SHB 1623
In CommitteeHouse
Tips/credit card fees
Prohibiting deductions for credit card transaction processing fees from employee tips.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill prevents employers from deducting credit card processing fees from employee tips, requiring them to pay the full tip amount to workers even when customers pay by credit card. It also reiterates that tips and service charges must be paid separately from and in addition to the minimum wage.
- Prohibits employers from deducting credit card transaction processing fees from employee tips or gratuities — employers must pay employees the full tip amount indicated on the credit card slip.
- Clarifies that tips and service charges (unless specifically excluded by law) must be paid in full to employees and do not count toward the minimum wage.
- Reaffirms that employers must pay all tips and service charges to employees in addition to their hourly wages.
- Maintains existing minimum wage schedule and annual inflation adjustments through the consumer price index (CPI-W).
Who is affected
- tipped service workers — Employees who receive tips (e.g., restaurant servers, bartenders, baristas) who currently have tips reduced when customers pay by credit card; they would retain the full tip amount without fees being deducted.
- employers in tip-receiving industries — Businesses that process credit card payments for tips (e.g., restaurants, cafes, hotels) — they must absorb credit card processing fees instead of passing them to employees.
- payment processing companies — Credit card companies and payment processors — they may see no change in how fees are charged, but employers will now bear the full cost instead of deducting from tips.
Pro/Con Analysis
Potential Benefits (2)
Tipped service workers—especially low-wage hourly workers—will retain 100% of tips indicated on credit card slips, directly increasing their take-home pay without reduction for processing fees, which can be 2–4% per transaction.
FinancialPeopleRef: Sec. 1(3)The bill reinforces that tips are the property of workers and cannot be used to offset minimum wage obligations, strengthening worker autonomy and preventing wage theft via tip pooling or fee deductions.
Rights & LibertiesPeopleRef: Sec. 1(3)
Potential Concerns (3)
Employers in tip-receiving industries (e.g., restaurants, cafes, hotels) will absorb credit card processing fees previously passed to employees, increasing operating costs—especially for small businesses with thin margins and high credit card tip volumes.
Business & EmploymentRef: Sec. 1(3)Businesses may face administrative burden in adjusting payroll systems to ensure full tip disbursement without deductions, particularly for chains or franchises with centralized payment processing.
Business & EmploymentRef: Sec. 1(3)The bill does not provide state or local government subsidies or tax credits to offset employer costs, meaning the financial burden falls entirely on businesses—potentially leading to reduced hiring, wage compression elsewhere, or price increases passed to consumers.
Business & EmploymentRef: Sec. 1(3)
Who Is Most Affected
Directly benefits from retaining full tip amounts; especially impactful for hourly workers who rely on tips as a major share of income and often face wage volatility. No offsetting costs for most workers.
Small independent restaurants and cafes with high credit card tip volumes and thin margins will absorb new costs; larger chains may absorb costs more easily but still face margin pressure. Some may reduce tipping expectations or increase menu prices.
Payment processors are unlikely to change fee structures, but their business model remains intact—no significant gain or loss. Employers now bear the fee cost directly rather than indirectly via lower tips.