credit card service fee/waitstaff

January 7, 2008 12:37 PM

lawfilter: is it legal in minnesota for credit card service fees to be deducted from a waitstaff's tip?

according to this it sounds like it's up in the air in MN and a few other states. i can't find anything with more clarification as to the current standing of the law or if it's being contested in court right now.

posted by andywolf to law & government (17 answers total)

Good lord. That link is worthy of an FPP itself. Deducting the credit card service fee from server's tips? That's just...damned cold.
posted by Thorzdad at 1:08 PM on January 7, 2008

At least they're not stealing all the tips like in another recent question.
posted by aerotive at 1:17 PM on January 7, 2008

Unless I'm misreading the article, it works like this:

Food bill: $100 + Tip: $10 = $110 charged to customer's card
Bank charges processing fee (2.95%): -$2.95 + $0.295 ($.30) = $3.25
Bank pays to restaurant working account: $110 - $3.25 = $106.75
Restaurant credits to food bill paid account: $100 - $2.95 = $97.05
Restaurant credits to waitstaff tip account: $10 - $0.30 = $9.70

This doesn't seem unfair to me; it splits the processing costs of the credit card fees between the restaurant and the waitstaff in the same proportion as the base amount distributed to them.

Now what would be unfair is if it worked like this:

Bank pays to restaurant working account: $110 - $3.25 = $106.75
Restaurant credits to food bill paid account: $100
Restaurant credits to waitstaff tip account: $6.75

But I don't think that's what's happening.
posted by aeschenkarnos at 1:25 PM on January 7, 2008

But I don't think that's what's happening.

Actually I could be quite wrong about what's happening, it could very well be what's happening, given the generalized willingness of business owners to shift costs onto any poor sod who stands still long enough, and restaurant owners being no exception to that generalization. However I don't think that taking all of the credit card processing fee entirely out of the tip, rather than evenly out of food bill and tip, is what the court ruled legal.
posted by aeschenkarnos at 1:29 PM on January 7, 2008

May I ask if they give you a choice? Can you for instance say to the customer, sorry I only accept cash? In other words the credit card is offered as a service to the customer by the restaurant, and if they do not offer any other way for you to get your tips without a credit card, then I'd say the onus is on them to pay any fees involved.
posted by Gungho at 1:35 PM on January 7, 2008

I hate to speak for the OP, but I did the waiter thing for a while and
May I ask if they give you a choice?
Unless they work at WaHo, I'm guessing not.

then I'd say the onus is on them to pay any fees involved.
Sorry, but who is the "them?" If it's the customer, that is never going to happen. I think it might even be illegal to charge more for CC transactions?

I read that article and the argument made me thing the $0.30 subtraction was happening, not $3.25. I can see some validity in that, I guess, but still kinda' dirty.
posted by jmd82 at 2:01 PM on January 7, 2008

that's ok to speak on my behalf, i don't wait tables personally, i was just trying to figure this out for a friend. thanks so far, it's interesting trying to make sense.
posted by andywolf at 2:07 PM on January 7, 2008

Minnesota Labor Standards will be able to answer your question. Care to e-mail them and report back here, andywolf?

I think it might even be illegal to charge more for CC transactions?

Not illegal by statute, but Visa and MasterCard prohibit it in their merchant agreements.
posted by grouse at 2:37 PM on January 7, 2008

Can you for instance say to the customer, sorry I only accept cash?

If I was told that by a waiter, I'd stiff them.

Seems to me that this policy is a fair one. They received a certain amount of money from the credit card company for the tip, and are giving it to you. Expecting them to give you more than they received hardly seems reasonable.
posted by Steven C. Den Beste at 3:35 PM on January 7, 2008

I think it might even be illegal to charge more for CC transactions?

It is commonplace for computer stores around here (Toronto) at least to offer a 3% (or so) "special discount" on cash or debit payments, which amounts to an effective 3% fee on credit card payments.
posted by onshi at 3:47 PM on January 7, 2008

Gungho: If the business has those Visa/MasterCard decals on the doors and they do not accept a card transaction, they'll have to pay a penalty to the card network.
posted by grouse at 3:50 PM on January 7, 2008

Here is a FAQ about credit card surcharges.
posted by winna at 4:00 PM on January 7, 2008

Not illegal by statute, but Visa and MasterCard prohibit it in their merchant agreements.
Ah, thanks. I've always wondered the what the real deal was.

However, interestingly enough from winna's link, some states do prohibit merchants charging for CC surcharges. The loophole comes from charging a discount for using cash. Awesome.
posted by jmd82 at 5:25 PM on January 7, 2008

Yes, that's right. I think this has even come up on AskMe before and I was corrected on it then too. Oh, the shame.
posted by grouse at 5:27 PM on January 7, 2008

Here in AU the law was recently changed to get around the Visa/Mastercard ban on surcharges. Stores can now tack the service fee onto prices if they want to, though not many do.
posted by polyglot at 9:43 PM on January 7, 2008

As a customer, I am perfectly OK with being charged extra to use a credit card over cash, if it's my choice to do so. It's convenient, so I'll pay for the convenience. I don't like being forced to use one when I can just as readily pay cash, though.
posted by aeschenkarnos at 11:16 PM on January 7, 2008

The U.S. Department of Labor Field Operations Handbook §30d05 says that the USDOL will not question reductions in credit card tips paid if the deduction "is no greater than the percentage charged by the credit card company."

Of course, it still might be illegal in Minnesota.
posted by grouse at 5:34 PM on January 13, 2008