Parasole dips into tips

The local restaurant company takes 2 percent of servers' credit card gratuities

Servers at Parasole restaurants received word earlier this month that they'll have to give up 2 percent of their credit card tips to the house.

A server at Good Earth Roseville tells City Pages that higher-ups explained the move as being necessary due to rising credit card use among customers and higher fees from banks. The excised 2 percent on their tips will make up for rising fees.

The workers are in a quasi-revolt because they're making minimum wage already.

"People aren't tipping as much because the economy is bad," the server said. "Now they're asking us to take a 2 percent cut in income."

City Pages called Good Earth to ask about the issue but was directed to Parasole's corporate offices. Vice President of Business Development Kip Clayton declined to comment.

"Whatever we end up doing in terms of compensation for employees is between us and the employees," Clayton says. "So there's no reason for us to share it with the rest of the world."

The waitstaffer City Pages spoke with says an official announcement was posted in the kitchen explaining that this change would affect servers at all Parasole restaurants, including Chino Latino, Uptown Cafeteria and Sky Bar, Il Gatto, and Manny's Steakhouse.

Restaurateurs "can take up to whatever the credit card company takes," explains James Honerman of the Department of Labor and Industry.

Which means that as long as the credit card in question charges a 2 percent fee to the restaurant, the restaurant can pass along that 2 percent penalty to the waiter receiving the tip.

"It would be one thing if the employer is keeping the 2 percent," explains Michelle Drake, employment lawyer for Nichols Kaster, "but it's really the credit card company keeping that percentage."

That a credit card tip would go to an employer might be shocking to someone who goes out to dinner, but it isn't all that unusual.

"That's fairly commonplace," says Mike Moberg, a labor attorney. "They're going to make sure the restaurant doesn't get shorted any money."

There's been a lot of chatter on Twitter over the issue, with a number of users questioning the legality of Parasole's decision to charge servers for their tips.

Some have pointed to Minnesota statute 177.4, subdivision 3, but that piece of legislation alone doesn't govern the rules, as Honerman and Drake point out. In fact, that section of state law focuses on protecting workers' rights to share their tips with their colleagues if they choose.

"When the servers share their tips with people in the back of the house, the employer is not allowed to hold the money for somebody who wasn't there at the end of the shift to get his allocation," explains state Sen. Linda Higgins, who cosponsored an amendment in the last session to make tip-sharing more convenient for employees who wish to share their tips. "This would allow the employee to hold the money for the people until they come in the next day."

Even though they were perfectly within their right to do so, Parasole executives—who did not return a voicemail seeking comment—may be wondering whether the 2 percent pass-along penalty is worth the public relations fiasco.

In statements issued via Twitter, Parasole said its success is built on taking care of its guests and employees, then added that its servers are better off when customers use credit cards because they tend to spend more money than people who pay in cash.

"Guests who pay with credit cards spend on average 25 percent more than guests paying cash. This results in higher tips and wages for our servers," Parasole tweeted. "Parasole Restaurant's success is built on taking care of our guests and our employees. The average tenure of our servers is between four and five years."

We put in another call to Parasole to ask if a live human being would be willing to talk to us in greater detail than these two tweets. We'll let you know if they get back to us.

 
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14 comments
guest
guest

Every restaurant owned by John Rimarcik uses this policy, from Monte Carlo and Runyon's to Annie's Parlor and the Kitty Cat Klub. Profit-making or cost-shifting, it's pretty greedy.

Anonimust
Anonimust

2% is actually the highest rate that can be charged for a physically signed credit card transaction. Anyone who knows anything about credit card fees knows that they are assessed individually by risk factor. Processing fees can be as low as 0.79% depending on the type of card. issuing bank, card limit. If they are taking 2% of all of the waitstaff's credit card tips they are making money from those tips.

Mstigerjuice
Mstigerjuice

Despicable restaurant employers strike again. ( "It would be one thing if the employer is keeping the 2 percent," explains Michelle Drake, employment lawyer for Nichols Kaster, "but it's really the credit card company keeping that percentage.") BS! what it really is is the employer shifting the cost of business to the server. It is akin to having cooks pay for food delivery fees.

Jensenc651
Jensenc651

As a restaurant patron who does use credit cards, I thank City Pages for letting us know who does this terrible practice. Shame on the establishment!! I will from now on tip in cash and use my card only for the purchase.

JRO
JRO

What's next? Retail store cashiers must get decreased pay due to bank greed. This is an overhead expense that should definataly come out of the business owners pocket. I always pay cash at restaurants to prevent multiple people taking a servers money.

Fred
Fred

The emphasis the writer puts on minimum wage is akin to the shocking discovery of gambling at Rick's casino. That's what restaurants pay. And yes, it is because servers get tips. Why should servers tips COST the restaurant money? Oh, I get it, they're the little guys and City Pages has to assume the worst on the part of big bad employers. But really - if it costs 2 percent to process a credit card, which either reduces the establishment's profit or is accounted for in a higher menu price which ups the figure on which the tip is calculated, why should the owners then take a hit on tips?

miker
miker

Economics 101. Businesses do not pay taxes, they simply collect them for the government.This is an example of the UNINTENDED CONSEQUENCES of raising taxes. Your friends in the govt. decide to punish banks because they think banks are making too much money. They raise taxes on banks by passing legislation (Dodd-Frank, champions of the left). Bank profits are affected so banks raise fees to businesses like restaurants (remember, they don't pay taxes from thier profits, they simply collect them).The restaurants don't pay more from their profits, they simply do what banks do, pass it on to the waitstaff. Restaurants tell the minimum wage waitstaff that they will pay more from theirtips to cover the increased expense of credit card fees. Who gets hit the hardest? The minimum wage waitress working her way thru college by waiting tables three nights a week. Unfortunately, she is also the one who pays $20,000 a year to sit in a college economics class, taught by a $100,000 a year professor who tells her that we are undertaxed and need more government regulation to make things "fair".

Fe1959
Fe1959

And why should their workers be made to cover the company's expense of doing business with the credit card corporations?

And why are the credit card companies upping their fees when they have already have billions in profits flowing in?

Parasole workers are making MINIMUM wage. Why are these companies trying to take more from those who already have so little?

Brennan Hannon
Brennan Hannon

I wait tables at an independently owned restaurant and about a year ago the business decision was made that the restaurant would keep 1% of all your sales each evening to offest the cost. My opinion: all business should pass on their merchant fees to the customers by adding whatever they get charged to the transaction. If we want to change this market, we need to start with the consumer. Consumers will pay cash if it means a 3% discount. Businesses would have to band together and do it at once for it to be effective.

Server
Server

It's not just Parasole. The restaurant I work for takes 5% of credit card tips, it's BS, but this economy has tricked me into being grateful for at least having a job. Give all servers cash no matter where you are eating.

Pfleetham
Pfleetham

Much Ado About Nothing.Simply the cost of doing business.2% is minuscule, look at how much the government takes and what do we get back.

Guest
Guest

Psycho Suzi's does this too.

Anokan
Anokan

Cost of doing business as a corporation.

 
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