Senate committee hears testimony on bill to bar card companies from charging fees on taxes and tips

Senate Labor & Commerce opened a hearing on Senate Bill 5070 on Jan. 1, 2025, when committee staff described a proposal to bar some payment processors and card issuers from charging merchants fees on sales tax and tips and to prohibit employers from deducting such fees from employee tips. Marlon Yanez, staff to the committee, summarized the bill and said, “This bill changes Washington law in 4 ways,” listing prohibitions on fees, a $1,000 per-transaction civil penalty, an anti-avoidance provision, and a ban on employers reducing workers’ tips by interchange amounts.

Supporters, including hospitality workers, independent retailers and many small business owners, told the committee the practice effectively taxes working people or penalizes businesses that collect sales tax. “This practice needs to stop,” said Eunice Howe, lead organizer with Unite Here Local Aid, the Hospitality Workers Labor Union of the Northwest, adding that proposed contract language to shift card fees onto workers would amount…