This published opinion is a case of first impression dealing with whether there's a private right to sue for tip pooling, as a violation of Labor Code §351. Tip pooling involves an employer requiring employees who are paid tips directly from customers to "pool" them into a common fund which is then distributed among that employee and others in a designated ratio.
In this case, the plaintiff was a casino dealer who sued on behalf of a class of about 650 dealers working at a casino in Los Angeles County. The casino had a written tip pool policy that required dealers to segregate 15 or 20 percent of the tips they received at the close of each shift, depending on the location of the table and the game dealt.
Dealers kept the remaining 80 to 85 percent of the tips they received. The casino's tip pool policy worked on the honor system, under which it left to the dealers the task of calculating the amounts designated for the pool.
Labor Code Section 351 reads in pertinent part:
"No employer... shall... 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."
An undisputed purpose for the section was to prevent employers from using tips as part of calculating an employees' wages for purposes of determining whether minimum wages were being paid.
The trial court had ruled on the pleadings that nothing in the above Labor Code Section prevented an employer from divvying up tips among multiple employees. It further ruled that, in any case, neither that section, nor Labor Code Section 450, gave employees a private right to sue employers who allegedly violated those sections.
[Section 450 reads in pertinent part: "No employer... may compel... any employee... [to make] ...payment of a fee or consideration of any type... for employment."]
The appellate court agreed and affirmed the trial court, ruling that legislative intent controlled whether either statute gave employees a private right to sue and held that there was no intention by the legislature to allow it here.
It ruled that the real intent of Section 351 was to permit the Labor Commissioner to act against employers trying to use tips to justify paying below the minimum wage, not to give employees the private right of enforcement.
It further ruled that while that didn't stop a possible lawsuit under the separate "unfair competition" statute (Business & Professions Section 17200), there was no specific right to sue granted under Section 351.
The decision did however make clear that Section 351 does NOT prohibit tip-pooling per se (and that to violate the unfair competition statute there would have to be such a violation of Section 351). Citing Leighton v. Old Heidelberg, Ltd. (1990) 219 Cal.App.3d 1062, the Court emphasized:
"It has long been settled law in California that employer-mandated tippooling is not prohibited by Labor Code section 351."
The case is Lu v. Hawaiian Gardens Casino.
To read the full opinion,
→
CLICK HERE.
