Delaware Advances Bill Protecting Restaurant Workers From Card Swipe Fees on Tips

A Delaware server pulling in $700 a week in card tips, at an industry-standard processing rate of 2.5%, stands to lose about $17.50 every work week. Over 50 weeks, that's $875 gone before a single dollar clears payroll. House Bill 315, which the Delaware House advanced April 6, exists to stop that math from happening at all.

The mechanics are straightforward even if the paper trail is not. When a customer leaves a $20 tip on a credit card, the payment processor bills on the entire transaction, tip included. At 2.5%, that's 50 cents that never reaches the restaurant's register in full. Delaware already bars employers from passing that cost onto servers' paychecks under Title 19 of state law, but HB 315 goes further: it would prohibit payment card networks from assessing interchange fees on the tip portion of a transaction in the first place, stripping the fee before it becomes a point of contention between owner and staff, or a silent deduction that workers never catch.

Katie Kutler, who owns Kaffe Karma, a fast-casual coffee shop in Greenville, supports the legislation. For a small operator like Kutler, who cannot negotiate lower interchange rates the way a national chain can, every gratuity a customer leaves currently generates a fee the business must absorb or, in cases of non-compliance with existing law, quietly pass to the worker. HB 315 would eliminate that pressure at the source.

Carrie Leishman, president and CEO of the Delaware Restaurant Association, is pushing hard for the bill. "We understand credit card fees happen on sales transactions but sales transactions aren't tips," Leishman said. "Tips belong to workers. It really is a decision this legislature needs to make between Main Street businesses and Wall Street. No bank, big or small, should assess a fee on someone's income."

The opposition frames its case around a different kind of worker risk. The Electronic Payments Coalition warns that if card networks cannot charge fees on tips, customers may be pushed toward cash-only gratuities, which few diners still carry; the group claims Delaware servers could lose more than $8,800 a year if card tipping becomes unworkable. The Delaware Bankers Association echoed that the bill would not net more money for workers. If passed, HB 315 would impose a $1,000 penalty per transaction on any processor that continues charging fees on tips, a number the payments industry has called untenable. Illinois passed similar legislation, though it remains under court challenge.

For Delaware restaurant operators, waiting on final passage is not a cost-free strategy. Pull a week of processor settlement reports now and compare the tip amounts on customer receipts against what was actually deposited into the restaurant's account. If those numbers don't match, the processor may be assessing fees on gratuities, which is the exact conduct HB 315 targets. Review your point-of-sale configuration to confirm whether the system separates the food sale and the gratuity as distinct line items at settlement. Workers who believe an employer is already deducting processing fees from their paychecks can file a complaint with the Delaware Department of Labor's Office of Wage and Hour Enforcement at wages@delaware.gov or by calling (302) 761-8200. Any operational change required by the bill, if it clears the full legislature, will need to be documented in writing and communicated to staff before the first payroll cycle it affects.