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deduct the cost of processing the entire bill from the server’s tip.This is clearly stated in the Department of Labor’s website in a section concerning tipped employees under the Fair Labor Standards Act (FLSA.) The relevant section states: This sets the circumstances in which an employer can deduct processing fees from an employee’s tips.This indicates that courts have traditionally ruled favorably to businesses as long as the restaurant was not charging more than the costs to process the tips overall.
This would not be acceptable per the FLSA regulation.
The following states expressly prohibit deducting fees from tips, or have laws that are considered unclear on the subject accordingly to According to California state law, employers must give employees the entire tip from the customer. Employers may be required to publicly post a notice when keeping any portion of an employee’s tip.
Employers are responsible for paying the entirety of the credit card processing fee. Furthermore, if you deduct processing fees from tips, you may not be able to claim the employee tip credit.
The Department of Labor’s website further specifies that employer may only deduct a processing fee if the employee’s pay will still be at or above minimum wage.
Additionally, the tip must be paid to the employee in a timely manner.
If you’d like to deduct fees from tips in Colorado, it’s strongly suggested that you consult a licensed attorney. Delaware’s law states that tips are the sole property of the employee (except in valid tip pools) but does not specifically refer to credit card processing fee deductions.