Location: Massachusetts
I am a hairstylist. I work on commission and tips. Until today our salon/employer would process tips via our credit card processor and the tips would be taxed, reported to the IRS and paid out each week along with our commission via payroll.
Today we were casually informed that a “new feature” of our appointment booking system would allow us to access tips that were added to credit card payments immediately instead of having to wait to recieve them on Fridays when our direct deposits came through. The catch was that there was a 5% processing fee that the client could either opt to pay for or it would be deducted from the tip. This “service” for lack of a better word would require the stylist to create an account directly with the processing company, provide their social security number and banking details.
I had several issues with this but figured I just wouldn’t bother to use it and would continue on as usual. But no.
While this new feature initially sounded like something the stylist could opt into and use at their will (or just continue being paid their tips via their paycheck as I had planned to), it turns out that this is not optional and any tips we recieve via credit card HAVE to be paid out in this way. Or we apparently just don’t get those tips at all.
The entire thing felt off to me so I decided not to jump the gun on setting up an account until I had done some research. Until you set that account up, any tips you’ve earned are apparently in a state of limbo. They just hang there until you hand over your most personal information and agree to the 5% fee. And if you don’t comply immediately you begin to get notifications sent to your phone saying that if you don’t opt in then your money is “at risk” and if you wait too long then your money will be refunded to the clients who thought they were paying you those tips.
Essentially, I’m being forced to hand over my banking info and social security number to a third party in order to recieve my own money and I never agreed to this whatsoever.
I’ve scoured every inch of the mass.gov employment rights literature but I’m still not totally sure if what is being implimented by my employer is a legal loophole or if what they are doing is against the law.