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

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 Now the owner has rescinded that policy and, in fact, is raising non-tipped employees’ wages above the new $8 minimum wage rate, the Star Tribune has reported.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