Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tipped Worker Protection topic
No spam. Unsubscribe anytime.
Committee approves bill banning POS systems from charging servers’ tips for card fees
Summary
House Bill 22 would bar point-of-sale systems from deducting credit card transaction fees from tipped workers’ tips. The Commerce & Economic Development committee approved the bill 9-1 after testimony from worker advocates and debate about potential business impacts.
The Commerce & Economic Development committee recommended passage of House Bill 22 by a 9-1 vote after proponents said the bill would stop point-of-sale systems from automatically taking a portion of credit-card processing fees out of employees’ tips.
"Tipped workers, when you are getting your tips, POS systems... are by default... tak[ing] the credit card fees, the portions of the credit card fees out of tips," Representative Hernandez said while presenting HB22. The bill would prohibit owners or managers from using tips to cover credit-card processing fees and require that those transaction costs be absorbed by the employer or otherwise handled, rather than deducted from employee tips.
Supporters included Emma O’Sullivan of the New Mexico Center on Law and Poverty, who argued "we stand in support of this bill because we believe that hardworking individuals who receive tips shouldn't have their wages taken to cover their employer's normal business expenses." O'Sullivan cited case law and New Mexico's minimum wage act, noting tips are the property of employees and that deducting fees harms low-paid tipped workers.
Sponsors and witnesses explained the mechanics with an example: on a $100 charged total (an $80 tab plus a $20 tip), a typical processing fee of about 3% equals $3; some POS settings would proportionally deduct part of that fee from the tip (approximately 20% of the $3, or roughly 60¢) and leave the remainder for the business. Advocates and sponsors said the bill would stop that automatic deduction and instead require the employer to cover transaction costs.
During committee Q&A, members asked whether the bill could push businesses to adopt cash-only tipping policies or pass costs to customers; sponsors said cash-only options are available but widespread cash-only operation is impractical and that the bill was intended to prevent servers from bearing processing costs. The fiscal-impact memo cited in testimony estimated the average effect could be small per employer but meaningful for tipped employees—testimony referenced figures in the range of a few dollars per week per worker (the presenter cited an estimate of about $17 per week in one example), while saying actual amounts vary by establishment.
The committee recorded a roll-call vote: 9 yes, 1 no. Representative Matthews explained her yes vote but also relayed a text indicating the practice might already be illegal under existing wage law; sponsors said they are continuing to check legal interpretations and will pursue clarifying language if needed.
Because the bill amends wage practice concerning tips, it will advance to the next stage for House consideration; committee discussion included requests for further legal review to reconcile overlapping state wage law and the bill’s text.
