The proposed bill aims to protect tipped wages for workers and alleviate financial burdens on employers by prohibiting interchange fees on tips and gratuities in electronic payment transactions. It establishes that issuers, payment card networks, acquirer banks, and processors cannot charge merchants interchange fees on the tax or gratuity amounts if the merchant provides this data during the authorization or settlement process. Additionally, if a merchant fails to transmit this data, they can submit tax documentation within 180 days to receive a credit for the fees charged. The bill also includes definitions for key terms such as "interchange fee," "merchant," and "gratuity," and mandates that payment card networks develop a mechanism for merchants to transmit tax or gratuity data within two years.

Furthermore, the bill amends existing laws regarding minimum wage and tips, ensuring that employers cannot reduce an employee's tips or gratuities by the amount of any interchange fees. It also stipulates that tips and service charges are in addition to the employee's hourly minimum wage. Violations of the new provisions can result in civil penalties of $1,000 per transaction, with penalties directed to the Department of Labor and Industries. The act is set to take effect on July 1, 2026, and establishes a new chapter in Title 19 of the Revised Code of Washington.

Statutes affected:
Original Bill: 49.46.020