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Minnesota Legislature

Tipped employees could get protections for credit card tips

When you tip your restaurant server using a credit or debit card, the number you write on the receipt might not actually be the dollar amount the server receives.

Currently, employers are allowed to charge tipped employees the percentage of the transaction’s service fee associated with their tip, Rep. Jim Davnie (DFL-Mpls) said.

He sponsors HF295, which would repeal the rule allowing this. It was held over Thursday by the House Jobs and Economic Development Finance Division for possible inclusion in an omnibus bill.

A companion, SF1601, is sponsored by Sen. Jason Isaacson (DFL-Shoreview) and awaits action by the Senate Jobs and Economic Growth Finance and Policy Committee.

“This is simply wage theft,” Davnie said, comparing the practice to stealing a couple bucks out of a waitress’s purse while she works on the floor of a restaurant, and penalizing servers for the “bad luck” of receiving a tip that wasn’t cash.

Not all restaurants cover their credit, debit, and charge card fees this way. Some will cover the entire transaction cost as a benefit to their employees.

“But not all are able to do so,” said Ben Wogsland, director of government relations for Hospitality Minnesota.

Many restaurants have incredibly slim profit margins and may not be able to handle the increased cost, even if it’s a seemingly minor one, of every transaction. The expense is also highly variable, as it depends on the interaction between servers and employees, “and the sole beneficiary … is the tipped employee,” he said.

“There is a cost to access money and that is what’s at issue here”

He recommended a requirement that would ensure all restaurants clearly disclose their policy and emphasized that, under Minnesota law, tips are not considered wages.

Given how common the use of credit and debit cards has become, work needs to be done to address the cost of transactions, but that “should be sorted out by industrial titans, not the person who brought me dinner,” Davnie said.


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