Leighton v. Old Heidelberg, Ltd.

Opinion

LILLIE, P. J.

Plaintiff sued defendant Hoppe’s Old Heidelberg Restaurant in the municipal court for damages for wrongful discharge alleging she was fired from her employment as a waitress for refusing to share her tips with the busboys; breach of the covenant of good faith and fair dealing, *1065based on the same facts; unpaid split shift premiums (Cal. Industrial Welf. Com. Wage Orders) and attorney’s fees (Lab. Code, § 218.5); and repayment of all moneys paid by her to busboys and bartenders under an employer-mandated tip-pooling arrangement. On defendant’s motion, summary judgment in favor of defendant and against plaintiff was entered. The judgment was affirmed by the appellate department of the superior court which certified its opinion for publication. We deemed the issue of the legality of employer-mandated tip pooling among employees to be of statewide importance and issued an order transferring the cause to this court. (Cal. Rules of Court, rule 62a.)

Motion for Summary Judgment

The following facts were undisputed: Plaintiff was hired as a waitress by defendant restaurant in August 1984, and terminated on February 14, 1987, for refusing to pool her tips with the busboys; she worked split shifts— lunch (11 a.m.-2 p.m.) and dinner (6 p.m.-10 p.m.); between shifts, she did not work and went home. Plaintiff was told when she was hired that she must share her tips with the busboys, and the general procedure was that she share the tips with the busboy who works the same tables on which she waits; she refused to automatically pay the busboys 15 percent; she had no written agreements or contracts regarding her employment with defendant.

In support of its motion, defendant submitted a portion of plaintiff’s deposition taken August 16, 1988, and copy of Determination of California Office of Administrative Law (1987 AOL Determination No. 4 [docket No. 86-010]).

On deposition plaintiff testified that after she was hired in August 1984 she worked the first couple of months at night, then started working lunch and dinner; she did not work in the hours between; such shifts are known in the restaurant business as split shifts; she went home between 2 p.m. and 6 p.m.; while working at the restaurant, she remembered talking about the split shift but did not recall if she signed any document concerning it; shown the affidavit signed by her under penalty of perjury, and asked if she recognized it, she answered, “I really don’t know exactly. I don’t remember, I don’t remember it,” then admitted she recognized her signature at the end but, asked if she signed it, said, “I didn’t say that, I just don’t remember.” Further, she testified that when she was hired, the manager told her she was required to share her tips with the busboys, and explained one of the procedures was that the waitresses had to pool their tips with the busboys; on February 14, 1987, she refused to do so.

*1066The following affidavit was signed by appellant:

“To Whom It May Concern
“I am employed as a waitress by Hoppe Enterprises, Inc., dba Old Heidelberg at 13726 Oxnard Street, Van Nuys, California 91411.
“Under the penalty of perjury, I state, that my services as a waitress are available to the Old Heidelberg only during their luncheon and/or dinner business and not during any hours falling between those two periods.
“Obligations to my family and other personal commitments prevent me from working at the Restaurant during any of the afternoon hours. By limiting my working hours in that manner, I am able to earn adequate compensation during hours of my choice and at my convenience.”

In opposition to motion for summary judgment, plaintiff submitted her declaration, and a statement signed by defendant for the office of unemployment.

In her declaration, plaintiff stated that shortly after she was hired, defendant presented her with the affidavit and told her to sign it; she signed it because, “I did not want to make waves”; she did not know at the time that she would be entitled to extra pay if she worked split shifts, and she was available to work between shifts even though she signed the affidavit, and when the owner asked her to work during that period, she did; the restaurant did not require a full complement of waitresses between lunch and dinner, and she signed the affidavit for the restaurant’s convenience. She further stated in her declaration that when she was hired, and throughout her employment she was told to give 15 percent of her tips to the busboys and 5 percent to the bartender; she complied to keep her job; she felt the tips were hers to do with as she pleased and it was the responsibility of management to pay bartenders and busboys; on February 14, 1987, she felt the “busboys were not nearly as helpful or cooperative as [she] felt they should be” and refused to share her tips with them that day; she was suspended for 10 days; when she returned to work she was asked by management if she would comply with their tip requirements, and when she indicated she might if the busboys did their job, she was fired.

In a statement to the unemployment office regarding plaintiff’s termination, defendant stated that plaintiff well knew that tip pooling was a “house rule and is with nearly all Restaurants”; she refused to pay the busboy 15 *1067percent of the tips and he was going to quit because of it; management requested she pay the busboy and she refused; she was suspended for a week; when she returned, her attitude was unchanged and she would give no tips to the busboy unless he gave her special attention; she was discharged because she gave less than first-class service and was insubordinate and uncooperative.

I

Employer-mandated Tip Pooling Not Prohibited by Labor Code Section 351

Plaintiff contends there is a triable issue of material fact as to whether or not she was wrongfully discharged, thus the judgment must be reversed. However, we perceive only a question of law, for her wrongful termination suit can succeed only if employer-mandated tip pooling among employees is prohibited by Labor Code section 351 (section 351).

No reported California judicial decision has interpreted section 351 to apply its prohibitions to employer-mandated tip pooling. Industrial Welfare Com. v. Superior Court (1980) 27 Cal.3d 690 [166 Cal.Rptr. 331, 613 P.2d 579] and Henning v. Industrial Welfare Com. (1988) 46 Cal.3d 1262 [252 Cal.Rptr. 278, 762 P.2d 442] detail the legislative history of section 351 and deal with the matter of subminimum wage, but neither case addresses the issue. While the language of the statute expressly prohibits various employer practices, there is no mention therein of employer-mandated tip pooling, or of any kind of tip pooling among employees. Tip pooling has been around for a long time, as has section 351, and had the Legislature intended to prohibit or regulate such practice, it could have easily done so, just as it prohibited the various enumerated employer practices. Further, we find nothing in the legislative history of section 351 or related sections, which precludes such an arrangement. And, as far as we can determine, California has no established policy against tip pooling among employees mandated by the employer. To the contrary, the restaurant business has long accommodated this practice which, through custom and usage, has become an industry policy or standard, a “house rule and is with nearly all Restaurants,” by which the restaurant employer, as part of the operation of his business and to ensure peace and harmony in employee relations, pools and distributes among those employees, who directly provide table service to a patron, the gratuity left by him, and enforces that policy as a condition of employment.

*1068The Legislature expressly provided1 that no employer shall “collect, take, or receive” any part of a gratuity left for an employee by a patron or engage in certain other enumerated practices, declaring each such gratuity to be the “sole property” of the “employee or employees” for whom it was left. The purpose of section 351, as spelled out in the language of the statute, is to prevent an employer from collecting, taking or receiving gratuity income or any part thereof, as his own as part of his daily gross receipts, from deducting from an employee’s wages any amount on account of such gratuity, and from requiring an employee to credit the amount of the gratuity or any part thereof against or as a part of his wages. And the legislative intent reflected in the history of the statute, was to ensure that employees, not employers, receive the full benefit of gratuities that patrons intend for the sole benefit of those employees who serve them. Thus, our Supreme Court has prohibited a reduction, either directly or indirectly, of an employer’s minimum wage obligation by virtue of tips received by an employee (Industrial Welfare Com. v. Superior Court, supra, 27 Cal. 3d 690, 730), and employers from paying tipped employees a subminimum wage. (Henning v. Industrial Welfare Com., supra, 46 Cal.3d 1262, 1265.)

But Old Heidelberg has engaged in none of these practices. It does not “take, collect, or receive” as its own any part of a gratuity left by a patron; it does not credit tips against wages it owes the employee; it pays none of its tipped employees a subminimum wage, but a minimum wage or greater; and it deducts no tip income from any employee’s wages. Old Heidelberg has simply followed a “house rule” which is the industry practice, that tips left on table be pooled and distributed among employees who directly provide service to the tipping patron.2

We reject plaintiff’s contention that employer-mandated tip pooling constitutes a prohibited “taking” by the employer within the meaning of section 351. Such a construction is a strained one, outside of the ambit of the definition of the word “take” contemplated by the Legislature in drafting the statute; and the policy inherent in section 351 bears this out. Consistent with this, the Legislature declared a gratuity to be the “sole property” of the *1069“employee or employees” for whom it was left by the tipping patron and further, in section 356, Labor Code,3 declared the purpose of the article, “to prevent fraud upon the public in connection with the practice of tipping.” She argues that tip pooling at the behest of Old Heidelberg constitutes a “taking” by it because it deprived her of the use of that portion of the gratuities she received which the restaurant required her to turn over to the busboys, thus “exerting control rights” or “unlawful dominion” over her personal property; and this violates section 351.

The argument is unsound, first, because it is based on the erroneous assumption that the entire tip left by the patron is the waitress’s personal property. To buttress this, much is made of for whom the gratuity is left, the intention of the patron in leaving it, and the lack of evidence offered by Old Heidelberg in this connection. We dare say that the average diner has little or no idea and does not really care who benefits from the gratuity he leaves, as long as the employer does not pocket it, because he rewards for good service no matter which one of the employees directly servicing the table renders it. This, and the near impossibility of being able to determine the intent of departed diners in leaving a tip,4 in our view, account for the Legislature’s use of the term “employees” in declaring that “[e]very such gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.” (§ 351, italics added.) It is clear that the Legislature intended by this section to cover just such a situation. More than often the patron decides what is good service by the attention the busboy gives. As a practical matter, if he is attentive to the needs of the patron, filling water glasses promptly, bringing rolls and butter, *1070clearing the table, mopping up spills, pouring coffee, etc., this kind of attention will incline the patron to leave a generous gratuity even though the service rendered by the waiter or waitress may not be all that satisfactory. Conversely, if the busboy is inattentive and his service is slow, sloven or haphazard, the disgruntled patron just as likely will depart leaving less than a respectable tip or nothing at all regardless of the kind of service rendered by the waiter or waitress.

Second, if more than one employee, for example a waitress and a busboy, directly serve the table of a patron, the gratuity is left for the “employees” within the meaning of section 351, and thereunder becomes their sole property as against the employer, to be equitably distributed between them.5 Were restaurant employers prohibited from administering tip pooling for equitable distribution of tip income, the gratuity could be picked up and appropriated by the first employee, perhaps the waitress, to reach the table after the diner departs. On the other hand, it as well could be the busboy who reaches the table first and pockets the gratuity to the exclusion of the waitress. Either way, one employee would be depriving the other of the use of his or her own personal property, the very conduct condemned by plaintiff and contrary to the spirit of section 351 which declares such gratuity to be the sole property of the “employees” for whom it was left.

Any claim that “to force a waitress to give part of her tips to a busboy is indirectly, a reduction of minimum wage obligations” contrary to Industrial Welfare Com. v. Superior Court, supra, 27 Cal.3d 690, 730, and here Old Heidelberg “made the waitresses pay part of what the market required the restaurant to pay busboys,” and in either event, “coercing this payment is identical to deducting the funds from [plaintiff’s] paycheck,” is as ill founded as a claim that the busboy is forced to share 85 percent of the tip with the waitress for the same reason. There is no evidence that either is the case, and it is not disputed that Old Heidelberg pays both waitresses and busboys minimum wage.

Third, an employer-mandated tip pooling policy is one of common sense and fairness, and protects the public, the employees and the restaurant employer. The public leaves a tip for those employees who actually service the table, and has a right to expect that those employees receive the gratuity to the exclusion of the employer. Under the tip pooling arrangement in this case, there is no way in which a gratuity can be appropriated by the employer either for himself or to make up part of an employee’s wages; and, *1071in the spirit of the purpose declared in section 356, no fraud can be perpetrated “upon the public in connection with the practice of tipping.”

Indeed, such tip-pooling practice by the employer protects the personal property of the employees and ensures a fair distribution of the gratuity to those who earned it, making certain that each gets his fair share. This way, distribution of tip income does not depend upon the whim or the generosity of the employee who is first to pick up the tip, and prevents a greedy employee from depriving another of his fair share of the gratuity, or a waitress, plaintiff, for example, from depriving a busboy of his share of a tip because in her opinion he has not performed satisfactorily. If a busboy fails to give satisfactory service, it is the responsibility of management, not the waitress, to do something about it.

An established tip-pooling policy encourages employees to give the best possible service. In turn, such service can only enhance the reputation of the restaurant and increase business. To permit a waitress to determine what if anything she should share with the busboy based upon what she deems to be the worth of his service can only lead to the surrender of the employer’s prerogative to run his own business, dissension among employees, friction and quarreling, loss of good employees who cannot work in such an environment and a disruption in the kind of service the public has a right to expect. An employer must be able to exercise control over his business to ensure an equitable sharing of gratuities in order to promote peace and harmony among employees and provide good service to the public. To deprive a restauranteur of the ability to regulate and control the conduct of his own business, leaves the door open to anarchy in the restaurant industry. It is for this very reason that employer mandated tip pooling among employees has been a long-standing practice, establishing a policy in the industry which permits the employer to operate a well-run, well-ordered restaurant business. Such a practice serves everyone well—the public, the employees and the employer. We conclude it does not fall within the prohibited conduct of section 351.

Called to our attention are two administrative interpretations, the first submitted by plaintiff, the second by defendant. (1) In 1984 the Division of Labor Standards Enforcement (DLSE), Department of Industrial Relations, interpreted section 351 (Interpretive Bulletin 85-4) to permit voluntary tip pooling among participating employees, but to prohibit an employer from making a tip-pooling arrangement a condition of employment. (2) Three years later, in 1987, Joric Parg of Fung Lum Restaurant filed with the California Office of Administrative Law (OAL) a request for regulatory determination of DLSE 1984 Interpretive Bulletin 85-4 to deter*1072mine whether or not it was a “regulation” as defined in section 11342, subdivision (b), Government Code, and valid and enforceable if adopted as a regulation and filed with the Secretary of State in accord with the California Administrative Procedure Act (APA). Analyzing Interpretive Bulletin 85-4, the OAL held it to be subject to the requirements of the APA, a regulation as defined therein and invalid and unenforceable; and suspended Interpretive Bulletin 85-4, as of March 25, 1987, concluding “that DLSE’s ‘preclusion interpretation’ is not the only legally tenable interpretation of section 351.” (1987 OAL Determination No. 4 [Docket No. 86-010].) The OAL opinion also pointed out that section 351 “sheds no light at all on how to handle a situation in which, for instance, three employees provided significant personal service to a particular patron, who then left behind one sum of money in appreciation of the good service received . . . [I]t would be arguably inconsistent with the statute for an employer faced with the above hypothetical situation to permit one particular employee to keep 100% of the tip.” (P. 9.) Actually neither of the foregoing opinions is persuasive in construing section 351 in the context of this case. We agree with plaintiff’s statement in her appellate brief that with DLSE’s bulletin invalid, “it is for the court to determine the true meaning of the statute.”6

II

There Is No Triable Issue Relative to Split Shift Premium

Plaintiff contends there is a triable issue of material fact as to whether she was coerced into signing an affidavit that waived her right to a split shift premium, as a condition of her employment. If there is no triable issue, plaintiff is not entitled to recover what she claims to be a split shift premium of $3.35 a day during her employment with defendant—one hour’s pay at *1073the minimum wage (Industrial Welf. Com. Wage Order7 [Cal. Reg. Notice Register 84, No. 23, p. 776]). We recognize that the trial court on motion for summary judgment is not a trier or finder of fact but can only determine if a triable issue of material fact exists. However, in reviewing the affidavit, declaration, deposition and factual matters before the trial court, we conclude that its decision was warranted by the evidence, and that it did not abuse its discretion in granting summary judgment. (Code Civ. Proc., § 437c; Sawyer v. First City Financial Corp. (1981) 124 Cal.App.3d 390, 406 [177 Cal.Rptr. 398].)

Under penalty of perjury plaintiff signed a waiver of the premium—an affidavit—that her services were available to the restaurant only during its luncheon and dinner business and not during any hours between; that obligations to her family and other commitments prevented her from working during the afternoon hours; and that by limiting her working hours she was able to earn adequate compensation “during hours of my choice and at my convenience.” In her deposition, taken prior to motion for summary judgment and made part of defendant’s motion, she testified that for the first couple of months she worked at night, then began working lunch and dinner, and between those shifts, she would go home; asked if she signed an affidavit concerning split shifts, she answered, “I remember talking about the split shift but I don’t recall if I did sign it or not”; when shown the affidavit and asked if she recognized it, she answered, “I really don’t know exactly. I don’t remember, I don’t remember it”; she acknowledged she recognized her signature but when asked if she signed the affidavit, she answered, “I didn’t say that, I just don’t remember.” These, indeed, are strange answers coming from one who claims she was coerced to sign the affidavit as a condition of employment.

Later, in her declaration, plaintiff remembered with clarity the details of her signing the affidavit, and said that shortly after she was hired, her employer presented the statement to her and told her to sign it; she did so because “I did not want to make waves”; she did not know at that time that she would be entitled to extra pay if she worked split shifts and, in fact, was available to work between the lunch and dinner shifts, even though she signed the statement and, when asked to work during that period, she did so; between lunch and dinner, the restaurant did not require a full complement of waitresses and she signed the statement for the restaurant’s convenience.

*1074Plaintiff contends that she created a triable issue on defendant’s motion for summary judgment by declaring the affidavit she signed under penalty of perjury to be false and that she was forced to sign it as a condition of her employment. We find no support for any such contention. In none of her documents has she asserted she was required by defendant to sign the affidavit as a condition of employment. She may have lied to defendant for reasons of her own and the affidavit may be false but, we find no element of coercion even in her own declaration. The only reasonable inference from the affidavit, her deposition and her declaration (in which, we assume she made the best showing she could) is that when she switched from night work and started working lunch and dinner, for whatever reason she may have had, she decided she did not want to work in the afternoons, and thus told Old Heidelberg she was unavailable to work the hours between the two shifts, although she really was available; Old Heidelberg, believing her representation to it to be true and that this was her choice, and to protect itself, presented to her the affidavit which she signed; and later when plaintiff discovered she could have been paid a premium for working the split shift had she not signed the affidavit and not gone home for the hours between, and realized that she had made a bad bargain for herself, she changed her mind and tried to avoid its legal effect first, by not remembering the affidavit at all, then by failing to recall whether she ever signed the document, then by recognizing her signature but still not remembering if she signed it. Consistent with her initial reluctance to recall such an affidavit or that she signed it, she ignored the affidavit in her complaint, and in her deposition just could not remember any such affidavit or that she had signed it. It was only after defendant’s motion for summary judgment was filed that she dealt with the affidavit, then in her declaration, in which she could have set up her strongest showing, she made no assertion she had to sign the statement as a condition of employment, that defendant told her she had to sign the document or be fired or that if she did not sign the affidavit she could no longer work lunches and dinners.

Whether plaintiff simply preferred split shift employment and for her own reasons wanted the afternoons free, actually was available to work between shifts but wanted to work only hours of her own choice and lied to defendant about her availability to work between lunch and dinner shifts, is beside the point. Assuming the affidavit to be true and she was unavailable to work between shifts and, further, that defendant asked her to sign the affidavit so stating, even as a condition of her continued employment, we find no wrongful conduct and no liability for split shift premium. On the other hand, assuming her affidavit to be false, this in itself is no evidence she was coerced into signing it as a condition of her employment; at most, it shows she lied to her employer for whatever personal reason she might have had (he even may have asked her to work the split shift and she lied so she *1075would not have to do so), but where is there wrongful conduct? Where in her declaration is there any evidence she was coerced to sign the affidavit, true or false, as a condition of or to keep her employment? She says she signed it because she “did not want to make waves,” whatever that might mean—she neglected to tell us. But it does not spell “coercion” in the context of her claim here. If this is what it means or even suggests or had this been true, she doubtless would have told us, because she had no hesitancy in the balance of the same declaration in making clear accusatory statements of coercion in connection with tip pooling—that when she was hired, and throughout her employment she was told she “had” to pool her tips, “I complied in order to keep my job,” and when she refused to pool her tips she was fired. Likewise, in her deposition, after admitting her signature to the affidavit, plaintiff did not even suggest she was coerced into signing it or had to do so as a condition of her employment, immediately thereafter testifying in the same deposition that her employer “required” her to share tips with the busboy.

We see no abuse of judicial discretion in finding no triable factual issue of material fact.

Disposition

The judgment is affirmed.

Woods (Fred), J., concurred.

Labor Code section 351: “No employer or agent shall collect, take, or receive any gratuity or a part thereof, paid, given to or left for an employee by a patron, or deduct any amount from wages due an employee on account of such gratuity, or require an employee to credit the amount, or any part thereof, of such gratuity against and as a part of the wages due the employee from the employer. Every such gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for. ...”

In opposition to motion for summary judgment, plaintiff submitted defendant’s signed statement filed with the unemployment office, which spelled out tip pooling—payment of 15 percent of a gratuity to the busboy and 5 percent to the bartender—as “a house rule and is with nearly all Restaurants.” Such industry practice was also referred to in oral argument to this court.

“The Legislature expressly declares that the purpose of this article [including Labor Code section 351] is to prevent fraud upon the public in connection with the practice of tipping and declares that this article is passed for a public reason and cannot be contravened by a private agreement. As a part of the social public policy of this State, this article is binding upon all departments of the State.” (Lab. Code, § 356.)

In oral argument before us reference was made by both parties to credit card invoices used by the restaurant when the patron pays with a major credit card, plaintiff contending that the invoice listing “waiter” and “captain” with a separate line for entry of a gratuity for each, with no mention of “busboy,” implies the busboy is not included in the tip. This reference is to a matter outside of our record. However, credit card invoices serve as a poor example in this case, for it is not the restaurant that supplies them to patrons, but the credit card companies that print them, and the invoices really reflect the intent of neither the restaurant nor the patron. Certainly, the credit card company cannot dictate to a restaurant how it shall run its business by singling out who, among its employees rendering service to a table, shall receive a gratuity left by a patron. Given no choice by a credit card invoice which lists only “waiter” and/or “captain," but to tip one or both, how can it be said the patron intended to exclude the busboy? Can that which the credit card company elects to print on its invoice reflect the true intent of the patron if, indeed, he has one at all in leaving the tip? Moreover, all credit card invoices are not the same; some companies leave a box only for a “tip” without specifying for whom it is left, while others list only “waiter,” some single out “waiter” and “captain,” others leave a blank space.

It seems fair to require a waitress to share the tip with the busboy who buses her table, for were it not for the busboy, the work ordinarily performed by him would fall upon the waitress who, in addition to her own work, would have the responsibility of his duties.

Primarily the dissent is based upon the premise that the gratuity left by a patron, unless he specifies otherwise, belongs to the waitress alone to the exclusion of the busboy and bartender. We have held that the gratuity, unless otherwise specified by the patron, belongs to the employee who contributed to the service of that patron. Once the gratuity is equitably shared indeed, as urged by the dissent, the property right in “the gratuity an employee receives from a customer must be protected.”

We also agree that the law must be “vigilant in its protection of the property rights of ordinary working people.” We are just as much concerned about wages and working conditions for and the property rights of waiters and waitresses in eating establishments as is the author of the dissent, but we are just as concerned with the other employees, i.e., busboys and bartenders, who, as well, render service to the same patron. Our ruling is intended to ensure that all such employees be placed in a fair and equitable position. It is because we are not insensitive to the plight of those employees that our ruling allows for a fair distribution of the gratuity to all those who earned it by contributing to the service afforded the patron, which sharing can only promote harmony among the employees, provide a peaceful environment in which to work and improve service to the public.

“When an employee works a split shift, one hour’s pay at the minimum wage shall be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment.”