The Court clarifies the tip pooling laws in California

On March 27, 2009, the second appellate district court of California published its decision on the tip pooling rules in the service industry which has been a subject of debate among litigants during the past several years. Etheridge v. Reins International. In that case, one of the issues was the interpretation of California Labor Code section 351 that states, among other things: ” No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” The Etheridge case focused on the interpretation of the term “employee” in the above code section.

Should only the waiters and bussers serving the table be entitled to the tips left on that table, or everyone in the “chain of service” of that table be included in the “tip pool?”

The court went with the latter interpretation, supporting its holding with compelling logic. The court stated that a patron tips on all of the services received, not simply the service provided by the employee the customer sees with his own eyes. If the plates on which the food is served are not clean, the food received is not hot, or is not as ordered, the patron may be inclined to leave a smaller tip even when the services of the servers and bussers are satisfactory. Likewise, when the meal is good, the presentation on the plates is pleasing, and special food requests have been satisfied, the patron may be inclined to leave a more generous tip, even when the servers and bussers might not have delivered exceptional service.

Thus, the court extended the tip pooling to include employee who do not provide direct table service, but who participate in the chain of service and contribute to the quality of the product/service provided with their labor.