Brazen Employer of the Week: Outback Steakhouse Forces Wait Staff to Pay Its Credit Card Fees

Filed in archive General on February 7, 2008

The title of this post is a bit misleading, because after this policy made it into the newspaper, OSI Restaurant Partners (parent company of outback Steakhouse) took it all back and said, "Oh, no, just kidding," but check it out:

The parent company of Outback Steakhouse and its sibling restaurants has rescinded a policy of requiring its wait staff to cover credit-card processing fees for tips included on their customers' bills.

...

"Upon reflection, we have decided that this is not a good idea, so we are rescinding that policy," Joseph Kadow, OSI's executive vice president and chief officer for legal and corporate affairs said Friday.

...

Typically, restaurants cover credit-card processing fees, which can range from about 1.5 percent to 3 percent of a transaction.

If a check for two diners totaled $100, for example, and the customer added a $20 tip on the card, the server typically would receive the full $20 tip.

Under the shelved OSI policy, the restaurant would have paid the credit card fee on the meal tab, but the server would have the processing fee subtracted from his or her tip.

...

"The company wasn't taking any money from the servers, the company was just asking the servers to pay their share of the fee that has to go to the credit card company," Kadow said. "Upon reflection, it just didn't sit right as the right message to give to our servers."

Ya think? You think it might cause a little animosity that your servers who make 1/1000th of what you execs make might be a little angry about you nickel and dimeing them over something that is YOUR cost of doing business? If you want them to pay a chunk of your credit card fees, how about first giving them a chunk of equity in the company? How likely is that?

Jeez.

And one last thing from the article:

Alan Higbee, a Tampa lawyer who has represented restaurant companies for years, said he was intrigued by the practice, even though he had not heard of other companies doing it.

Higbee said Friday that he might recommend the idea to his restaurant clients.

"Actually it sounds pretty brilliant to me," Higbee said.

Yikes.