New Laws Protect Tipped Workers in Pennsylvania

Can Your Employer Deduct Credit Card Fees from Tips?

The Pennsylvania Department of Labor recently issued new regulations according to revised labor laws passed recently by the Pennsylvania legislature. The new laws already took effect at the beginning of August 2022 and the new regulations are effective immediately. One of the most important changes to the law involves tipped workers in Pennsylvania. Under the new laws and regulations, Pennsylvania employers CANNOT deduct credit card and other processing fees from tips that are paid via credit, debit, and other types of cards.

If your Pennsylvania employer is still deducting credit card fees from your tips, your employer is stealing part of your tips. If this is still happening to you, call us here at Herrmann Law. We offer legal representation for employees and punish employer rights violations all across the country. We are courtroom-tested employee rights lawyers and wage and hour litigators who can help you vindicate your rights under Pennsylvania law. Call us at (817) 479-9229.

Employers in all 50 states must, at minimum, adhere to federal law, which prohibits employers from deducting credit card processing fees for any more than the amount of the credit card company charges the employer. In other words, in states that do not outright prohibit an employer from deducting credit card processing fees, federal law limits an employer from deducting more than the credit card transaction fee the employer is charged by the credit card company.

However, in states like Colorado, California, Maine, and Massachusetts employers are prohibited from deducting any amount for credit card processing fees. Now, Pennsylvania joins this list of states that outright prohibit deducting credit card fees from tips.

Added Protections for Tipped Workers in Pennsylvania

The new Pennsylvania law is part of a trend of protecting tipped workers and, likely, additional States and localities will follow suit and disallow the deduction of card processing fees.

The new Pennsylvania laws and regulations made other changes. For the tip credit, Pennsylvania has raised the minimum for use of the tip credit by an employer from $30 a month to $135. That is, a Pennsylvania employer cannot use the tip credit unless the tipped employee receives at least $135 in tips per month.

With respect to tip pooling, the new laws and regulations in Pennsylvania clarify that, under no circumstances, can an owner, manager, or supervisor participate in a tip pooling arrangement. It has long been the law in Pennsylvania that tips are owned by the employees receiving the tips and that owners, managers, and supervisors have no right to any amount of an employee’s tips. Creating a valid tip pooling arrangement does not change that.

Finally, the new Pennsylvania regulations now require a weekly calculation of wages, tips, and compensation earned by employees for calculating overtime. This is most relevant to employees with flex work schedules and for employees with multiple jobs paying different rates (or being in distinct tipping categories). Overtime is generally paid for hours worked that exceed 40 hours in a work week. The new Pennsylvania rules now require that the overtime pay rate be based on an average of the pay-per-hour for the actual work done in a given week (not, for example, based on a month’s or another average).

Call the Employee Rights Attorneys at Herrmann Law Today

For more information, call the Employee Rights attorneys at Herrmann Law. If you think that your employer has violated your rights as an employee, call us. We are proven, experienced, employee-focused attorneys representing workers across the United States in all types of workplace disputes. Use our Online Contact page or call us at (817) 479-9229. We are more than just a law firm for employees – we are an employee’s fiercest advocate, equipping employees with the legal representation needed to achieve the best result possible.