The Consumer

Lawmaker files bill to prevent restaurant owners from deducting tips from waiters/waitresses

A proposal by Rep. Terry Canales, D-Edinburg, would prevent Texas restaurant owners from deducting from the tips of waiters and waitresses the transaction processing fees that businesses must pay when customers use credit cards to pay for their purchases.

When his measure, House Bill 1215 – which was filed on Monday, February 9 – is considered by a House committee, Canales said he will add language to his proposal to forbid restaurants from deducting from the tips the processing transaction fees involved when a customer pays with a debit card.

When a consumer makes a purchase using a debit card or credit card, the merchant is assessed fees associated with processing the transaction, according to the U.S. Federal Reserve System.

“Most Texans have no idea that when they include a tip on a credit card, some or all of that tip could be used by the restaurant owner to pay the transaction processing fees that are the responsibility of the business,” Canales said. “I was astounded when I found out that when I tipped my waiter or waitress, they may not have been receiving the full amount.”

A tip, also known as a gratuity, is given to one who provides services and added to the cost of the service provided, generally as a reward for the service provided and as a supplement to the service provider’s income (

If approved by the Texas Legislature and the governor, HB 1215, as to be amended by Canales, would make it illegal for any restaurant to take the debit card or credit card transaction processing fee from an employee’s tip.

“Every time a company is paid with a debit card or credit card, the firm must pay a fee for that financial service,” Canales explained. “But for waitpersons in restaurants – those professionals who provide excellent service and depend on tips to make a living – it is unfair that they cover the restaurant’s cost of doing business.”

Federal law allows restaurants to take credit card fee from tips, as long as the worker’s pay does not drop below the U.S. minimum wage, which currently is $7.25 per hour.

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