The Tipping Game in California

Minimum wage is fairly standard and the laws surrounding it are generally laid out and easy to follow.  It’s a whole new ballgame for employers when they have tipped workers to consider.  If you employ servers, bartenders, busboys, bellhops, employees in the personal service industry or any other employee who routinely receives more than $30 monthly in gratuities this article is for you.  Employees who routinely receive more than $30 a month in tips or gratuities are considered a “tipped worker” and the laws regarding tipped employees is somewhat different than those for non-tipped employees.

California Tipped Employee

Minimum Wage for Tipped Employees

You might be under the impression that the minimum wage for tipped employees is lower than that of non-tipped employees, but if you employ tipped workers in California you would be wrong.  California is one of the few states that do not follow the Fair Labor Standard Act’s (“FLSA”) “Tip Credit”.  What is the tip credit? The tip credit allows employers to use a percentage of an employee’s tips as a credit towards the required minimum wage hourly rate, which as of May 1, 2017 is $9.80 an hour. However, California does not abide by the FLSA tip credit, therefore, the California tipped employee minimum wage is $10.50 an hour unless your specific city has set a higher rate.

Tip Pooling

What is tip pooling? Tip pooling is where an employer requires employees to pool or combine their tips into one collective and then distribute them amongst a group of employees. California law does allow for tip pooling and provides specific guidelines for the creation of the tip pool. There are two main rules regarding the creation of tip pooling. First, the employees that are included in the tip pool must be a part of the “chain of service” being provided. In other words the waiter and busboy would be part of the “chain of service” but the cashier or hostess would not. Secondly, the collected gratuities must be disbursed in a fair manner. The California Department of Labor Standards Enforcement (DLSE) provides the following guidelines to a fair disbursement of tips: 80% shall go to the initial line or the waiter staff, 15% shall go to the followers or the busboys, and the remaining 5% shall go to the bartenders.  Another key part of the tip pooling guidelines is that supervisors or managers may not be included in the tip pool even if they have participated or worked in any capacity within the chain of service.

Determining the Employee’s Tip?

This may sound easier than it actually is, especially in the day and age of the credit card.  If you work in an all cash business, tips are easy to figure out, the employees get the amount the customer leaves over and above the price of the service.  However, if your business accepts credit card payments you are probably all too aware of the service charges imposed by the credit processing companies.  Some states allow an employer to deduct a proportionate amount of the processing fees from the employee’s gratuities. Again, California does not allow this process.  Regardless of whether you are a California cash business or not, you must take processing fees into consideration when determining an employee’s gratuity.

California does allow employers to disburse at their discretion any mandatory service charge collected.  Should your company impose a mandatory service charge for a specific reason, that service charge is not considered a tip, and you may choose to provide your employees with a percentage and keep a percentage of this business, it is completely up to the employer.

Tipping and the laws surrounding tipped employees may seem a bit fuzzy or convoluted at first inspection but once you have a standard protocol in place you will find the laws easy to follow.  If your business needs guidance on these or any other area of employment law, Goldbach Law Group provides a full array of employment counseling and guidance for small businesses.

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How Mental Health Issues Cost Employer’s

In today’s increasingly busy society your employee’s mental health should be a high priority.  Studies have shown that one out of four employees will experience some form of mental health issues throughout the year, with the most common mental health issues being stress or stress related.  As May was a Mental Health Awareness Month, I thought I would take the opportunity to discuss ways to combat mental health issues in the workplace and in turn create a more productive and efficient small business.

California mental health Issues

While not a largely talked about topic mental health is a big issue in the workplace.  A recent study done by the Center for Prevention and Health Services estimated that mental health issues in the workplace cost employers in excess of $75 billion yearly. This number is shocking but if you think about the various ways a business is affected by employees suffering from mental health issues it is very understandable.

Employees experiencing mental health issues are less productive and may be a drain on the workplace culture making other employees less productive as well.  Secondly, employees dealing with mental health issues may require significant time off and increase costs with the need to find outsourced labor.  Further, employees with long standing mental health issues can lead to an increase in healthcare expenses.

Stress in the Workplace

While stress is technically not a diagnosable mental condition, it can lead to a number of other larger mental and physical issues such as depression or anxiety which can lead to lengthy disability claims and long term workplace absences. As an employer you have an ethical responsibility to support your employees and provide a safe workplace.

De-stressing the Workplace

Small businesses should always be on the lookout for ways to increase productivity and one such way is by reducing mental health issues amongst your staff.  As an employer you can significantly decrease the likelihood of having employees with mental health issues by promoting a healthy workplace.  Here are a number of ways to do that:

  • Training managers and supervisors on ways to detect when employees are experiencing mental health issues.
  • Providing an open business environment where employees feel comfortable coming to management with their concerns.
  • Providing employees with access to programs that help reduce stress and assist with ongoing mental health issues.
  • Including your employees in some decision making processes.
  • Creating a healthy work environment where employees have access to breaks, time off, and other various benefits, such as access to a designated rest area.

Legalities of Stress in the Workplace

California Labor Code details the statutory requirements for mental health related workers compensation claims.  In particular it indicates that in order for a mental health injury to be a valid claim it must be a formally diagnosed mental health disorder that is predominantly or at least 51% caused by the employee’s job or work environment.

Workers compensation claims aside, promoting good mental health in the workplace can not only reduce the likelihood of employees suffering from mental health issues it can lead to increased productivity, happy and healthy employees and an increase in the longevity of staff.

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