California Tip Pooling Laws (2026)

California lets employers require tip pooling among employees in the “chain of service”, but owners, managers and supervisors can never take part, even when they serve guests. There is no tip credit: tipped employees get the full $16.90 minimum wage before tips ($20.00 at fast food restaurants), and employers may not take card processing fees out of tips.

Last reviewed October 11, 2026.

At a glance

Minimum wage	$16.90 an hour in 2026; $17.40 from January 1, 2027
Fast food restaurants	$20.00 an hour
Tip credit	Not allowed
Required tip pools	Allowed if fair and reasonable
Back-of-house in a pool	Employees in the chain of service
Owners, managers, supervisors	Never
Card fees taken from tips	Not allowed
Local minimum wages	Higher in many cities

Tip credit and minimum wage

California does not allow a tip credit: an employer may not count an employee’s tips toward the wages it owes (Labor Code § 351). Tipped staff get the full state or local minimum wage plus their tips. The statewide minimum is $16.90 an hour in 2026 and rises to $17.40 on January 1, 2027. Fast food restaurant employees have had a $20.00 minimum since April 1, 2024 (§ 1475). Where a city or county sets a higher minimum, the higher rate applies.

Who can share in a tip pool

Every tip is the sole property of the employees it was left for (§ 351), but the Labor Commissioner reads the law as allowing required tip pools, as long as the pool is fair and reasonable and does not pay owners, managers or supervisors. Courts have upheld pools among employees who give direct table service or are in the “chain of service”, meaning their work bears on the guest’s overall experience.

Federal law lets a required pool include back-of-house staff only when the employer takes no tip credit. California never allows a tip credit, so that condition is always met; whether a particular kitchen role is in the chain of service depends on the facts.

Owners, managers and supervisors

No employer or agent may take any part of a tip. An agent is anyone other than the employer who has authority to hire or fire employees or to supervise, direct or control their work (§ 350). The Labor Commissioner applies this even when an owner or manager serves a table or is in the chain of service.

Credit card tips

Employers must pay the full tip written on the card slip, with no deduction for processing fees, no later than the next regular payday after the guest paid (§ 351).

Service charges

A service charge may or may not legally be a gratuity: the Labor Commissioner looks at whether the customer would see and intend it as a tip. California’s price transparency law lets restaurants add a mandatory fee only if it is clearly shown, with its purpose, on menus and other displays that list prices (Civil Code § 1770(a)(29)). West Hollywood also requires service charges to be shared among the employees who serve guests, including back-of-house staff, and not with managers.

Records and enforcement

Employers must keep accurate records of all gratuities they receive (§ 353). Since January 1, 2026, the Labor Commissioner can issue citations or sue over tips taken or withheld (§ 351(b)).

Local minimum wages

Examples for 2026: Los Angeles $18.42 and San Francisco $19.61 from July 1, 2026; West Hollywood $20.25, rising to $20.94 on January 1, 2027; San Diego $17.75; San Jose $18.45.

California tip pooling FAQ

Is tip pooling legal in California?

Yes. Employers may require tip pooling among employees in the chain of service if the pool is fair and reasonable. Owners, managers and supervisors cannot receive any share.

Can cooks and dishwashers share tips in California?

They can if they are part of the chain of service, which the Labor Commissioner describes as employees whose work bears on the guest’s overall experience. California has no tip credit, so federal law does not stand in the way. Check where your kitchen roles fall before you set up the pool.

Can managers share in a tip pool in California?

No. A pool may not pay owners, managers or supervisors, even when they serve tables or are in the chain of service.

Can a California employer take credit card fees out of tips?

No. The full tip on the card slip must be paid, without deducting processing fees, by the next regular payday.

Official sources

This page summarizes the law for restaurant operators and staff; it is not legal advice. Wages and rules change, and cities can set their own minimums. Check the linked official sources, or ask an employment lawyer, before changing how you handle tips.