Section 927-1 - Tips as Wages(a) Statements by employees.(1) Every employee who, in the course of his or her employment by an employer, receives in any calendar month cash tips of twenty dollars ($20) or more shall report all such tips in one or more written statements furnished to his or her employer on or before the tenth (10th) day following such month. (A) If the cash tips received by an employee in a calendar month, in the course of his employment by an employer amount to twenty ($20) or more, none of the cash tips received by the employee in such calendar month are excluded from wages under this section. The cash tips to which this section applies include checks, tips added to the bill of a charge customer at his or her request, and other monetary media of exchange. Tips given by a patron to or for an employee in any medium other than cash, such as passes, tickets, or other goods or commodities do not constitute wages.(B) If an employee in any calendar month performs services for two or more employers and receives tips in the course of his or her employment by each employer, the twenty dollar ($20) test is to be applied separately with respect to the cash tips received by the employee in respect of his or her services for each employer and not to the total cash tips received by the employee during the month.(2) The employee's statement may be a completed "Employee's Report of Tips to Employer", Federal Form 4070 Rev. 10/92, incorporatedby reference, or any form giving the following information: (A) Employee's name, address and Social Security account number;(B) Employer's name and address;(C) Calendar month covered by the statement;(D) Amount of the tips received;(E) Date and signature of the employee;(3) The employee's statement should be prepared in duplicate with the original copy going to the employer and the duplicate copy dated and countersigned by the employer and returned to the employee for his or her record.(4) Upon termination of employment, the employee shall furnish a statement of tips to his or her employer at the time he or she ceases to perform services.(b) Employers. (1) Tips reported by an employee to his or her employer in a written statement shall be deemed to be earned for purposes of this regulation and paid to the employee at the time the written statement is furnished to the employer. Example (1) An employee received $40 in tips in the month of May. The employee reports to the employer the $40 on June 10. The tips received in May would be reported on the second quarter return.
Example (2) In the example above, the employee received the $40 in the month of June and reports the tips to the employer on July 10. The tips received would be reported in the third quarter.
Example (3) As in example (2), the employee received $40 in June; however, the employee reported the $40 in tips for that month on June 30. The tips received would be reported in the second quarter.
(2) The employer can collect the disability contribution from the employee's wage or from funds furnished to the employer by the employee. If the employer is unable to collect the disability insurance contribution, the employer can supply the employee with the Form DE 370 "Statement of Amount Due From Worker" Rev. 4: (9/89), incorporated by reference. Completion of the Form De 370 Rev. 4: (9/89) will relieve the employer of the uncollected employee liability.(3) In the event that an employer estimates or allocates the amount of tips received by the employee, the employer will reconcile the estimate or allocation with the actual amount of tips reported by such employee and adjust for any differences. The actual amount of tips reported by the employee will be reflected in the contributions return filed for the quarter. The employer should adjust for any differences between the amount of disability insurance withheld and the amount due is indicated by the statement submitted by the employee.(4) If the employee has made an attempt to report his or her tips to the employer, and the employer did not accept the employee's written statement of tips received, the amount of tips as reflected by the employee's records shall be deemed to have been reported and shall be considered wages within the meaning of section 927 of the code.(c) In the absence of a monthly or other payroll period report of tips by the employee, any claim thereafter made by him or her for wage credit for tips for that month shall be deemed invalid, and unreported tips for that month shall not be included in the computation of benefits.(d) When tips are pooled and the employer determines the split of the tips, the tips paid from the pool are wages under Section 926 of the code. The employee must receive the total amount of the tips from a customer or the total amount of the tips minus a maximum of 15 percent contribution to a tip pool, to be considered tips under Section 927. This includes tips paid in cash or the tip portion paid by the employer to the employee when a customer pays by check or charge card. If the employee is required to pay more than 15 percent to a tip pool, or the employer pays less than 85 percent of the total amount of its tips to the employee, then the amount retained by the employee or paid over by the employer is wages under Section 926. Wages under Section 926 of the code are taxable and reportable when actually or constructively paid.(e) Service charges, even if designated as banquet tips or other name including the word "tips", are not tips and are wages under Section 926 of the code. The term "service charge" refers to a sum of money which the patron pays to the employer and which meets two or more of the following criteria: (1) The employer determines whether or not such a sum of money must be paid;(2) The employer determines, or negotiates with the patron, the exact amount of the sum which the patron must pay, and(3) The employer determines to which employee(s), if any, the sum is to be paid.Cal. Code Regs. Tit. 22, § 927-1
1. Amendment of subsection (c) filed 11-20-81; effective thirtieth day thereafter (Register 81, No. 47).
2. Amendment filed 8-18-93; operative 9-17-93 (Register 93, No. 34). Note: Authority cited: Sections 305 and 306, Unemployment Insurance Code. Reference: Sections 926 and 927, Unemployment Insurance Code.
1. Amendment of subsection (c) filed 11-20-81; effective thirtieth day thereafter (Register 81, No. 47).
2. Amendment filed 8-18-93; operative 9-17-93 (Register 93, No. 34).(