New California Law in 2022 Makes Wage Theft of Tips, Grand Theft

A new California law in 2022 (AB 1003) protects workers from employers who commit wage theft and steal their tips by allowing prosecutors to charge them with felony grand theft.

Under Assembly Bill 1003, an intentional theft of wages above $950 from a single employee in any 12-month period is punishable as a grand theft under the California Penal Code. This law increases current laws from a misdemeanor to a felony. Additionally, the law also applies when there are two or more employees with lost wages that exceed $2,350.

This new law aims to punish employers who fail to pay workers their tips. In the past, under existing law, employers who intentionally withheld wages from their employees or gig workers faced only a misdemeanor for the offense. As a misdemeanor, the employer could face time in county jail for up to 1 year, but as a felony this increases to imprisonment in county jail for 16 months or 2 or 3 years.

Also, the new California law allows prosecutors to issue a search warrant and enlist the help of a grand jury as needed so that they may investigate a case involving wage theft. These are tools not available to prosecutors in the past when such cases were considered a misdemeanor.

The bill considers gratuities and tipping as part of a person’s wages. Also, under this bill, the courts treat independent contractors the same as employees. Therefore companies who hire gig workers and withhold their tips could be charged with wage theft as a felony.

Gov. Gavin Newsom signed the bill back in September 2021 and it becomes law on Jan. 1, 2022. This new law protects all wages, gratuities, benefits, or other compensation from employer theft.

California Law Worker’s Tips

Employees have the right to keep their tips under California law. Employers cannot withhold or take any portion of their employees’ tips. Also, they cannot offset tips against regular wages. The law prohibits employers from forcing their workers to share tips with owners, managers or supervisors.

Tips and Credit Card Fees

Patrons often add tips on their credit card when they pay their bill. This is typically done at a wide range of businesses including restaurants, beauty salons, or coffee shops. However, some employers attempt to deduct credit card fees from the tips and lower what is paid to the employee. This practice is illegal and the employer is required to pay all credit card fees on tips — not the employee. In other words, employees are entitled to the full amount of tips left by the customer.

Help for Employees

Has an employer intentionally stolen your wages or tips? Under California law, workers are protected and they have rights under AB 1003 and Title VII of the Civil Rights Act of 1964.

It’s imperative that you take steps right away to protect your right to sue. Please contact Johnson Attorneys Group at 1-800-235-6801 to request a free case evaluation with our knowledgeable and experienced California attorneys.

We serve clients throughout California and accept some cases on a contingency fee basis.