DELAWARE - The Delaware Department of Labor announced that withholding credit card fees from tips is unlawful in the state. The determination comes after an investigation into multiple complaints regarding the practice of withholding a percentage of servers' tips for credit card processing fees.
The Delaware Department of Labor announced on Friday that the practice is illegal in the first state. Under the Delaware Code (Title 19, Chapter 9, Section 902(d)), state officials say “Any gratuity received by an employee, indicated on any receipt as a gratuity, or deposited in or about a place of business for direct services rendered by an employee is the sole property of the primary direct service employee and may not be taken or retained by the employer except as required by state or federal law”.
State officials say there are instances in the Wage Payment and Collection Act where an employer may withhold any portion of an employee's wages. However, this does not permit redirecting credit card processing fees from wages, including tips.
The Department of Labor states they are notifying all restaurant owners and businesses in the state with tipped employees of the law.
In a statement regarding the announcement, Delaware's Attorney General Kathleen Jennings highlighted the importance of tips, especially for employees that rely on earnings from tips as primary income. Jennings says, "We want restaurants and other Delaware employers to thrive — but we also expect them to adhere to laws that guarantee fair treatment and proper compensation for their employees". The Attorney General added that she is grateful to the DOL and their investigation into the issue.
More information on current tipping practices can be found on the Delaware Department of Labor website.
