Am I Eligible for Overtime Pay as a Tipped Employee in California?

If you work in the service industry and regularly receive tips from patrons, you are most likely still eligible for overtime pay if you work more than 40 hours in a workweek or over eight hours in a day.

Do not let your employer fool you into thinking you are exempt from overtime pay simply because you earn tips as part of your income.

Below, we discuss California’s unique tip laws and how they may affect overtime pay for tipped employees.

Understanding California’s Tip Laws

Under California Labor Code 351 LC, an employee’s tips cannot count toward the minimum wage. Therefore, tipped employees are not paid differently than employees who earn their income from an hourly wage.

This means that employees in roles that are traditionally tipped, like bartenders and servers, must still be paid the state minimum wage of $14 or $15 per hour, depending on the size of the company the person works for.

California’s tip laws make it unique, as other states allow employers to differentiate between tipped and non-tipped employees.

In other states, there is a different minimum hourly wage for tipped employees, so long as the tips an employee earns are equal to or more than the state (or federal) minimum wage. For example, the federal minimum wage is $7.25 in 2022. An employee who earns tips may be paid as little as $6.98 per hour, so long as his or her hourly rate and tips combined average out to at least $7.25 per hour.

Due to the uniqueness of California’s tip laws, it may be in your best interest to discuss your claim with our wage and hour attorneys in Sacramento who may be able to help if you have been denied fair wages.

Can a Tipped Employee Be Exempt From Overtime Pay?

An exempt employee is someone whose job is not subject to one or more sets of labor laws. This includes overtime pay laws, which state that any employee who works more than 40 hours in a workweek should be paid 150 percent of their regular wage. However, to classify as an exempt employee, a person’s job must meet certain criteria.

One primary requirement for an employee to be exempt from overtime pay is that he or she must be paid a salary that is at least twice the state’s minimum wage. Jobs that are customarily considered “tipped,” like a bartender or server, would most likely not fall into this category. Therefore, your employer may not legally classify you as an exempt employee to get away with not paying you for overtime hours worked.

If you are a manager in a restaurant, though, you may be legally classified as an exempt employee so long as you meet the state’s requirements. However, if you are frequently asked to complete tasks like your subordinates, you may be able to file a claim to recover the wages you are rightfully owed.

Can My Employer Withhold My Tips Because I Worked Overtime?

California labor law specifies that any tips an employee receives belong to him or her. This means your employer cannot legally withhold your tips by claiming it is to cover your overtime pay.

An employer may try to argue that he or she can withhold the tips because you will be paid 150 percent of your hourly wages and therefore the tips are to cover payroll costs. However, this is not true, and it is not legal.

What Are the Rules When Calculating Overtime Pay for a Tipped Employee?

Due to California’s lack of differentiation between tipped and hourly employees, calculating overtime pay as an employee who receives regular tips is a lot simpler than in most states. Employers do not have to worry about how much an employee earns in tips and hourly wages to determine how much he or she needs to pay an employee for overtime hours. It is straightforward that you must be paid 150 percent of your hourly wages if you work more than 40 hours in a workweek.

Despite these labor standards in California making it easier for employers, there are still some who may try to argue that they should not be paying 150 percent of your wages for overtime hours. An employer might try to say that because you also made a certain amount in tips on top of your hourly wages you are set. This is also not true, and denying you overtime wages for these reasons is a violation of labor laws.

Call an Experienced Attorney Today

The labor laws in California are extensive, but they are in place to protect employees’ rights to fair wages. If you believe your employer is illegally withholding pay from you, whether by denying overtime pay or some other way, call the Arnold Law Firm today.

Our attorneys have extensive knowledge of the labor laws in California and are prepared to help you pursue justice.

Call 916-777-7777 to schedule a free consultation today.