When a guest tips on a card, the restaurant pays the card company a fee on the whole charge. Federal rules let the employer take only the part of that fee that applies to the tip. With a 3% fee, a $20 tip can be reduced by $0.60, and no more. The deduction also cannot push your pay below the minimum wage.
Card tips must be paid by your regular payday, even if the card company has not paid the restaurant yet.
Several states ban the deduction entirely, including California, Massachusetts, Minnesota and Pennsylvania. In Colorado, taking it cancels the employer's tip credit. New York allows only your pro-rated share. Watch for a flat fee, a percentage higher than the real rate, or a fee on the whole bill taken from your tip. See which deductions are illegal.
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