Legal Question in Employment Law in Illinois
Credit Card Processing Fee Withholding
Is it legal for a restaurant to withhold a pro-rata share of the credit card processing fees from the servers in the restaurant?
Example - a server receives a $6.00 tip on a credit card purchase. The restaurant is withholding the processing fee on the tip from the server. In this example, at a processing fee of 1.8% (they vary by card), 11 cents is withheld from the server and he/she receives $5.89.
1 Answer from Attorneys
Re: Credit Card Processing Fee Withholding
This likely violates the tip credit provisions of the Fair Labor Standards Act. If you are paid an hourly wage rate less than the federal minimum wage of $5.15 per hour because you receive tips as part of your compensation, it is improper for your employer to participate in any way in the "tip pool," including attempting to recover the processing fees from credit cards.
The penalty is disgorgement of that money improperly withheld from you (and all other tipped employees).
Please e-mail me if you have any other questions, or I can otherwise be of assistance.
Douglas Werman
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