Is it legal in for your employer to require you to tip out a certain percentage?

Labor Law Section 351 prohibits employers and their agents from sharing in or keeping any portion of a gratuity left for or given to one or more employees by a patron. Furthermore it is illegal for employers to make wage deductions from gratuities, or from using gratuities as direct or indirect credits against an employee’s wages. The law further states that gratuities are the sole property of the employee or employees to whom they are given. "Gratuity" is defined in the Labor Code as a tip, gratuity, or money that has been paid or given to or left for an employee by a patron of a business over and above the actual amount due for services rendered or for goods, food, drink, articles sold or served to patrons.

Now, tip pooling is legal as long as it is not shared by a manager or agent of he emplyer and it does not replace wages.  Many types of tip sharing arrangements of legal, even if they are mandated by the employer and even if the employee has no real way to bargain for different terms. As long as no manager or supervisor is participating in the pool, the employer is allowed to split the tip up in a "fair" manner among all people who are normally part of the "chain of service." This has been interpreted to mean any waitperson, busperson, bartender, hostess, wine steward, or "front room" chef. The tip can be split with the bartender even if that particular patron did not order any drinks. However, requiring tips to be paid to people who have little or no connection to the "chain of service" is illegal. The most common violation is using tips to pay dishwashers or other types of employees.

Problems can also come up when the employer places a mandatory "service charge" on a bill. For instance, in many car service operations, the bill has an automatic 15% "service charge" added to the bill. Such service charges will belong to the employer and not be considered tips if they are mandatory and not waivable by the customer. However, if the charge is negotiable or is simply "added as a convenience," then it will be considered a tip and belong to the employees. A typical example is when a restaurant automatically places an 18% gratuity on the bill for large parties. Even though the charge is automatically added to the bill, it is still considered a tip.