As an employer, you know that some of your staff gets tips. Much of the time, they do not receive cash tips. Customers will just leave a tip on a credit card.
It is important to know how to address these payments under California’s employment laws. Below are three questions and answers about tips given on credit cards.
1. Can you take out the processing fees?
No, you cannot deduct the credit card processing fees from the tips that were given to the employees. They are supposed to be given 100% of the tips. There are fees on credit card transactions, but you cannot use your employees to cover these fees.
2. How soon do you have to pay?
You do not necessarily have to pay the employees their tips on the night that they earn them. Instead, if the tips are given on a credit card, you just need to pay that out by the next regular payday. Many employees who are given cash tips will take them home the same day, but credit cards delay this process.
3. Do employees have to share tips?
Not always, but they may have to share with bartenders or busboys under Labor Code Section 351. Employers may also have the option to use a tip pool, which is where employees combine their tips and then split them up evenly. But it is important to know that you – as the employer – can never be included in this tip pool or ask the waitstaff to share their tips with you.
If you do find yourself in a dispute regarding tip policies or other wage and hour issues, make sure you know what legal steps to take.
