Restaurants Fire Back on Minnesota Minimum Wage Increase

Minnesota’s Minimum Wage increased to $8.00 per hour on August 1, 2014. Already some local restaurants are making their displeasure with the wage increase known to their customers.

The mandatory wage increase combined with rising expenses caused by the health care law has put a strain on some small businesses. They claim to be unable to absorb the additional costs and need to pass those along to their clientele and, in some cases, their staff.

Credit Card Fees Paid by Restaurant Servers

Blue Plate Co. – owner of eight restaurants in the Twin Cities area – is in favor of the wage increase for its employees, as well as the upcoming health care changes, but the combination of the two at the same time has put a lot of pressure on their business. After raising their prices, Blue Plate Co. is now asking servers to pay the fees incurred when a customer uses their credit card to pay the tip– which is estimated to be two percent of their tips, a practice already in place at Parasole Restaurant Holdings’ 11 restaurants in the Twin Cities area.

Charging servers the fee is not illegal according to the U.S. Department of Labor.

“… the Wage and Hour Division does not question the practice whereby the employer reduces the amount of credit card tips paid to the employee by an amount no greater than the amount charged to the employer by the credit card company. The employer’s deduction from tips for the cost imposed by the credit card company reflects a charge by an entity outside the relationship of employer and tipped employee.”

Charging Diners ‘Minimum Wage Fee’

In Stillwater, Minn., River Oasis Restaurant is taking a different tack to deal with the wage increase. They are passing the costs onto the customer by adding a minimum wage fee of 35 cents to every check. According to River Oasis’ manager, the restaurant “wants people to be aware we’re a small business and we’re trying to stay open…if you raise prices and don’t tell anyone, that seems more backhanded to me.”

The owner estimated that the wage increase will cost River Oasis more than $10,000 per year.

Social Media Backlash

Reviewers on Yelp and Facebook have expressed their displeasure with River Oasis Restaurant in no uncertain terms.

Opponents like Wade Luneberg, secretary/treasurer of MN State Council of UNITE HERE Unions said that, “Putting [minimum wage] fees on tickets and passing the cost on to consumers directly is strange at best, and creates an ‘us against them’ mentality while ordering dinner.”

Although this change has caused alarm to many, others maintain that if it helps to keep a small business going and their employees working, they are happy to pay a little more. And in the case of Blue Plate Co. & Parasole Restaurant Holdings, servers may appreciate getting their tips in cash.

For more information on Minnesota’s Minimum Wage increase, click here.

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