The Blue Plate restaurant chain no longer plans to take a cut out of its servers' tips to offset Minnesota's higher minimum wage.
In the face of blistering community backlash, the St. Paul-based restaurant chain announced Wednesday that it will resume paying a 2 percent credit card fee it had been passing along to its minimum-wage waitstaff every time someone paid their tip with a credit card.
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."
Minnesota's minimum wage -- which had been one of the lowest in the nation -- increased by 75 cents an hour on Aug. 1. In response, the Blue Restaurant Company sent a memo to its employees alerting them that the new wage hike, coupled with rising health insurance costs, would cost the company $1.25 million. Therefore, the 2 percent credit card fee on tips that the restaurant used to pay would now be coming out of servers' tips.
A number of restaurants already pass credit card fees along to waiters and waitresses, arguing that tips can make servers some of the best-paid employees on staff. But to the Blue Plate's tipped employees, it looked like they were being asked to pay for their own pay raise.
On Wednesday, management backpedaled, pledging to immediately resume paying the credit card fees themselves.
"I think Blue Plate made a business decision that backfired on them: 'Enjoy your increase in the minimum wage increase but we're going to nick you on the back end,'" said Wade Luneburg, political director of UNITE HERE Minnesota, a union representing restaurant and hospitality industry workers. "It was a tacky policy. It is legal, but that probably doesn't make it right."
The company also announced that beginning Sept. 1, it will offer its non-tipped employees a new, higher minimum wage of $9.69 per hour. Minnesota's current minimum wage is now $8 an hour and will increase to $9.50 by 2016.
Burley also said the restaurant chain would begin holding monthly meetings with employees to "share ideas and innovations."