Employment Law & Compliance Highlights from the Law Offices of Paul P. Cheng
September 2025
– FEDERAL –
No Updates.
– CALIFORNIA –
California Expands Enforcement on Tip Violations
Effective January 1, 2026, California employers face increased scrutiny regarding employee gratuities.
On July 30, 2025, Governor Gavin Newsom signed SB 648, amending existing labor law on tips. While current law already prohibits employers from:
- Retaining any gratuity left for employees by patrons, and
- Using tips as a credit toward minimum wage obligations,
the new legislation goes further by granting the California Labor Commissioner authority to investigate and issue fines against employers who unlawfully retain tips.
What This Means for Employers:
- Employers must ensure that all gratuities are passed directly to employees.
- Any violation could now trigger not just employee complaints but also active enforcement and monetary penalties from the Labor Commissioner.
- Businesses—particularly in the hospitality, service, and food industries—should review their payroll and tip-handling practices before the law takes effect.
At the Law Offices of Paul P. Cheng & Associates, we counsel businesses on California labor compliance and defense. If you have questions about how these changes affect your operations, contact our office to ensure your policies are updated before January 2026.
These developments highlight the evolving landscape of employment regulations on both federal and state levels. Employers should stay updated and ensure compliance to avoid legal pitfalls and potential penalties. Legal counsel is recommended to navigate any complex changes effectively.
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