The Trump administration’s Labor Department announced its intention in December to make tip pooling a legal practice. In essence, the administration stated that it will revoke the Obama administration’s rule and allow restaurants to pool tips as they see fit. The change will directly impact employers in California who pay tipped employees the full federal minimum wage.

Background

In general, tips are regarded as the property of the tipped employee, and regulators restrict what employers can and cannot do with tip proceeds as a result. In California, employers may not take any deductions from tips or otherwise use tips as a substitute for hourly wages.

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