Opinion ID: 1312025
Heading Depth: 3
Heading Rank: 3

Heading: Construction of Section 351 by the IWC

Text: After the Legislature amended section 351 into its current form in 1975, the IWC consistently construed the provision to bar the establishment of a minimum wage for tipped employees lower than the generally applicable minimum wage. For example, in 1976 the Commission reviewed the adequacy of the minimum wage and declared: Many requests were received from the hotel and restaurant industry for a special, lower wage rate for tipped employees.... The Commission denied the request.... [T]he Legislature specifically revoked the authority it had earlier given the I.W.C. to allow credit for tips against the minimum wage, when it amended Section 351 of the Labor Code this [ sic ] year. (Statement of Findings by the Cal. Ind. Welf. Com. in Connection with the Revision in 1976 of its Orders Regulating Wages, Hours, and Working Conditions, p. 11.) In 1979 the IWC again reviewed the adequacy of the minimum wage. The Restaurant and Hotel Associations urged the Commission to establish a lower cash minimum wage for tipped employees. (Statement of Position of Cal. Restaurant Assn. and Cal. Hotel and Motel Assn. to Cal. Ind. Welf. Com. in the [M]atter of Proposal for Hours, Wages and Working Conditions Order for the Pub. Housekeeping Industry (Aug. 21, 1979) p. 19.) The Commission denied the request: the Legislature specifically revoked the authority it had earlier given the IWC to allow credit for tips against the minimum wage, when it amended Section 351 of the Labor Code [in 1975]. (Statement as to the Basis for Ind. Welf. Com. Order No. 5-76 Regulating Wages, Hours, and Working Conditions in the Pub. Housekeeping Industry (as adopted Nov. 16, 1979) p. 20.) In 1980 the IWC argued before this court in the Industrial Welfare Commission case that section 351 barred a lower minimum wage for tipped employees: Not only is the tip the sole property of the employee but also it may not be deducted or used as a credit against the wages due the employee. An employer may not pay an employee less than the minimum wage and then use the tips received by the employee to make up the difference. The Legislature could not have intended to allow indirectly what it forbade directly. The adoption of a lower minimum wage for a tipped employee has the effect of doing just that. A lower minimum (which in itself is to provide an adequate) wage is only possible because tips are used to subsidize it. Thus, an employer, who is allowed to pay a lower minimum wage to those who receive tips, is indirectly deducting from wages those same tips  a practice squarely prohibited by Labor Code section 351. (Replication of Ind. Welf. Com. and Div. of Lab. Stds. Enforcement, etc.; Points and Authorities in Support Thereof, pp. 89-90, italics in original.) In 1982 the IWC convened a Minimum Wage Board to review the adequacy of the minimum wage. The board considered and rejected a proposal for a lower minimum wage for tipped workers. (Rep. of 1982 Min. Wage Bd., Minutes, pp. 16-17.) In 1984 the IWC convened another Minimum Wage Board to review the adequacy of the minimum wage. This board too considered and rejected a proposal for a lower, so-called alternative minimum wage for tipped workers. (Rep. of 1984 Min. Wage Bd., Minutes, pp. 64-67.) But late in 1987, as stated above, the IWC established a lower, alternative minimum wage for tipped employees, rejecting its former construction of section 351 and adopting the contradictory interpretation in its place: creating a tipped classification did not violate Labor Code Section 351 ( Statement of Basis for Order No. MW-88, supra, at p. 11).