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Philly councilman wants restaurants to remit full tips

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in Compensation and Benefits,Human Resources

Philadelphia Councilman Jim Kenney has a bone to pick with some city restaurants. When customers charge their meals, he claims the restaurants deduct from waiters’ tips the credit-card processing fees businesses must pay. Kenney has introduced a bill in the City Council to bar the practice.

Credit card fees are normally considered a business expense that employers are responsible for paying. But no law currently forbids restaurants from deducting fees from waiters’ tips.

Kenney told the Philadelphia Inquirer, “If I’m leaving an 18-20 percent tip, I expect that to go into the pocket of the person who waited on me, not 3% percent skimmed off the top to go to the owner of the restaurant.”

Note: This legislation highlights the need for employers to stay up-to-date on local ordinances as well as state and federal laws. State and federal laws are silent on the issue of deducting credit-card processing fees. Employers that deduct the fees must keep records showing the deductions and the fees the bank charges, as those fees are effectively payroll records.

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