Tenth Circuit upholds employer-defined job duties when safety and security risks are significant. It clarifies accommodation limits and supports consistent qualification standards without lowering business requirements.

California Pay Transparency Law SB 1162: Employer Rules, Compliance, and Penalties

California’s Pay Transparency Law SB 1162 requires employers to disclose pay ranges, maintain records, and submit annual wage reports. Non-compliance can result in financial penalties, lawsuits, and reputational damage for businesses across California.

Is Holiday Pay Double Time? Rules, Calculations, and Eligibility

Holiday pay rules, double time vs time-and-a-half, eligibility, and calculations, including Massachusetts and Rhode Island requirements. Guidance for employers and HR on policies, paid holidays, overtime, hourly and salaried staff, and payroll timing.

How to Apply for Temporary Disability in California: Eligibility, Payments, and Filing Steps

California employees may qualify for temporary disability payments through SDI when a certified medical condition stops them from working. Check eligibility, typical benefit amounts for 2025, and filing steps with the EDD to submit a timely, complete claim.

How Much Does Disability Pay for Obesity? ADA Recognition, Legal Cases, and Employer Implications

Obesity as a disability: ADA recognition, benefit eligibility, and real legal outcomes. Guidance for employers on policies, accommodations, and risk.

California Right to Work: State Status and Union Rules

California lacks a right-to-work law, so private employers may require union membership or dues as hiring conditions. See California’s rules, failed initiatives, and how they differ from right-to-work states.

Paid Parental Leave California: 2025 Updates, Employer Rules, and Employee Benefits

California’s 2025 Paid Parental Leave updates increase wage replacement and flexibility for workers bonding with a child or caring for family. Employers gain clarity on obligations, benefit coordination, and compliance under the revised Paid Family Leave and Disability Insurance programs.

CA Sick Pay Law 2025: Employer Requirements & Employee Rights

California’s 2025 sick leave law mandates at least 40 hours or five days of paid leave for eligible employees. Get clear rules on accrual, usage, carryover, anti-retaliation protections, and notice requirements for employers statewide.

California Rest Break Law 2025: Worker Rights, Violations, and Penalties

California Rest Break Law 2025 protects workers’ rights to duty-free meal and rest periods across all industries. Employers face penalties, premium pay, and legal actions for break violations under California Labor Codes 512 and 226.7.

CA Bereavement Leave 2025: AB 1949 Rules, Paid vs Unpaid Time, and Employer Compliance

California AB 1949 requires employers to provide up to five days of bereavement leave for eligible employees in 2025. It covers eligibility, paid versus unpaid time, documentation rules, employer obligations, and compliance risks for California businesses.

Pre-Employment Drug Test California: Laws, Requirements, and Employer Guidelines

California employers can require pre-employment drug testing under strict regulations, with exceptions for safety-sensitive roles and federal compliance. Workers have rights regarding confidentiality, fairness, and contesting results, and businesses must update policies for California’s new marijuana laws.

Does California Drug Test for Weed? AB 2188 Employment Rules

California AB 2188 limits employer drug testing for non-psychoactive marijuana use and permits impairment and active THC testing. Beginning January 2024, most employees gain workplace protections, though safety-sensitive and federally regulated positions remain exempt.

Make Up Time in California: Rules, Overtime Exceptions, and Employee Rights

Make-up time in California lets non-exempt employees offset missed hours without losing pay under defined legal rules. This guide covers overtime exceptions, employee rights, and employer duties for make-up time requests under state labor laws.

See all blogs: Business | Corporate | Employment

Can Managers Take Tips in California? Laws, Tip Pools & SB 648

Introduction

Law Regarding Tips and Managers

Is Your Employer Allowed to Accept Your Tips?

Various Perspectives on Tip Distribution

What Are the Labor Commissioner’s New Enforcement Powers Regarding Tip Violations?

What This Signifies for Employees

The Significance of Error-Free Tip Enforcement

Takeaways

Free Consultation