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The results of a recent Appeals Court decision should cause employers to evaluate any tip sharing policies that call for a portion to go to any person who could be construed as an agent of the employer. Employers should pay attention to whether any persons sharing in the tips have supervisory responsibilities or the power to hire or discipline other employees.
In Jameson v. Five Feet Restaurant (2003) 2003 LEXIS 424, the dispute centered on the restaurant's policy of requiring its servers to give 10 percent of the their nightly tips to the floor manager. The floor manager, referred to as "the door," supervised the servers, acted as host, greeted customers, set up the reservation sheet and seating arrangement, and assisted in serving customers.
Generally, tip pooling is permissible in California if an employer or agent does not take any part of the gratuity given to an employee by a patron or otherwise violate Labor Code section 351. Plaintiff Jameson challenged the restaurant's policy as a violation of Labor Code 351, arguing that the floor manager was in fact an agent of the restaurant employer under the Labor Code definition of agent, which includes "every person other than the employer having the authority to hire or discharge any employee or supervise, direct or control the acts of employees."
At trial, plaintiff Jameson produced evidence that (1) the floor manager's duties included scheduling server's stations, disciplining servers, hiring employees, and recommending the discharge of employees; (2) the floor manager supervised servers on a daily basis even while assuming host duties; (3) after the restaurant opened, the floor manager assumed host duties, such as greeting and seating guests, and continued to supervise servers, (4) the floor manager had the authority to hire Jameson without the necessity of consulting the actual employer; (5) the employer acknowledged that the floor manager had supervisory duties and was referred to as a supervisor in the restaurant's training manuals; (6) the employer acknowledged that the floor manager supervised servers when the employer was present at or away from the restaurant; and (7) the floor manager had the authority to discipline employees without the employer's consent.
The Fourth District Court of Appeal found this was sufficient evidence to uphold the finding that the restaurant's floor manager was in fact an agent under the Labor Code definition. They found irrelevant the restaurant's counterargument that the floor manager earned the 10 percent share of the tips by serving patrons in addition to his supervisory duties.
Given the costs and fees involved in litigating such claims, as well as the exposure to injunctions and restitution orders, restaurant owners with tip sharing policies should have legal counsel review their policies and procedures. Attorneys at Higgs, Fletcher & Mack have extensive experience in providing businesses with counseling, risk assessment, and, ultimately, litigation defense.
Higgs, Fletcher & Mack has been serving the needs of San Diego businesses and residents since 1939, and offers a full range of legal services in both transactional and litigation matters. The Firm is committed to integrity, thoroughness, and care in striving to achieve outstanding results for clients.
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