Can Restaurants Require Servers And Bartenders To Pay Credit Card Fees?

The federal tipped employee regulations allow restaurants to pay servers and bartenders $2.13 per hour plus tips as long as those tips bump up the worker to at least minimum wage per hour. A question that arises is whether restaurants are permitted to deduct anything from the bartenders or wait staff’s pay to cover credit card fees. In order to accept credit card sales, restaurants agree to pay the credit card companies a fee. This fee is usually between 1.5% – 3% of total credit card sales and restaurants are starting to deduct these fees from the pay of its wait staff and bartenders. Is this legal?

Federal courts have held that restaurants can deduct fees from waiters and waitresses’ tips, however, it can only deduct the amount of the credit card fee associated with the tip – not the sales – and it can only deduct fees from credit card purchases – not cash sales. This means, at the end of each shift, the restaurant would look at total amount of credit card tips received by a server and it may deduct 1.5% – 3% for the costs in converting the tip.

Many restaurants, however, charge the wait staff a fee that is based on the servers’ total credit card sales. This is illegal because it is not the servers’ responsibility to cover all of the credit card fees charged to the restaurant. If the fee with the credit card companies is 2%, federal district courts have ruled that a restaurant can only deduct 2% of the servers’ tips.

For example, a waiter makes $500 in credit card sales and $100 in credit card tips during his shift for a total of $600. Under the tipped employee regulations of the Fair Labor Standards Act (“FLSA”), the restaurant may only deduct 2% of the $100 in credit card tips which would equal $2. If the restaurant deducts 2% from the $500 in sales or the $600 in sales and tips, the restaurant is violating the FLSA. Many restaurants also violate the FLSA tip laws by deducting the credit card fees from the server’s cash sales. Because restaurants do not pay credit card fees on cash sales, federal district courts have ruled that restaurants cannot deduct credit card fees from a server’s cash sales.

If you are a server, waiter, waitress, bartender, or any other type of tipped employee and have a question about your employer deducting credit card fees, you should contact an Atlanta wage and hour lawyer.