On July 30, 2025, California Governor Gavin Newsom signed into law a bill (Senate Bill 648) that authorizes the state’s labor commissioner to investigate tip theft and levy fines for violations. The new law is particularly relevant for employers in the hospitality, restaurant, and tourism industries.
The California Labor Code bars employers from withholding tips intended for workers and using tips as a credit against wages.
The new law allows the state labor commissioner to enforce these rules with citations and civil fines. The law impacts employers that have workers who receive tips, such as restaurants, bars, hotels, hair salons, barber shops, and nail salons.
If a business permits patrons to pay gratuities by credit card, the business must pay employees the full amount of the gratuity that the patron indicated on the credit card slip without reductions for processing fees or other costs charged to the business by the credit card company. These gratuities must be paid to employees at the next pay period after the credit card payment occurred.
The new law requires employers to keep accurate records...
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