New Tips Protection in California Starting January 1

Under a new California law starting January 1, 2026, if customers tip employees by credit card, employers must remit the tips to employees without any reduction for processing fees or other credit card costs. Tips must be paid no later than the next regular payday after the credit card charge. What’s more, employers in California must maintain accurate records of all gratuities. But maintaining accurate records of tips applies to employers in all states because of the federal no-tax-on-tips deduction. #IdeaoftheDay