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Wage deduction for credit card fee and "tipping out" Tennessee Texas

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  • Wage deduction for credit card fee and "tipping out" Tennessee Texas

    I'm trying to find the law stating whether or not wage deducting from the employee the small fee that the credit card company charges for each transaction. I'm assuming this goes under normal business transactions and is not lawful to wage deduct unless otherwise agreed.

    Also, is there any law stating the "tipping out", or giving a percentage of your tips out, to the bus boy and hostess' legality? I'm not sure if I would be required to pay for another employee's wages.

  • #2
    Generally speaking "tip pooling" is permitted.

    This is what DOL says about tip pooling:
    Tip Pooling: The requirement that an employee must retain all tips does not preclude tip splitting or pooling arrangements among employees who customarily and regularly receive tips, such as waiters, waitresses, bellhops, counter personnel (who serve customers), busboys/girls and service bartenders. Tipped employees may not be required to share their tips with employees who have not customarily and regularly participated in tip pooling arrangements, such as dishwashers, cooks, chefs, and janitors. Only those tips that are in excess of tips used for the tip credit may be taken for a pool. Tipped employees cannot be required to contribute a greater percentage of their tips than is customary and reasonable.

    http://www.dol.gov/esa/regs/compliance/whd/whdfs15.htm
    http://www.dol.gov/esa/regs/compliance/whd/whdfs2.htm

    The cost you incur for credit card transactions is a general business expense. I think you'd be hard pressed to pass this cost to your employees. This is not a common business practice. The more likely scenario is that this cost should be considered when you are setting your prices that you extend to customers. Generally speaking you cannot require a wage deduction that would "benefit" the employer. Wage deductions are statutory or voluntary. Examples of voluntary deductions are employee portion of health premiums, contributions to a retirement account and saving bonds purchases. IMHO a wage deduction to help the employer pay for his business expenses would not fit this criteria.

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    • #3
      However, it is not illegal to pass through the credit card fees. See the last paragraph here:
      http://www.dol.gov/esa/regs/compliance/whd/whdfs15.htm
      I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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      • #4
        No disagreement. Just inserting my opinion on the matter.

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