Labor and Public Employees Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-7085

Title:

AN ACT CONCERNING CREDIT CARD TRANSACTIONS AND GRATUITIES.

Vote Date:

3/2/2017

Vote Action:

Joint Favorable

PH Date:

2/21/2017

File No.:

91

SPONSORS OF BILL:

Labor and Public Employees Committee

REASONS FOR BILL:

Sometimes employers impose a surcharge or reduce the gratuity paid to employees when customers use credit cards for their transactions.

RESPONSE FROM ADMINISTRATION/AGENCY:

Scott Jackson, Commissioner, CT Department of Labor

This bill would discourage employers who reduce their employee's gratuities when customers pay via credit cards. This gratuity may not be considered towards the minimum fair wage. This bill protects employees from being penalized when credit card transactions are used for transactions.

NATURE AND SOURCES OF SUPPORT:

Lori J. Pelletier, President, CT AFL-CIO

Although her testimony supports this bill, she urges it be strengthened by prohibiting employers from passing credit card transaction fees onto tipped employees. These business owners are already at an advantage because tipped workers are not paid the full minimum wage. Credit card companies levy different charges and the employers should be responsible for the transaction fees.

Stacey Zimmerman, SEIU CT State Council

Mr. Zimmerman's testimony stated the state budget is suffering not due to a lack of economic growth, but rather because too much of that growth is going to the tiny percentage of the superrich.

NATURE AND SOURCES OF OPPOSITION:

Connecticut Restaurant Association (CRA)

In their testimony, the CRA said according the Fair Labor Standards Act; tips are the property of the employee who then pays a service charge on this property. It was explained when tips are charged on a credit card, the employers must pay the credit card company a percentage on each sale as well as the employee's tip less the percentage of the surcharge. As an example, if a customer using a credit card has a $50 check and tips their server $10, (with a 3% credit card processing fee), the restaurant is charged $1.50 surcharge. The server is charged only $.30 based on this example. This charge on the tip cannot reduce the employee's wages below the required minimum.

Reported by: Marie Knudsen

March 20, 2017