The City of Palo Alto is considering a minimum wage tip credit, despite the fact that it is illegal. The proposed credit would authorize employers to pay tipped workers less than the local minimum wage, with the assumption that the employees’ tips would make up the difference.
Specifically, Section 351 of the California Labor Code, which makes tips “the sole property” of the employees, prohibits employers from paying tipped employees “a wage lower than the employer would be obligated to pay if the employee did not receive tips.” Further research done by the City Attorneys of San Diego and Berkeley and the National Employment Law Project have confirmed that a tip credit is unlawful in California.
The City of Palo Alto must recognize that any attempt to proceed with the minimum wage tip credit will draw a lawsuit which the City will most certainly lose.
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