Restaurant Owners Rescind Controversial Policy That Cut the Waitstaff’s Tips

A company that owns eight restaurants in Minnesota had instituted the plan to reduce its costs for paying a higher minimum wage.

Did you see this story when it first broke? After Minnesota passed a higher minimum wage, a restaurant owner tried to offset the cost by requiring servers to pay the 2 percent credit card fee when diners use plastic to pay for their tips.

Here’s an update: People complained. Now the owner has rescinded that policy and, in fact, is raising non-tipped employees’ wages above the new $8 minimum wage rate, the Star Tribune has reported.

An earlier story in the Star Tribune said that waitstaff at the eight Twin Cities restaurants owned by the Blue Plate Co. were flabbergasted that they would lose a portion of their tips. The owners said the higher minimum wage, plus rising costs that resulted from the Affordable Care Act, will cost them $1.25 million, the Star Tribune said.

Since most customers pay with credit cards, the hit to servers is estimated to be 2 percent of their tips, on top of the taxes they already pay. While that may not seem like much, one employee, who didn’t want to be named, said servers often live paycheck to paycheck, and every dollar matters.

“It’s their choice to accept credit cards, and the customers’ choice to pay with them, it’s not up to me,” the employee said, adding that credit card fees are simply the cost of doing business.

Minnesota’s new minimum wage law went into effect Aug. 1, immediately raising the minimum wage by 75 cents. Higher rates will be implemented over the next few years.

In addition to Blue Plate’s pledge to resume paying all credit card fees, the Star Tribune wrote:

Blue Plate’s owners, David Burley and Stephanie Shimp, also announced they will be offering an additional wage hike of their own to their non-tipped employees.

“We have always listened to our guests and our community,” Burley said in a statement. “We’ve reflected and decided to try a different approach that will give our communities a clear indicator of who we are as a business.”

That new in-house minimum wage for non-tripped employees will be $9.69 an hour beginning Sept. 1, the newspaper said.

Other restaurants around the country pass along credit card transaction fees to their servers. But the timing of Blue Plate’s policy change put them in the news.

Meanwhile, another restaurant owner in Minnesota has tacked a “minimum wage fee” to every restaurant check, The Huffington Post reports. It said the 35-cent surcharge was described by an owner of the restaurant as a way of “thumbing my nose at the law change.”

What do you think of requiring servers to pay credit card transaction fees? Would you rather see a price increase at a restaurant or a minimum wage fee tacked onto your bill? Share your comments below or on our Facebook page.

Stacy Johnson

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  • MrsNCLB

    i actually had no idea that they would even consider that…..
    this is really shameful and just sad…. money truly is the root of all evil…. if a business owner was good to his employees, then in a time of need, the employees would do what they could to help out right? noone else would care…. but in todays times, all the owners just seem to care about is the money… there is no way that i could charge the employees the fee for paying with a debit/credit card and live with myself… that is just pure greed to me….. there a “fees” that go along with having a business and most of them are tax write offs…. what can the workers write off? the owners of these restaurants should be accountable and responsible for their business… its not the employee that should have to suffer…after all, the employees just work there! Very sad….

  • Chuck

    Please print the names and locations of all restaurants engaging in this behavior. I do not want to spend my dining money at any restaurant that engages in the greedy behavior.

  • irisheyes57

    They should be ashamed of themselves. I also would like to have a list of restaurants that do that. I would never eat there. It’s so sad. It’s a shame they can’t all just walk out. The waitresses are what makes your visit pleasant or miserable. We mostly have very pleasant happy server.

  • TeeTime

    It said the 35-cent surcharge was described by an owner of the restaurant as a way of “thumbing my nose at the law change.”

    35 cents is a small price to pay to help someone earn a living wage.

    • Don Lowery

      If the owner of the restaurant is this cheap…as well as stupid…why not just have the state tax agency just tack on the same amount of the total of this “fee” to the business taxes of anyone stupid enough to try it? Being a restaurant…the owner can close or move. This way…they can see what it feels like to have someone steal from them for their stupidity.

  • Al Seaver

    How much do you want to bet that the real reason that they changed their mind was a sudden sharp drop in business and workers threatening to quit due to their greedy stunt?

  • Ramon O

    If my friends and I have a dinner costing $100, I shall tip the waiter (my son) $5,000 using my Credit Card, or a total of $5,100 on the bill. My son gets his wages plus the 5,000, which he returns to me. I wind up spending only $100 for the dinner. The restaurant owner receives $100 for the dinner, but has to pay $100 as the 2% Credit Card fee. So the poor guy gets nothing for feeding me and my friends.

    • Patrick Seitz

      Yes, this totally real and definitely not made-up situation you described is very common and getting out of hand. Something should be done about this problem that absolutely exists.

    • Baja Pete

      Your son would have to pay payroll taxes and federal income tax on his $5,000 tip. Thus he would only be able to return to you about $4,000.

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