Can my Employer Tax my Tips when I have claimed Exempt status on my W-04?
I am a Certified, Licensed Massage Therapist operating in California. I was hired to work at a new spa and was told that my employer was going to be taxing my tips in the range of 15-40%, and that I MUST report all my tip income at the beginning of a pay week. (Mondays before the Friday that is payday) He’s stated that if I do not submit a tip earning report (how much I’ve made from tips in that pay period) then he will not include any credit card tips into my paycheck.
I read up on the CA labor law (section 351) and it clearly states that an employer cannot touch my tips for any reason as they are essentially ‘my sole property’. In my workplace, clients can either give me a cash tip personally (put it in my hand), tip me with an envelope from the front desk, or they can tip me via credit card slips…but there is no ‘tip pooling’ or any other form of tip manipulation.
Can my employer tax my tips if I claim exempt from federal taxes? Can he withhold my CC tips if I do not comply?
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tips are still considered taxable income though, and your employer isn’t taxing you its the government
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NO, tips are for you to claim. If you claim exempt that means nothing should be taken out of your check and you will pay at the end of the year, your employer has no right.