How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Tina Your Own Question
Tina, Attorney
Category: California Employment Law
Satisfied Customers: 33166
Experience:  JD, 17 years experience & recognized by ABA for excellence in employment law.
Type Your California Employment Law Question Here...
Tina is online now
A new question is answered every 9 seconds

Hi we have a limousine service in calilfornia and nevada..

Resolved Question:

Hi we have a limousine service in calilfornia and nevada.. It is common practice for customers to add the voluntary tip to the bill on there credit card. When this occurrs we as the employer are stuck with the burden of paying the credit card fee of 2.5% and the labor taxes ssi and comp on this tip .. This is costing us Thousands of dollars a year on revenue earned by others. Our intention is to 1099 our employees on all credit card tips and charge the 2.5% credit card fee to the employee. Are we within our legal limits to do so.
Submitted: 4 years ago.
Category: California Employment Law
Expert:  Tina replied 4 years ago.
Hello and welcome,

CA law specifically prohibits an employer from passing the charge onto the employee in this situation. Labor Code Section 351 provides that the employer must pay the employee the full amount of the tip that is indicated on the credit card. The employer may not make any deduction for credit card processing fees or costs that are charged to the employer by the credit card company from gratuities paid to the employee.

See the following link for more information:

NV is also one of the few states that specifically prohibits this practice. Here is a link for you to review:

I hope you found my answer helpful, even if the law is not in your favor; please click on the GREEN ACCEPT button above for my answer. This is necessary for me to be paid for my work and so that I can get credit for assisting you. Your question will not close, and you will still have the opportunity to follow-up if needed. Leaving a bonus and positive feedback is not required, but doing so is certainly appreciated!

If you have additional questions, please keep in mind that I do not know what you already know or don't know, or with what you need help, unless you tell me. Please consider that I am answering the question or question that is posed in your posting based upon my reading of your post and sometimes misunderstandings can occur. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered.

Also remember, sometimes the law does not support what we want it to support, but that is not the fault of the person answering the question, so please be courteous. Thank you.

Customer: replied 4 years ago.
Can the employer 1099 for all tips seperate from payroll? currently we are catagorizing hourly wage and tips in
Expert:  Tina replied 4 years ago.
Hello again,

No, this would typically violate the intent of the state laws indicated above and if the workers are properly classified as employees and not independent contractors under the law, then a 1099 would not be appropriate in any case.

I would not suggest reducing employee wages for the fee in any manner.

Tina and other California Employment Law Specialists are ready to help you

Related California Employment Law Questions