No-tipping policies at restaurants may be gaining traction, but Brian Van Vleck says in California, they can trigger liability to employees. It’s the state’s settled law that employers have the ability to implement a “no tipping” policy and a “mandatory service charge,” which it doesn’t need to share with its employees. But the labor code says if a tip is included in part of the transaction, it is the sole property of the employee, explains Van Vleck.
“If an employer advertises to customers that a ‘tip is included’ in the price of a service, it implies that the employer is adding a tip to the price and passing it along to the employee,” he explains. “If the employer doesn’t actually pay such an additional amount to the employee, it may be liable for converting this advertised ‘tip.’”
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