Many employees in the hospitality industry rely on tips to supplement their incomes. For some, tips may even become a primary source of income—so employees must protect this source of income and not allow an employer to improperly restrict or redirect it.
In certain circumstances, an employer may lawfully make deductions from an employee’s tip income. In other cases, this violates New York labor law. An experienced New York employment law attorney can help workers determine whether they have received all of the tip income to which they are entitled.
Credit Card Processing Fees
Credit card fees are among the many costs of doing business. Businesses incur processing fees whenever they accept credit card payments from a customer. Such fees can add up quickly for a business that conducts large volumes of sales. Some employers attempt to reduce these costs by passing them on to employees. But is this legal?
According to the New York State Department of Labor, employers may subtract an employee’s prorated share of credit card processing fees from a tip. Here is an example of how this works:
The bill totals $100 exactly. The customer leaves, on their credit card, the $100 payment of the bill, as well as a $20 tip. Both the tip and the bill must be processed through a credit card company which charges a 5 percent fee on all transactions. The total charge levied by the credit card company on the $120 charge is $6. Of that $6, $5 is for the bill (5 percent of $100) and $1 is for the tip (5 percent of $20). The employer must provide the employee $19, which represents the $20 tip minus $1 pro-rated employee’s portion of the surcharge).
New York law also requires employers to pay tips paid via credit card to employees no later than the next regularly scheduled payday.
Employees who feel entitled to outstanding payments for tips, overtime, or other forms of compensation should consult an attorney to determine the best method of recovering such wages.
The Right Wage and Hour Attorney for Your Wage Claims
Tip- and commission-based workers in and around New York City have legal rights under state and federal employment laws. An experienced New York wage and hour attorney can help you determine whether you have received all of the wages to which you are entitled. Call (212) 206-8166 today to schedule a consultation with employment law attorney Adam Braverman at Braverman Law PC. He has decades of experience protecting the rights of underpaid workers, so please contact us today.