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RESTAURANT AND HOTEL INDUSTRIES
The restaurant and hotel industries consist of WHAT ARE WAGES?
establishments that are open to the public or are
operated by membership organizations that furnish Wages are payments made to an employee for services
meals or lodging. performed during employment. The payment may be
made in cash or some medium other than cash. Types
The restaurant industry is composed of establishments of payments typically considered to be wages are:
that prepare and serve meals and beverages and
includes, but is not limited to, restaurants, cafeterias, • Cash • Lodging
caterers, cocktail lounges, diners, fast food places, and • Meals and Beverages • Tips
takeout or delivery businesses.
Employer-provided meals and lodging are subject
Establishments in the hotel industry provide lodging to to Unemployment Insurance (UI), State Disability
their customers or members and include, but are not Insurance (SDI),* and Employment Training Tax (ETT).
limited to, hotels, motels, hostels, inns, rooming and For additional information, refer to Information Sheet:
boarding houses, fraternity or sorority residential houses, Personal Income Tax Wages Reported on the Quarterly
and residential clubs. Wage and Withholding Report (DE 6) (DE 231PIT).
WHO IS AN EMPLOYEE? Meals are subject to California Personal Income Tax
(PIT) withholding and reportable as PIT wages unless
A worker is a common law employee when the employer furnished for the employer’s convenience and on the
has the right to direct and control the manner and means employer’s premises.
of accomplishing the work. Refer to Information Sheet:
Employment (DE 231) for additional information. If more than half of the employees receive meals that are
for the convenience of the employer, all meals furnished
Types of employees that are typical in the restaurant and by the employer are considered furnished for the
hotel industries are: employer’s convenience and are therefore not subject
to PIT withholding or reportable as PIT wages. If fewer
• Chefs • Cooks than half of the employees receive meals which are
• Dishwashers • Kitchen Helpers for the convenience of the employer, only those meals
• Bus Persons • Waiters and Waitresses actually provided for the employer’s convenience would
• Maitre d’s • Hosts and Hostesses be exempt from the PIT withholding and wage reporting
• Cashiers • Managers requirements.
• Delivery Persons • Bartenders
• Valets • Clerical and Office Staff Lodging is also subject to PIT unless furnished on the
• Maids • Switchboard Operators employer’s premises, for the employer’s convenience,
• Laundry Persons • Repair and Maintenance and as a condition of employment.
• Desk Clerks Persons
• Bellhops
Other services that may be performed by an employee
under common law rules include, but are not limited to, *Includes Paid Family Leave (PFL).
bookkeepers, janitors, and entertainers.
DE 231E Rev. 25 (2-10) (INTERNET) Page 1 of 2 CU
What Are the Values of Meals and Lodging? Wages Includes Tips
The taxable values of meals and lodging should not be Employees who receive more than $20 in tips in a
less than the reasonable estimated values stipulated calendar month must report all tips in one or more
by the contract of employment or in a union agreement. written statements to the employer on or before the tenth
If the cash values are not stipulated in the hiring or day of the month following the month in which they are
union agreement, the taxable values are established received from the customers. Tips are taxable when
by regulation. The taxable value of lodging is 66 2/3 the employee’s statement is furnished to the employer.
percent of the ordinary rental value to the public up to a Banquet tips and tips controlled by the employer are
maximum per month and not less than a minimum value treated as regular wages, and their taxability is not
per week. The taxable values of meals and lodging are contingent upon employees reporting them to the
listed below: employer.
VALUE OF MEALS VALUE OF LODGING
Tips that are included in a written statement furnished to
the employer are wages and are subject to Ul, ETT, SDI,
YEAR DAY BR. LU. DI. UNID MAX PER MIN and PIT. Tips should be combined with regular wages
MONTH PER WEEK when reported to EDD. Refer to Information Sheet: Tips
2010 10.35 2.25 3.15 4.95 3.60 $1,190 $38.60 (DE 231T) for more detailed information on reporting tips.
2009 10.00 2.20 3.00 4.80 3.50 $1,145 $37.20
2008 9.60 2.10 2.90 4.60 3.35 $1,092 $35.40
ADDITIONAL INFORMATION
2007 9.30 2.00 2.80 4.50 3.20 $1,041 $33.80
For further assistance, please contact the Taxpayer
2006 9.15 2.00 2.80 4.35 3.20 $1,000 $32.45 Assistance Center at (888) 745-3886 or visit the nearest
NOTE: These values apply to non-maritime employees only. Employment Tax Office listed in the California Employer’s
Lodging: 66 2/3 percent of ordinary rental value. Guide (DE44) or access EDD’s Web site at
www.edd.ca.gov/Payroll_Taxes/.
The cash values of meals and lodging are subject to
change each calendar year. This information is published EDD is an equal opportunity employer/program.
in the Employment Development Department’s (EDD) Auxiliary aids and services are available upon request to
quarterly newsletter, the California Employer, which is individuals with disabilities. Requests for services, aids,
mailed to all registered employers, and on the EDD Web and/or alternate formats need to be made by calling
site at www.edd.ca.gov/Payroll_Taxes/California_ (888) 745-3886 (voice) or TTY (800) 547-9565.
Employer_Newsletter.htm.
This information sheet is provided as a public service, and is intended to provide non-technical assistance. Every attempt has
been made to provide information that is consistent with the appropriate statutes, rules and administrative and court decisions. Any
information that is inconsistent with the law, regulations, and administrative and court decisions is not binding on either the Employment
Development Department or the taxpayer. Any information provided is not intended to be legal, accounting, tax, investment or other
professional advice.
DE 231E Rev. 25 (2-10) (INTERNET) Page 2 of 2 CU
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