My boss’ verbiage has been a little confusing so I’m going to ask him to clarify…one sentence makes it sound like it’s just the cc tips, other sentence makes it sound like it’s the whole transaction.
Deducting the fee for the *whole* charge from tips is definitely **illegal** under federal law, in all US states.
Deducting just the portion of the CC processing fee attributable to the tip is **legal** under federal law, but prohibited by state law in a handful of states, including CA, DE, MA, ME, and PA, and it's illegal in CO if the employer takes a tip credit (i.e. pays servers below full state minimum in direct hourly wages).
Not sure where some others work in this thread but I have never experienced or heard of CC fees coming out of employee tips in ~15 years in the industry. Yes, I expect the full amount tipped to me.
Edit: Never bartended outside of California, so that usually explains it
It was only explicitly allowed under federal law in 2018, and at least five states prohibit it. It's becoming more common as more employers adopt it, but it's quite normal for long time employees to have never encountered it, and you still won't encounter it in CA, DE, MA, ME, or PA.
I don’t remember exactly, it was like around a dollar and this was almost three years ago. They held a staff meeting about the issue because it started popping up on our paychecks. It was the whole fee for every CC transaction.
Yes, it’s not uncommon- especially in corporate owned places. It’s legal, up to a reasonable certain % of the transaction as long as you’re only be charged the processing fee for your tips. There is a limit to what % they can charge you and it’s illegal to charge you the processing fee for the entire order- it can specifically only be the processing fee for your tip.
Mastercard and Visa charge around 3% and Amex charges around 10% (last time I checked). So, if your bar accepts Amex it won’t be unusual to get charged an average rate of around 5% of your CC tips. This comes out losing 25 cents per $5 I make at my job that does this now. I’ve looked into it, this fee is totally legal. If your bar is charging more than this, definitely check into what’s the legal limit they can charge you.
The argument legally made to justify this is businesses have to pay for the credit card processing fees for tips paid to their employees. However, businesses don’t have to allow employees to receive credit card tips at all. So if they do allow employees to receive credit card tips, they are allowed to pass off the processing fee to the employees to avoid losing revenue over what’s basically seen as a benefit to us. It’s a bit icky, but I would rather deal with it than not get credit card tips at all, so many of us in the industry just deal with it.
It’s pretty standard as it’s only illegal in like 3 states.. but there is a real issue there that the guest signed intending to tip a certain amount and the restaurant is not paying you out that much
Any place ive ever worked they have always taken them out of our tips. My current location did this till we got a new pos system and now we offer a “cash discount” meaning if they pay cash then they are paying the actual price. If they pay by card they pay the credit card fee to run their card.
It's been explicitly allowed under US federal law since 2018, and more businesses are gradually adopting it. At least five states prohibit it, including CA, DE, MA, ME, and PA.
I've been doing this for 20+ years and have never once heard of this. I even just asked our city wide bartender group and not a single person has ever heard of this either. Maybe it's just my city but it's not a practice that is done here
What city are you in? I'm in Seattle and it's the standardest of practices. I get that maybe you've never had to toil under it...but to never have even heard of it seems crazy.
It’s pretty standard for the CC tip fees to be paid from those tips. Why would the employer cover those fees for you? Some are nice enough, but it isn’t their obligation.
It’s another reason why people should appreciate cash tips
I call bullshit on that. Even if they're losing 2 or 3% on all sales, that's what, 20 or 30 out of every thousand? If their margins are so thin they can't eat that, they're going under for other reasons already, and they're bailing out the boat with a teaspoon.
So then your boss should either eat the fee or send it back to the customers. So what happens when you have a tip of $1? Makes zero sense to charge you a fee on that.
It’s a percentage thing. If the business is getting charged 3% on all cc transactions, the business pays the 3% on the sale and you pay the 3% on your tip. So if someone tipped $1 you’d pay 3 cents.
Again that isn’t how an employee receives wages.
When a business increases cost by % you don’t receive a % wage. There is no reason to ever accept paying cc fees from your wage pool.
When the business increases the cost of something on the menu. Wouldn't your tip as a percentage of she's increase as well? Why would your wage increase with it? Like if the menu price went up 20% you should see an increase to your tips as well.
This is actually not true in my experience. People are white knuckling right now. Plus the younger folks emerging from lockdown during their formative years have no idea what they’re doing, how to order, and have no idea about appropriate tipping.
I've seen the exact opposite. Due to social media, awareness of tipping culture has grown on the younger generations and they tip appropriately.
But that isn't addressing what I said. I mean people who don't tip doesn't change regardless of menu price. So if the tips you do receive you are still getting more than without a price increase.
I understand what 2% of a dollar means. But that means % of your yearly wages went into paying a fee that isn’t associated with you as the bartender.
To put this in perspective;
3% was considered the average inflation rate that we should expect annually.
X% is being taken from your wages and your earning potential because the business can’t eat a % fee after agreeing on your wages.
If you make 100k in a year and all that was subject to a CC fee you would lose $3000 or to put more perspective when you get paid a check it cost the business money should they deduct that check fee from your wages?
The tips don't go to the employer so why would they eat the cost of the fee? That is the cost of making tips (depending on your location). Let's just say a place didn't accept tips via CC how much tips are you losing out on if no one carries cash to tip you.
Let’s get this straight. When you run a business and hire somebody there are all sorts of cost associated.
Say you hire someone and pay them annually 100k. The cost of that employee is not 100k annually to the business. There are all sorts of fees associated with just a singular worker. This comes in the form of insurance/writing their checks/training/etc… none of which the employee pays back the fee. This is the associated cost of labor to the employer.
Tips are the exact line of payment to your employee when you build that system out. In order for a place to have a bartender they usually don’t have an annual salary. Instead they work like dogs for their tips and the cost to the business is paid through the profit of the sales.
No place and nobody working as a bartender should accept an employers taking CC fees out of their tip pool.
In your example the employer gains at a rate higher than that of the employee. The employer also isn’t removing CC fee directly from the BOH employee who makes a flat hourly even though they would technically earn less if the place didn’t take CC fee.
You keep repeating yourself, thinking that the more you say or makes it true. Clearly it is happening, does happen, and legally is allowed to happen. So it doesn't really matter what you think should or shouldn't be allowed. It really just comes down to if the individual is willing to accept that as a price of working at a specific location.
In my example and all examples hourly wages is built into the menu pricing so then you can account for the credit card fee for hourly wages. This isn't the gotcha that you think it is.
I assume at this point you have nothing new to add, so I'm going to walk away from this futile conversation.
Again this isn’t about the legality. Places do all sorts of shit and it varies by state and location.
The poster ask is this common and the thoughts behind it. It is true you benefit as a bartender from both cash and CC. But the employer benefits from that same relationship. As a bartender you don’t go out there and negotiate the rates.
Once you go into the realm of making your wages from tip your employer no longer pays you. The customers are paying you and the employer is reaping the benefits of your labor and profit from your sales. Nobody who is worth a dam should pawn off their labor and lose out on % of their earnings because the employer can’t survive on CC fee. Even in examples of 2-3 cents off a dollar no business that isn’t a shithole would die on that cost.
So yes you are 100% right that this is a legal practice in some places. But that doesn’t mean this should be practical or acceptable terms when working on this type of industry. You wouldn’t put up with that shit in another job if they told you % of your wages will be cut for fees related to how we process payment.
Do you pay for the alcohol that makes your tip? Or do you pay for the space in which you work?
The cost of business is not related to your tip pay. That makes zero sense from an employee wage.
And I am explaining to you that is essentially wage theft.
Tips are labeled as wages and are taxed as income. You don’t subtract the cost of business from wages.
Exactly how would that work if you got a flat wage of $15 a hour? They can’t minus fees from that cost.
That’s wild. I’ve been tending bar for almost ten years and have never encountered this before. Are you covering the fee for the whole transaction or just on your CC tips?
It's typically around 2.5% to 3.5%, and can't exceed the actual amount they're paying in processing fees, in aggregate. Remember, that's 3% of your *tip*, not 3% of total sales, so in that sense it is a pretty small portion. Your $10 tip is now $9.70.
This is what I’ve paid before. The cards have different rates with American Express being highest. As it was explained to me 3% was the average IIRC.
It was only the CC processing fees on our tips but I wasn’t thrilled about it either.
Absolutely. Been going on for years. Common in corporate gigs, less common at dives.
Probably around 2000 was the first time an owner told me "When we pay you credit card tips you get the net after credit card fees are taken out on your tips."
My response: "That's fair."
You think you're entitled to the gross amount? I don't think so. That's why I ALWAYS TIP CASH.
You're talking 3% off your $100 to $500. For the owner it's 3% OFF ALL SALES.
You do want your owner to stay in business don't you?
Like I said in a different comment, I’ve never encountered this before and was curious if this was a common occurrence for other bartenders. Also, my bar is definitely not corporate.
Among full service restaurants, I think the minority do this, but it's becoming increasingly common. But it's prohibited in a few states, so some people have never encountered it for that reason.
My old employer took the cc fees for tips out of our tips. I fucking hated it and quit for other reasons but that one kind of ignited my fire for looking for a new job. She had never worked as a tipped employee and was a “numbers lady” so she had no clue and didn’t care.
My old employer just did this. It's a sign of larger programs with the business BUT it really only comes out to like $5/$100. And perfectly legal in Florida where I am.
Legit. Did in it nyc when i owned a bar. Switched to cash advance credit card model which makes the customer pay the fees explicitly. Customers didn’t care, business and bartenders happy. CC fees were brutal
OP I need clarification. Is it *all* credit card fees, or just the fee to process your tips?
My boss’ verbiage has been a little confusing so I’m going to ask him to clarify…one sentence makes it sound like it’s just the cc tips, other sentence makes it sound like it’s the whole transaction.
If it's just on the CC tips it's pretty standard, if it's on total credit sales that's probably illegal.
Deducting the fee for the *whole* charge from tips is definitely **illegal** under federal law, in all US states. Deducting just the portion of the CC processing fee attributable to the tip is **legal** under federal law, but prohibited by state law in a handful of states, including CA, DE, MA, ME, and PA, and it's illegal in CO if the employer takes a tip credit (i.e. pays servers below full state minimum in direct hourly wages).
Pretty sure he's a dirtbag either way.
Not sure where some others work in this thread but I have never experienced or heard of CC fees coming out of employee tips in ~15 years in the industry. Yes, I expect the full amount tipped to me. Edit: Never bartended outside of California, so that usually explains it
It was only explicitly allowed under federal law in 2018, and at least five states prohibit it. It's becoming more common as more employers adopt it, but it's quite normal for long time employees to have never encountered it, and you still won't encounter it in CA, DE, MA, ME, or PA.
In WNC one employer made us pay 3% of credit card tips to cover fees. And according to the labor board in NC this is totally legal.
This happened to me in Hawaii, I was *pissed* and they told me it was legal when I asked about it…
How much are they? Do you have to pay the whole transaction fee?
I don’t remember exactly, it was like around a dollar and this was almost three years ago. They held a staff meeting about the issue because it started popping up on our paychecks. It was the whole fee for every CC transaction.
Oh then they were breaking the law.
1-2% on tips only.
Did you tell them it's also legal for them to go fuck themselves?
re edit: well, obviously lol. shit is different in the south. employers can fuck me all day long with no recourse except my reputation getting slimed.
You just haven’t noticed
My state insulates me from shady practices like that, it’s not about ‘not noticing’
I've seen it. I'm lucky, for awhile the bar itself was paying the fee, now we inform the customer that the CC fee will be added to the bill, only 4%.
Yes, it’s not uncommon- especially in corporate owned places. It’s legal, up to a reasonable certain % of the transaction as long as you’re only be charged the processing fee for your tips. There is a limit to what % they can charge you and it’s illegal to charge you the processing fee for the entire order- it can specifically only be the processing fee for your tip. Mastercard and Visa charge around 3% and Amex charges around 10% (last time I checked). So, if your bar accepts Amex it won’t be unusual to get charged an average rate of around 5% of your CC tips. This comes out losing 25 cents per $5 I make at my job that does this now. I’ve looked into it, this fee is totally legal. If your bar is charging more than this, definitely check into what’s the legal limit they can charge you. The argument legally made to justify this is businesses have to pay for the credit card processing fees for tips paid to their employees. However, businesses don’t have to allow employees to receive credit card tips at all. So if they do allow employees to receive credit card tips, they are allowed to pass off the processing fee to the employees to avoid losing revenue over what’s basically seen as a benefit to us. It’s a bit icky, but I would rather deal with it than not get credit card tips at all, so many of us in the industry just deal with it.
It’s pretty standard as it’s only illegal in like 3 states.. but there is a real issue there that the guest signed intending to tip a certain amount and the restaurant is not paying you out that much
Any place ive ever worked they have always taken them out of our tips. My current location did this till we got a new pos system and now we offer a “cash discount” meaning if they pay cash then they are paying the actual price. If they pay by card they pay the credit card fee to run their card.
I have never heard of this before and it would be a dealbreaker
It's been explicitly allowed under US federal law since 2018, and more businesses are gradually adopting it. At least five states prohibit it, including CA, DE, MA, ME, and PA.
How long you been in the biz?
I've been doing this for 20+ years and have never once heard of this. I even just asked our city wide bartender group and not a single person has ever heard of this either. Maybe it's just my city but it's not a practice that is done here
What city are you in? I'm in Seattle and it's the standardest of practices. I get that maybe you've never had to toil under it...but to never have even heard of it seems crazy.
I’ve never heard of it either. I’ve worked in CA, CO, and DC over 15 years.
I'm currently in Albany ny but have been in CO and VA
Do you walk with your cc tips or have to wait for the house to dole them out?
One place I walk with them, the other I wait but I've done both about 50/50 over the years
I am a born and raised Seattlite. Do you own a failing business within those city limits or something? You are so uptight and defensive for no reason.
LOL just realized your user name is Unfair-Job man you sound like a very soft person. Seems like the rest of your life might be difficult.
Hehe ok big dawggy
Nope I own a ton of bitcoin and I’m retired.
Yeah, I’m already looking for another spot…
User name tracks...big time. You're probably in the wrong industry.
Lol this was the autogenerated UN that Reddit gave me
Well...it certainly fits your question.
It’s pretty standard for the CC tip fees to be paid from those tips. Why would the employer cover those fees for you? Some are nice enough, but it isn’t their obligation. It’s another reason why people should appreciate cash tips
It’s very common. Most places I’ve worked at do it. I’m out like maybe 10 bucks on a 350 dollar night.
Yah that isn’t common. CC fees are the cost of business and not the cost of your tips or labor.
That’s what I was thinking. Boss is saying they’re losing too much money by not having us pay them back for the fees.
I call bullshit on that. Even if they're losing 2 or 3% on all sales, that's what, 20 or 30 out of every thousand? If their margins are so thin they can't eat that, they're going under for other reasons already, and they're bailing out the boat with a teaspoon.
So then your boss should either eat the fee or send it back to the customers. So what happens when you have a tip of $1? Makes zero sense to charge you a fee on that.
It’s a percentage thing. If the business is getting charged 3% on all cc transactions, the business pays the 3% on the sale and you pay the 3% on your tip. So if someone tipped $1 you’d pay 3 cents.
Again that isn’t how an employee receives wages. When a business increases cost by % you don’t receive a % wage. There is no reason to ever accept paying cc fees from your wage pool.
When the business increases the cost of something on the menu. Wouldn't your tip as a percentage of she's increase as well? Why would your wage increase with it? Like if the menu price went up 20% you should see an increase to your tips as well.
This is actually not true in my experience. People are white knuckling right now. Plus the younger folks emerging from lockdown during their formative years have no idea what they’re doing, how to order, and have no idea about appropriate tipping.
I've seen the exact opposite. Due to social media, awareness of tipping culture has grown on the younger generations and they tip appropriately. But that isn't addressing what I said. I mean people who don't tip doesn't change regardless of menu price. So if the tips you do receive you are still getting more than without a price increase.
I’m glad for you!
If you have a $1 tip you pay ~ $.02.
I understand what 2% of a dollar means. But that means % of your yearly wages went into paying a fee that isn’t associated with you as the bartender. To put this in perspective; 3% was considered the average inflation rate that we should expect annually. X% is being taken from your wages and your earning potential because the business can’t eat a % fee after agreeing on your wages. If you make 100k in a year and all that was subject to a CC fee you would lose $3000 or to put more perspective when you get paid a check it cost the business money should they deduct that check fee from your wages?
The tips don't go to the employer so why would they eat the cost of the fee? That is the cost of making tips (depending on your location). Let's just say a place didn't accept tips via CC how much tips are you losing out on if no one carries cash to tip you.
Let’s get this straight. When you run a business and hire somebody there are all sorts of cost associated. Say you hire someone and pay them annually 100k. The cost of that employee is not 100k annually to the business. There are all sorts of fees associated with just a singular worker. This comes in the form of insurance/writing their checks/training/etc… none of which the employee pays back the fee. This is the associated cost of labor to the employer. Tips are the exact line of payment to your employee when you build that system out. In order for a place to have a bartender they usually don’t have an annual salary. Instead they work like dogs for their tips and the cost to the business is paid through the profit of the sales. No place and nobody working as a bartender should accept an employers taking CC fees out of their tip pool. In your example the employer gains at a rate higher than that of the employee. The employer also isn’t removing CC fee directly from the BOH employee who makes a flat hourly even though they would technically earn less if the place didn’t take CC fee.
You keep repeating yourself, thinking that the more you say or makes it true. Clearly it is happening, does happen, and legally is allowed to happen. So it doesn't really matter what you think should or shouldn't be allowed. It really just comes down to if the individual is willing to accept that as a price of working at a specific location. In my example and all examples hourly wages is built into the menu pricing so then you can account for the credit card fee for hourly wages. This isn't the gotcha that you think it is. I assume at this point you have nothing new to add, so I'm going to walk away from this futile conversation.
Again this isn’t about the legality. Places do all sorts of shit and it varies by state and location. The poster ask is this common and the thoughts behind it. It is true you benefit as a bartender from both cash and CC. But the employer benefits from that same relationship. As a bartender you don’t go out there and negotiate the rates. Once you go into the realm of making your wages from tip your employer no longer pays you. The customers are paying you and the employer is reaping the benefits of your labor and profit from your sales. Nobody who is worth a dam should pawn off their labor and lose out on % of their earnings because the employer can’t survive on CC fee. Even in examples of 2-3 cents off a dollar no business that isn’t a shithole would die on that cost. So yes you are 100% right that this is a legal practice in some places. But that doesn’t mean this should be practical or acceptable terms when working on this type of industry. You wouldn’t put up with that shit in another job if they told you % of your wages will be cut for fees related to how we process payment.
Not at all uncommon for employees to pay the fees on their tips.
Do you pay for the alcohol that makes your tip? Or do you pay for the space in which you work? The cost of business is not related to your tip pay. That makes zero sense from an employee wage.
Be an obnoxious smart ass then, makes no difference to me, just stating what's been done at half the restaurants I've ever worked in.
And I am explaining to you that is essentially wage theft. Tips are labeled as wages and are taxed as income. You don’t subtract the cost of business from wages. Exactly how would that work if you got a flat wage of $15 a hour? They can’t minus fees from that cost.
Again, you're a dick, an incorrect one at that, so I'm not gonna engage with you on this.
Wow! At what age did you find lashing out at those that reasonably disagree with you with name calling to be a healthy or successful behavior?!
It's the cost to process and receive your tips. It's not a business cost. That cost wouldnt be there if you weren't being tipped.
Wrong. Standard industry practice. Tip in cash.
Merchant fees went up like everything else after Covid. A lot of places also charge customers cc fees now. Hasn’t changed anything on my end really.
Extremely common.
That’s wild. I’ve been tending bar for almost ten years and have never encountered this before. Are you covering the fee for the whole transaction or just on your CC tips?
Just the cc tips. It’s like 1.78%.
Hmmm. They’re telling us it will be a “nominal” 3%.
It's typically around 2.5% to 3.5%, and can't exceed the actual amount they're paying in processing fees, in aggregate. Remember, that's 3% of your *tip*, not 3% of total sales, so in that sense it is a pretty small portion. Your $10 tip is now $9.70.
This is what I’ve paid before. The cards have different rates with American Express being highest. As it was explained to me 3% was the average IIRC. It was only the CC processing fees on our tips but I wasn’t thrilled about it either.
Absolutely. Been going on for years. Common in corporate gigs, less common at dives. Probably around 2000 was the first time an owner told me "When we pay you credit card tips you get the net after credit card fees are taken out on your tips." My response: "That's fair." You think you're entitled to the gross amount? I don't think so. That's why I ALWAYS TIP CASH. You're talking 3% off your $100 to $500. For the owner it's 3% OFF ALL SALES. You do want your owner to stay in business don't you?
Like I said in a different comment, I’ve never encountered this before and was curious if this was a common occurrence for other bartenders. Also, my bar is definitely not corporate.
Among full service restaurants, I think the minority do this, but it's becoming increasingly common. But it's prohibited in a few states, so some people have never encountered it for that reason.
Trust me. It's super common.
Hell no, they can take it out of their sales
My old employer took the cc fees for tips out of our tips. I fucking hated it and quit for other reasons but that one kind of ignited my fire for looking for a new job. She had never worked as a tipped employee and was a “numbers lady” so she had no clue and didn’t care.
In some states that's not legal. Check your local laws.
My old employer just did this. It's a sign of larger programs with the business BUT it really only comes out to like $5/$100. And perfectly legal in Florida where I am.
Its becoming more common now that less and less places use cash. Up to 3% is reasonable, and 3% of the tip itself - not 3% of the entire transaction.
Legit. Did in it nyc when i owned a bar. Switched to cash advance credit card model which makes the customer pay the fees explicitly. Customers didn’t care, business and bartenders happy. CC fees were brutal
Lol wut, no? Factor them into your business plan and pricing structure like a reasonable owner?
https://woodworkingnut.com/2015/10/30/how-to-make-a-guillotine/ best of luck
This is completely illegal. Contact your state's labor board and go to town. Shit makes me sick
Tell me how the new job is when you get it. If the owner is doing that then he’s fucking the stuff over in other ways. Best of luck.
Ask him why he believes the employees should be covering the overhead of his business.
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