Banker Leaves 1% Tip On $133 Lunch Bill In Defiance of 'The 99%' [UPDATED]

2.  Credit Card Tips

- Employers are allowed to charge servers a fee to receive credit card tips by deducting a  processing fee. The industry standard is three percent, which means where the policy is practiced, a server may only collect $19.40 out of each $20 in tips.    States that prohibit employers from taking this deduction include: Alaska, California, Colorado, Montana, Nevada, Oregon, & Washington.

- Unlike cash tips which are received on the same day, employers are allowed to postpone disbursing credit card tips until the next scheduled pay period.

Statements issued by the U.S. Dept of  Labor from Opinion letters dated March 28th, 1977 and February 26, 1998- FLSA sS 3(m) and FOH3OdO5

“Where tips are charged on a credit card, it is the position of the Wage and Hour Division that the tips due the employee must be paid to the employee not later than the next regular pay day and may not be held by the employer while the employer is waiting to be reimbursed by the credit card company.”

“An employer may deduct an average standard composite amount for tip liquidation, rather than individually calculating the precise charge for each transaction, so long as the total amount collected reasonably reimburses the employer for no more than the total amounts charged by the credit card companies attributable to liquidating credit card tips.  Any employer attempt to deduct an average standard composite amount for tip liquidation that exceeds such expenditures is not acceptable.”

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